1. Introduction to the CSP program

The Microsoft Cloud Solution Provider (CSP) program is one of the three pillars of the Microsoft Customer Agreement, along with the Microsoft Direct Motion (MCA-E) and the self-service motion. Also called “MCA via partners”, the CSP model is a key component of Microsoft’s licensing ecosystem, designed to enable businesses to purchase, manage, and optimize Microsoft cloud products through trusted and registered Microsoft Partners. This program provides flexible billing options, scalability, and access to cloud-based Microsoft services such as Microsoft 365, Azure, and Dynamics 365. Through CSP, organizations can leverage a cloud-first strategy, benefit from consumption-based pricing, and tailor their solutions with support from their CSP partner.

The role of CSP in Microsoft’s licensing ecosystem

CSP plays a critical role in delivering Microsoft cloud solutions to businesses of all sizes, from small startups to large enterprises. Unlike traditional volume licensing programs, CSP offers a more dynamic approach to licensing, where customers can scale their usage up or down based on their evolving needs. As a cloud-based licensing model, CSP aligns with Microsoft’s broader push for businesses to migrate to and leverage cloud technologies. The CSP model also serves as a bridge between Microsoft’s products and the expertise of partners who help manage and support these services.

CSP vs. other licensing models

While CSP offers distinct advantages, it’s important to understand how it compares to Microsoft’s other licensing programs:

• Enterprise Agreement (EA): The EA program is designed for large organizations with a need for standardized licensing across a wide range of Microsoft products. It offers multi-year commitments and volume-based pricing but lacks the flexibility of CSP when it comes to cloud and subscription-based services. EAs are typically more suited for organizations with predictable, large scale on-premises and cloud needs, as well as for customers who require specific amendments to their contract. If you are in the process of deciding between the Enterprise Agreement and CSP, read our blog here.
• MCA-E (Microsoft Customer Agreement for Enterprise): MCA-E is a more streamlined licensing option for large enterprises with complex cloud and on-premises needs. Unlike the EA, MCA-E offers more flexibility with a focus on cloud consumption and pay-as-you-go pricing. It allows for simplified management and consolidated billing across services but requires direct engagement with Microsoft. This program is more suitable for enterprises looking for more control over their licensing while still leveraging Microsoft’s cloud services. MCA-E is intended to be the successor to the EA program and aligns more closely with the CSP program in its purchasing models.

Benefits of the CSP model for businesses

The CSP program is designed with flexibility and scalability at its core, offering businesses several distinct advantages:

Flexibility in licensing

With CSP, businesses can select from monthly or annual billing (or in some cases even tri-annual) options, allowing them to adapt licenses based on usage. Unlike traditional licensing models, this flexibility means you only pay for what you use, whether you need a few licenses or hundreds. You can also mix and match these different term-based models.

Scalability

As your business grows or your cloud needs change, CSP makes it easy to adjust your licenses. Whether you’re expanding to new teams or scaling up your Azure infrastructure, CSP provides seamless scalability. Adjusting licenses is done in line with their procurement terms. For example, monthly licenses can be scaled down on a monthly basis, while annual licenses only provide the option to scale down once per year. Scaling up, however, is more flexible and can be done at any time. It can also be aligned with the original order’s payment terms—unless you prefer otherwise.

Tailored support and expertise

When working with a CSP partner, businesses gain access to expert guidance and support. CSP partners are often able to help optimize cloud deployments, troubleshoot issues, and provide personalized services to help organizations make the most of their Microsoft cloud investment. For instance, partners often provide their own purchasing experiences for end customers. This typically includes portals to manage your licenses, access detailed invoice information, and handle related tasks.

Consumption-based pricing

In CSP, many services are billed based on actual consumption, such as with Azure. This helps businesses save money by only paying for the resources they use, rather than committing to a fixed number of licenses upfront. Consumption-based pricing is expected to grow in other areas as well, with self-service models for Power Platform and Copilot already available in certain markets.

