The CSP has been around for many years and is designed from a cloud-based/subscription model – you pay for what you use when you use it. CSP offers flexibility that EA does not offer, such as the ability to reduce your number of subscriptions every day, unlike every year on EA. However, CSP has had a difficult period in competition with EA, mainly because better prices are worth it for qualified customers. Alternatively, the customer can sign a purely enterprise online service contract with Microsoft. This option does not require company-wide standardization. Customers must acquire at least 500 Enterprise online service licenses. There are many ways to license and/or subscribe to Microsoft products. The Licensing Solutions Provider or the account employee of a given company may not be well aware of all the options available. However, they are well trained (and motivated by incentives) to encourage customers to increase the cost of licensing.
Make sure you ask Microsoft`s licensing specialists how to better structure licensing for reduced expenses and consider getting impartial expertise to help the sourcing team review the recommendations. Most companies view the renewal of Microsoft EA as a unique event. They provide their smartest IT and sourcing resources to manage EA, but once it`s signed, those resources are actually “out of the woods.” It`s a mistake. Before the ink is dry during an extension, the Microsoft account team is working on the next one. Called “T minus 36” informally (a three-year countdown until the customer is renewed), Microsoft follows a cyclical and successful method to ensure that each customer extends their Microsoft succession and delivers it at the next renewal event. For example, once the EA is purchased/renewed, companies must be ready for the next event – the true-up. Following the true-up is the audit, which has become very often for Microsoft customers. Clients who have not completed an audit in recent times should expect them to be reviewed in the near future. In most cases, this will foster a new round of negotiations that will require a skilful interpretation of the programs and licensing conditions. Of NPI`s total customer base, more than 40% of EA`s extensions take place during Microsoft`s fourth quarter of the fiscal year (April/May/June). This contrasts with Q1, which typically accounts for less than 20% of EA`s extensions.
The result is a lump sum application for licensing and legal resources, a flat-rate risk forecast and a lumpy cash flow. One of the objectives of the transition to subscription licensing is to smooth out this model. As a public company, Microsoft`s mission is to accurately predict revenue. To do this, the company must have a clear overview of its sales pipeline and be able to close purchases and renewals faster and earlier in the quarterly sales cycle. There are a limited number of legal resources and license desks to process these transactions, and it is almost impossible to process paperwork less than two weeks before a calendar year, fiscal year or end of the quarter. Managing these largest volumes in deal volume is a challenge for Microsoft`s operations, and delays in this pipeline can have a domino effect on quarterly and annual revenue, share price and overall market perception. Customers should use the supplier`s desire to prevent purchases and extension periods accordingly. Contrary to popular opinion, Microsoft may be more flexible in negotiations outside of their peak sourcing periods. In 2014, Microsoft launched the Cloud Service Provider (CSP) program to allow the reseller community to sell Microsoft`s online services to the masses.
CSP is currently the only licensing program available that increases and reduces the number of Office 365/Microsoft users 365 per month. Unfortunately, CSP is aimed at small and medium-sized businesses and its pricing is negotiated by Microsoft`s reseller community,