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What is the difference between microsoft ea and csp?

2 Answer(s) Available
Answer # 1 #

Choice is critical in business, but sometimes it’s difficult to determine the best decision for your specific organization. Such is the case when it comes to contracting services for Azure and your other Microsoft cloud applications. For many years, the best choice for larger organizations was signing up for an Enterprise Agreement (EA) directly with Microsoft. However, with the Cloud Service Provider (CSP) option, you can purchase from a certified Microsoft partner, like Interlink.

Both offer similar services and similar pricing. There are advantages and disadvantages to both depending on your size and type of business. So, how do you decide what’s the right choice for your organization? Below is a look at the two options in several key areas:

An EA is a three-year agreement and requires a minimum of 500 licenses to be purchased at the same time. The most frequently purchased licensing options are Office 365 plans - any combination of the E1, E3, and E5 licenses would count. Customers pay upfront for the entire year, which is unexpected for a subscription service and can make cash flow tough. Any user licenses added during the year would be paid on the next anniversary, which can also make cross charging quantities difficult. Quantities on the EA can go up during the year but can only come down by providing a notice 30 days prior to the anniversary. If the company divested a division in the first month after their anniversary, they may have to pay for licenses for 11 months that are unused.

CSP licensing is based on a month-to-month commitment, which can be attractive for businesses in volatile markets with inevitable ebbs and flows or businesses that have seasonality. It is also beneficial for organizations who find it difficult to predict longer-term usage requirements or those who may want to start with a basic plan as they move to Office 365 (like email only) and then increase the licensing level as users adopt the functionality.

In general, larger organizations with 500+ users are frequently better off with an EA. For smaller organizations, a CSP might be the best alternative. However, each business will have unique needs to consider. Interlink has also created a helpful Microsoft 365 Enterprise Licensing Sheet, which breaks down what is included in the 365 Enterprise Suites.

Answer # 2 #

Most organisations are used to buying licences through the Microsoft Enterprise Agreement (EA) route. But there are also other options, including the relatively new Microsoft Cloud Solution Provider (CSP).

Microsoft license resellers and Microsoft CSP partners, if they haven't yet approached you with CSP offers, surely will. Some will be pitching CSP versus EA, and they will come prepared. Will you be prepared too?

Are you prepared to face the question, "How do EA and CSP compare? And what does it mean for me?"

Don't worry. We got you covered. Bookmark this page and come back when you need it. It's a live article.

Table 1. EA vs CSP

Certainly not. The two agreements are too different for CSP to simply replace EA. Their fundamental principles, economics, and even software licensing terms are different. You must consider all of it when you are forced to switch to CSP or decide to do it voluntarily.

It may be pitched to you as a viable alternative to EA, and for many organisations, it may be. The question is whether it's right for you.

EA has volume discounts. CSP program does not, and getting a reasonable discount when you have over 2400 users (EA Level A/B threshold) may be challenging.

EA has a fixed term and price protection during the term. CSP program does not have similar price protection, but when you add licences to an existing annual or 3-year subscription, you add them at the initial price.

EA requires you to commit to "standardising" all users and computers, demanding you to stick to one set of products for every user or device regardless of alternatives. The CSP program does not require that; it's flexible.

EA locks you in for three years; you can renew it after that. In CSP, you have a mix of monthly, annual, and 3-year subscriptions that start and end at different times. It's an entirely different challenge for SAM and license managers.

As you can already see, CSP is not the new EA, not by a mile.

The need for flexibility and cost management is probably the main driving factor to consider CSP if not to replace Microsoft EA entirely but at least to augment it.

While EA always lasts at least three years, in CSP, you have a choice of shorter-term subscriptions: one month and one year. If you need "elasticity" in your numbers, you may, for example, procure CSP licences on top of your "stable" EA quantities. Please pay attention, though, and consult with an expert on whether EA allows using non-EA licences for a particular product. It's not always permitted.

But as we are discussing cost management, please remember that monthly subscriptions have no price protection. They are also 20% more expensive than annual subscriptions. So use them wisely. Sometimes you may be better off reserving additional EA quantities.

Also, be vary of 3-year CSP subscriptions. While they offer price protection, they have a significant drawback. Unlike in EA, annual right-sizing (reduction of licenses) is not permitted. Plus, they have no spread payments. You pay 100% upfront.

One of the CSP program's most significant advantages is the value-added services available in addition to licensing. Strictly speaking, that is the main idea of CSP – to switch your mindset from "what licenses do I need" to "what services will help me run my business".

And Microsoft did a good job. Very few end clients like you research CSP. It is "taken care of" by your trusted outsourcer – Cloud Solution Provider. It becomes pronounced if you look at Google search trends. EA still outperforms CSP on licensing queries. In fact, I should feel lucky that you have even discovered this article.

But scepticism aside, if executed properly, it's a win-win-win. Microsoft gets less headache selling and supporting licences. They also move the first line of defence against requests for discounts to their partners. Let the partners deal with negotiations!

Microsoft CSP Partners get a direct "value-added truster outsourcer" relationship with the client (with you). That kind of relationship tends to be more long-term than old-school license reselling. You know, "support", "looking after", "tailored services", and all that jazz and cuddly feelings.

And there's even a win for you. If you are comfortable with the price-per-value of your CSP partner's services, your license management headache is on them now. If they do their job right, you have one less complication to worry about.

Announcing the death of Microsoft EA may be too preliminary, even though such rumours have been circulating starting circa 2010.

The only thing that has happened since then was the increase of the entry barrier to an EA from 250 to 500 qualified users. The industry expectations and rumours that the barrier will be raised to 1100 or even 2400 users haven't materialised. We can make no promises, however, as we are not Microsoft.

So, for the time being, EA is here to stay.

But there is a trend worth watching. Microsoft approaches enterprises with direct Azure cloud services deals that work through the same agreement as Microsoft CSP – Microsoft Customer Agreement (MCA). Signing an MCA opens the door to further CSP expansion into large enterprises. And who knows, one day, they may start offering licenses through the same channel.

Here is when CSP is right for you, either as a substitute or as an additional option to EA:

If you are a large organisation with over 2400 users and even over 1000, we advise keeping your EA. Here is when EA is right for you:

Marek Obedzinski
Sound Technician