2. Types of Microsoft licenses available through CSP

The Microsoft Cloud Solution Provider (CSP) program provides a wide range of Microsoft products and services to businesses of all sizes. Here are the key types of licenses available through CSP:

1. Microsoft 365 (Office 365, EMS, Windows 11)

Microsoft 365 offers businesses a comprehensive suite of productivity tools. The CSP model provides access to various Microsoft 365 plans, for example popular services such as Office 365 (Word, Excel, PowerPoint, etc.), Enterprise Mobility + Security (EMS), and Windows 11. These licenses are flexible, allowing businesses to scale as needed and choose the right combination of services based on their organizational needs.

• Office 365: Cloud-based productivity apps for email, collaboration, file sharing, and more.
• Enterprise Mobility + Security (EMS): Security and management tools to protect company data across devices.
• Windows 11: Licenses for the latest operating systems, enabling secure and flexible work environments.

Other Microsoft 365 products and services available through CSP
In addition to the major product suites mentioned above, the CSP program also offers many other Microsoft products and services, for example:

• Microsoft Intune: A cloud-based service for managing and securing mobile devices and apps.
• Power BI: A business analytics tool that helps organizations make informed decisions by providing interactive data visualizations.
• Microsoft Teams: A collaboration platform for chat, video conferencing, and file sharing.
• Microsoft Defender: Security tools for protecting endpoints, identity, and data.

2. Microsoft Azure

Azure, Microsoft’s cloud computing platform, is available through CSP in various subscription models, allowing businesses to take advantage of the scalability and flexibility of the cloud. CSPs offer a range of Azure services, including virtual machines, storage, networking, databases, and artificial intelligence, which can be customized to meet specific business needs. Subscriptions can be scaled up or down depending on usage, and businesses only pay for what they use, making it an efficient option for cloud computing.

3. Dynamics 365

Dynamics 365 is Microsoft’s suite of enterprise resource planning (ERP) and customer relationship management (CRM) applications. Through the CSP program, businesses can access individual Dynamics 365 apps for areas such as sales, customer service, finance, and operations. CSP provides flexible subscription-based licenses for businesses looking to optimize their workflows and customer engagement with a cloud-based solution.

4. On-premises/Server Subscriptions in CSP

While CSP is primarily known for its cloud-based solutions, it also offers on-premises and server subscriptions. This allows businesses to access perpetual software licenses for products such as Windows Server, SQL Server, and other server-related tools via subscription models. These server licenses can be consumed on-premises while benefiting from the flexibility and payment options of a subscription-based model, providing businesses with the opportunity to manage their on-premises infrastructure in a cloud-oriented environment.

5. On-premises perpetual licenses without Software Assurance

As the successor to the Open License Program, Microsoft has introduced the option to purchase perpetual software without Software Assurance through the CSP program. This model supports many of the most popular on-premises software solutions, including Office suites and the Server portfolio.

These products and services available through CSP allow businesses to choose a mix of solutions that best support their unique needs, with the flexibility to scale as their operations grow or change.

3. Key features of CSP licensing

The Microsoft Cloud Solution Provider (CSP) program offers several key features that make it a flexible and attractive licensing option for businesses of all sizes. Below are some of the standout features of CSP licensing:

Monthly vs. annual billing options

CSP provides businesses with the flexibility to choose between monthly or annual billing for their Microsoft products and services. Monthly billing allows for more frequent payment cycles, ideal for businesses with fluctuating needs or cash flow. Annual billing, on the other hand, offers cost savings by committing to a longer-term contract, which can be beneficial for businesses with predictable usage over the year. This flexibility ensures that companies can tailor their licensing models to fit their budget and operational requirements.

Pay-as-you-go Azure billing

One of the major advantages of CSP is its pay-as-you-go billing for Azure services. Instead of committing to large upfront commitments or annual subscriptions, businesses only pay for the Azure resources they actually use, which allows for better cost management and scalability. Whether it’s virtual machines, storage, or databases, pay-as-you-go billing ensures that companies aren’t overpaying for resources they don’t need, and can adjust their usage as needed without being locked into fixed contracts. This is an attractive offer for customers that struggle with an Azure Monetary Commitment (MACC) from Microsoft.

