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While many hosting providers might still offer services via the Microsoft Services Provider Licensing Agreement (SPLA), better margins can be made by shifting workloads to Microsoft Azure through the CSP program.

It’s true that revenue and cost models for each cloud solution have differences. Hosting providers often don’t migrate their current customers for fear of reduced profitability as part of the SPLA license model ↗. They don’t want to interrupt current contracts, or consider tracking business too complex.

However, the reality is pretty different. You can find profitable margins for actual customer consumption and productivity in Azure by ensuring correct comparison and deployment. There are also numerous benefits to transacting through the Microsoft CSP program, such as working with an expert partner.

SPLA overview

With Microsoft SPLA, your company can license Microsoft products and leverage those licensed products to deliver hosted applications and software services to your customers.

With SPLA, you become the licensee, but not the customer. You provide software services to your customer base, making Microsoft products run, display, avail or connect with other Microsoft apps. You offer these services from at least one or more data centers through a telephony network, a private network on rent, the internet, services, or a subscription basis, regardless of if you charge a fee. Software services don’t include installing a Microsoft product on any device to allow a customer to engage with the Microsoft product directly.

SPLA licenses also require a Windows Server, meaning the ability to move Microsoft apps to the cloud is contingent on the application.

Differences between SPLA licenses and CSP licenses

Many CSP and hosting partners express concern that the transition to Microsoft Azure can cost them a significant margin. Why? The SPLA license program works on the pay-as-you-go payment model; you only need to pay for software leveraged by end-users. But that doesn’t necessarily mean that SPLA is a better deal. When it comes to SPLA versus CSP subscription licensing, there are some prominent differences.

Extended support with Azure

SPLA license doesn’t provide you the capability of and access to extended support that can enhance the quality of solutions. Azure, on the other hand, offers access to extended support (cloud services), along with the primary benefit of regional resiliency with feature parity when you deploy Azure Cloud Services. Azure also provides ARM capabilities ↗ like role-based access and control, policy, support deployment templates and tags.

SPLA licenses can’t run on Azure (no hybrid benefit)

You can’t run SPLA licenses on Azure. Microsoft defines Azure Hybrid Benefit ↗ as licensing advantages that help you significantly minimize the costs of operating workloads in the cloud. In simple words, it’s a discount program that provides you more value than your SQL Server license or Windows Server.

It’s therefore possible to leverage Azure Hybrid Benefit reduce spending and eradicate redundancy and overlay by receiving only one invoice with your preferred solution, irrespective of hybrid, private or public. It also increases efficiency for end-users, having a single provider to manage their hybrid, private or public IT services and cloud-based solutions by improving response times to emergencies and ensuring continuity of IT services.

Incentives through the CSP program enable providers to be more profitable

Microsoft’s CSP program lets partners completely take ownership of their customer lifecycle, and allows managed service providers and value-added resellers to sell Microsoft Cloud Service and software licenses with extra support, so they can be more involved with your customers. Each cloud-based solution from Azure to Office 365 can be resold to your customers at a value you decide.

The CSP program also provides other incentives such as backing and managing customer subscriptions, whether indirectly or directly. These additional opportunities improve your connections and enable customer engagement, while also enabling greater investment control and boosting profits.

CSP offers more support and security for providers

The CSP program provides enhanced security and support to cloud service providers to sell cloud services by Microsoft to their customers, something you won’t find with SPLA. Providers can also benefit from a focused point of contact for all support requirements and questions, including subscription queries or technical issues.

One of the CSP program’s other tenets is technical support, with the ability to offer round-the-clock, high-level support. You get proactive maintenance, management and monitoring to reduce interruptions and delays due to downtime. With SPLA however, you’re on your own.

SPLA vs. CSP: Additional differences

  • An SPLA license is held by the partner and is not bound to a specific customer
  • The customer holds the CSP license via a Microsoft License Agreement, delivered and invoiced by a partner
  • An SPLA license is on a month-to-month basis and does not require any commitment
  • CSP program participants must commit and pay for 1 or 3 years upfront, but also define the customer price for the license
  • CSP partners can also make the cost of licenses part of a managed service
  • There is no license mobility applicable to SPLA licensing, whereas license mobility is functional for CSP subscriptions


Still need help deciding between SPLA and CSP? An expert partner can help

CSP subscription licensing is a logical step in deploying Azure services. Like all Azure subscriptions, CSP licensing is contracted directly between Microsoft and the end customer. Microsoft takes full responsibility for availability, security and compliance.

Ultimately, CSP licensing helps you transition from an owner of a hosted service to an Azure managed service partner, helping your customer get the best out of the Microsoft Cloud for the best possible price.

Looking for more information on the differences between SPLA and CSP? Reach out to us! Ready to start maximizing the profitability of Microsoft Azure? Join Sherweb’s partner program ↗ and discover the benefits of working with an expert CSP partner.

Written by The Sherweb Team Collaborators @ Sherweb