Ability to scale licenses up/down (based on business needs)

CSP’s flexibility extends to the ability to scale licenses up or down based on business needs. As businesses grow, they can easily add more licenses, users, or subscriptions to accommodate increased demand. Conversely, during periods of reduced usage, businesses can scale down their licenses, which helps them manage costs effectively. This scalability makes CSP ideal for businesses that experience fluctuating usage or are in the process of transitioning to cloud-based services. We always advise our customers to use the CSP monthly billing option for the flexible layer in their company (highly fluctuating workforce).

Partner support and value-added services

CSP partners provide dedicated support and value-added services to help businesses get the most out of their Microsoft licenses. These services can include implementation, customization, migration support, security services, and ongoing technical support. CSP partners work closely with customers to ensure they are using the right licenses for their needs, optimizing costs, and addressing any technical challenges that may arise. This level of personalized service is a key differentiator for the CSP model, helping businesses optimize their Microsoft solutions with expert guidance.

These features make the CSP licensing model one of the most adaptable and cost-efficient ways for businesses to manage their Microsoft products and services while ensuring they have the support and flexibility needed to grow and thrive in today’s digital landscape.

4. Licensing models in CSP

The Microsoft Cloud Solution Provider (CSP) program offers a variety of licensing models, each designed to cater to different business needs. These models are flexible and allow organizations to choose the best fit based on their usage patterns, whether that’s user-driven, consumption-based, device-specific, or on-premises. Below are the key licensing models available through CSP:

1. User-based licensing (e.g., Microsoft 365, Dynamics 365)

User-based licensing is the most common model for cloud productivity tools such as Microsoft 365 and Dynamics 365. Under this model, businesses are charged based on the number of users who will have access to the software. This model is ideal for organizations that need to provide cloud services to a specific, defined group of users, such as employees or contractors. Examples include:

• Microsoft 365 Business and Enterprise plans
• Dynamics 365 (e.g., Customer Service, Sales, and Marketing plans)

2. Consumption-based licensing (e.g., Azure)

Consumption-based licensing is commonly used for services like Microsoft Azure, where businesses pay based on their actual usage of cloud resources. This model is suitable for organizations that have variable or fluctuating cloud workloads, as costs are tied directly to resource consumption, such as virtual machines, storage, and networking. This pay-as-you-go model provides flexibility, especially for businesses scaling their cloud environments up or down.

• Examples: Azure virtual machines, storage, networking, and other cloud services.

3. Device-based licensing (e.g., specific Microsoft 365 SKUs)

Device-based licensing applies to scenarios where software is licensed based on the number of devices rather than users. This model is useful for organizations that need to provide access to applications on shared devices or multiple devices per user. Examples include:

• Microsoft 365 Apps for Enterprise (device-based licenses for kiosks, shared devices, or shift workers)
• Specific Dynamics services

4. On-premises licensing

On-premises licenses through CSP allow organizations to purchase traditional Microsoft software, such as Windows Server or SQL Server, but with the added flexibility of CSP’s billing and management capabilities. This model is ideal for businesses still maintaining on-premises environments while looking for a cloud-centric solution to manage licenses, updates, and deployments. On-premises licensing options can be integrated with cloud services to create hybrid environments that combine both on-prem and cloud resources.

• Examples: Windows Server, SQL Server, and other server-based products.

5. CSP direct vs. indirect models

The Microsoft Cloud Solution Provider (CSP) program offers two distinct models for organizations to access Microsoft’s cloud products and services: CSP Direct and CSP Indirect. Understanding the differences between these models is crucial for choosing the best path for your organization’s needs.

Definitions and differences CSP direct vs indirect

CSP Direct (direct bill)

In the CSP Direct model, the partner is responsible for directly billing and managing the relationship with the customer. Direct CSP partners work closely with Microsoft and have direct access to Microsoft’s tools, support, and services. They handle the entire process, from customer acquisition and licensing to billing and support. This model is ideal for larger organizations or partners with technical expertise who want to offer tailored solutions and take full responsibility for the customer lifecycle. This way you are buying from what is called a Tier 1 CSP partner.

CSP Indirect (indirect reseller)

The CSP Indirect model involves working through an intermediary, known as an Indirect Provider or Distributor, who acts as a middleman between Microsoft and the reseller. Indirect resellers purchase licenses from the Indirect Provider, who handles the billing, support, and logistics. The Indirect model is ideal for smaller businesses or resellers that may not have the resources to manage direct billing or large-scale Microsoft cloud deployments. It offers access to Microsoft cloud services without the need to establish a direct relationship with Microsoft. This way you are buying from what is called a Tier 2 CSP partner. A Tier 2 CSP partner buys from a distributor who has the relationship with Microsoft. The distributor is responsible for any support to you as their (indirect) customer.

Responsibilities of direct CSP partners vs. indirect resellers

Direct CSP Partners

• Billing & payment: Direct CSP partners handle all billing directly with Microsoft and the customer and act as the only intermediary.
• Customer support: Direct partners provide end-to-end support, including technical support, deployment, and troubleshooting.
• Licensing & sales: Direct partners have control over sales and license management, allowing them to offer tailored solutions to meet specific customer needs.
• Reporting: Direct partners have access to comprehensive data and analytics to help manage customer accounts effectively.

Indirect Resellers

• Sales & customer engagement: Indirect resellers work with the Indirect Provider to purchase licenses, but they are still responsible for customer sales and relationship management.
• Billing & payment: The Indirect Provider handles billing to the reseller, and the reseller then passes the charges on to the customer. Resellers may also handle their own invoices.
• Support: While resellers provide front-line customer support, they rely on the Indirect Provider for back-end technical support and assistance with troubleshooting issues.
• Flexibility & resources: Indirect resellers benefit from the Indirect Provider’s resources, including marketing materials, training, and specialized services, without the need to manage the operational complexities themselves.

6. Licensing Management in CSP

• Using the Partner Center or Reseller Portal: CSP customers manage licenses through a reseller’s portal, where they can access all their subscription details, billing information, and support resources. This is usually developed by the CSP partner (direct or indirect).
• Adding, modifying, and cancelling licenses: Licenses can be added or modified directly through these created portals, allowing businesses to scale their usage up or down based on changing needs. Cancelling licenses is also straightforward, ensuring flexibility in managing subscriptions.
• Tracking usage and managing subscriptions: The portal (usually) provides tools to monitor consumption and track usage across subscriptions, making it easier to manage costs. Businesses can stay on top of their usage and ensure compliance with their licensing agreements. Additionally, they can find all their invoice information here and download the Microsoft Customer Agreement that they signed with the CSP Partner.

7. Microsoft NCE (New Commerce Experience) in CSP

The CSP model has been around for a while. In 2023, Microsoft introduced significant updates to the CSP model by transitioning all customers to the New Commerce Experience (NCE) model. This updated framework enhances the CSP model by providing improved customer experiences and serves as the foundation for the broader Microsoft Customer Agreement (MCA) contract.

Overview of NCE and how it affects CSP licensing

The New Commerce Experience (NCE) is a Microsoft initiative designed to streamline and simplify the way customers purchase and manage Microsoft cloud services. NCE introduces a more consistent and predictable process for purchasing licenses across different Microsoft offerings, including Microsoft 365, Dynamics 365, and Azure. It affects CSP licensing by providing a unified platform for managing subscriptions and offering new pricing models, all aimed at enhancing flexibility, visibility, and control for both customers and partners.

Key features and differences from Legacy CSP

The NCE introduces several key features that differ from the legacy CSP model. It offers a more standardized approach to licensing, with a clearer, more consistent pricing structure across Microsoft products and services. The NCE also consolidates various purchasing channels into a single platform, improving the overall purchasing experience.

One of the most significant differences is the introduction of new subscription options, including the ability to lock in pricing for longer-term commitments, offering more stability for customers. Additionally, the NCE provides more detailed usage insights and better reporting capabilities compared to the legacy model.

One drawback of this transition was Microsoft’s decision to increase the price of monthly subscriptions in the CSP program by 15%, while maintaining legacy CSP pricing for annual-term licenses. As a result, customers accustomed to flexible monthly subscriptions were faced with a difficult choice: lock in a longer-term agreement or pay a higher premium in the NCE model.

Flexible terms in CSP (monthly, annual, or multi-year commitments)

NCE gives businesses the flexibility to choose from various contract terms, including monthly, annual, or multi-year commitments. The monthly commitment option allows businesses to scale licenses up or down quickly, making it ideal for organizations with fluctuating or short-term needs. On the other hand, the annual or multi-year commitments offer more predictable pricing, which can be beneficial for businesses seeking stability and longer-term cost savings. This flexibility allows organizations to select a payment structure that best suits their financial strategy and operational needs.

Cancellation and subscription change policies

The NCE introduces updated cancellation and subscription change policies that differ from legacy CSP terms. With NCE, customers are required to commit to a minimum subscription term (e.g., annual or multi-year), and early cancellations are no longer possible. You have 7 days to cancel if you order for a specific term, otherwise you are stuck for that term. Additionally, changes to subscriptions, such as increasing or reducing licenses, are subject to specific rules and timeframes, requiring businesses to make changes within defined windows to avoid overpaying or even worse, service interruptions. However, the NCE allows for greater control and flexibility in terms of adding or removing licenses within those terms, improving overall subscription management.

8. Licensing CSP for different scenarios

Small and medium-sized businesses (SMBs)

CSP is ideal for SMBs due to its flexibility and scalability. With monthly billing and no long-term commitments, SMBs can adjust licenses based on their needs, making it cost-effective and manageable for growing businesses.

Enterprise organizations

CSP offers large enterprises flexibility for cloud and hybrid environments. It provides scalability, monthly billing, and short-term commitments, making it a great option for businesses with dynamic or evolving technological needs. Whereas the EA or MCA-E might align better for longer term commitments, the CSP model is still a valid option for a flexible licensing construct.

Government organizations

The CSP program is designed to support government organizations (available only in the US) with flexible pricing and compliance features. It offers tailored solutions, discounts, and centralized management to help optimize costs and meet regulatory requirements. However, it’s important to note that if your government operates under a framework agreement, CSP licenses are typically not included. Framework agreements are usually tied to Enterprise Agreement (EA) contracts and are not connected to the CSP model.

Education sector

CSP offers special pricing for educational institutions, making it easier to deploy Microsoft solutions like Microsoft 365 and Azure. With flexible billing and scalable licenses, educational institutions can manage costs while benefiting from cloud services.

Non-profit organizations

Non-profit organizations benefit significantly from reduced Microsoft rates (not based on contract type). Non-profits can acquire non-profit licenses through a CSP partner as well with the non-profit status and receive discounted pricing and flexible terms tailored to their unique needs. Non-profit organizations can leverage solutions like Microsoft 365 and Azure to support operations while keeping costs manageable. One benefit of CSP for non-profits is the ability to scale licenses as the needs change, offering both affordability and adaptability to support their mission-driven initiatives.

9. Cloud licensing compliance and governance

While you might assume that using the Microsoft Cloud ensures compliance, this is far from the truth. Even under the CSP model, you can still be audited—and for good reason. Consider these examples:

• Azure Hybrid Benefit misuse: Licensing all your Azure VMs with Azure Hybrid Benefit without purchasing the correct supporting licenses.
• Unlicensed Defender Products: Activating a Microsoft 365 Defender product without ensuring all users in the tenant have the required licenses.
• Power Platform Self-Service: Allowing self-service license issuance in Power Platform without monitoring or managing who is issuing the licenses.

These are only a few scenarios out of many, but they highlight how easily you can unintentionally fall out of compliance. And of course, Microsoft takes compliance breaches seriously, so it’s crucial to stay vigilant.

Understanding licensing audits in CSP

Licensing audits ensure that organizations comply with Microsoft’s licensing terms. CSP partners may conduct regular audits to confirm that licenses are used correctly. Understanding the Microsoft audit process, including how Microsoft verifies usage and assigns licenses, is essential to avoid penalties.

Managing and optimizing compliance

To stay compliant, businesses must track license usage and ensure proper allocation. Regularly review subscription details, monitor consumption, and adjust as needed. Using reseller portals can help an organization stay on top of their licensing status. When purchasing through a partner in the CSP program, you remain fully accountable for ensuring that the licenses are used in accordance with Microsoft’s intended purposes and that you adhere to all licensing rules.

Best practices for avoiding over- or under-licensing

• Regularly review license usage to avoid paying for unused licenses.
• Optimize licensing by scaling up or down based on actual needs.
• Work closely with CSP partners to ensure accurate licensing configurations and avoid compliance issues.
• Document and regularly assess your cloud assets and services to prevent unnecessary costs or compliance risks.

10. CSP licensing cost optimization strategies

Cost optimization is our bread and butter, and we can write books on this topic. Below are only a few of our recommendations to keep in mind when purchasing in CSP. Also make sure to check out our other blogs that describe optimization tips in more detail. Want to discuss your specific case (no obligation)? Feel free to reach out to us!

Leveraging Reserved Instances in Azure for cost savings

Azure Reserved Instances allow businesses to commit to a one- or three-year term for virtual machine usage, offering significant cost savings compared to pay-as-you-go rates. By accurately predicting long-term workloads, organizations can lower their overall cloud spend.

Rightsizing and reducing unused licenses

Regularly assess your environment to ensure you’re only paying for the resources you need. Rightsizing your cloud resources by reducing underused virtual machines and adjusting software licenses based on actual usage helps eliminate unnecessary costs. Removing unused licenses or scaling down resources can lead to substantial savings.

Benefits of multi-year discounts and commitment plans

Microsoft CSP partners offer multi-year discounts for long-term commitments. By committing to multi-year contracts for products like Dynamics 365 or M365, businesses can benefit from lower rates and better pricing stability, optimizing licensing costs over the long term.

11. CSP in Hybrid Environments

Combining CSP with on-premises licensing (e.g., Server and Cloud Enrollment)

In hybrid environments, businesses can combine CSP with on-premises licensing solutions like a Server and Cloud Enrollment (SCE). This approach allows organizations to maintain their on-premises infrastructure while adopting cloud services for greater flexibility. CSP can handle cloud-based licenses, such as Microsoft 365 and Azure, while the SCE helps manage on-premises software, ensuring a unified and cost-effective licensing strategy.

Supporting Hybrid Cloud Strategies with CSP

CSP enables organizations to manage both cloud and on-premises resources seamlessly. By using CSP for cloud-based licenses and integrating it with on-premises licensing solutions, businesses can create a hybrid cloud model that optimizes both infrastructure and cloud spending. CSP provides scalability, flexibility, and cost optimization for businesses transitioning or operating in a hybrid IT environment.

CSP-Hoster Program

The CSP-Hoster program allows service providers to offer Microsoft on-premises subscriptions to their customers while maintaining control over the billing and subscription management. This program is tailored for businesses that host datacenters for others, providing them with the ability to resell Microsoft cloud solutions under their own brand. It’s a different model to SPLA (see below) and can be quite expensive. It’s an option worth pursuing if you don’t own a large datacenter and require some resources that you can’t get in Azure (for instance if you have data sovereignty requirements).

How CSP-Hoster differs from SPLA

SPLA is the old model for hosting providers offering software to end customers in a hosted environment, whereas CSP-Hoster is a newer offering for service providers reselling Microsoft’s software. CSP-Hoster provides more flexibility with cloud-native solutions, while SPLA is more suited for traditional hosting of on-premises software. Currently, the SPLA model offers a cost advantage for monthly subscriptions, but this benefit may not last. Microsoft appears to be shifting its focus toward the CSP-Hoster model, with the expectation that SPLA may eventually be killed off. For now, however, both models coexist and can be used to license outsourcing scenarios.

12. CSP partner selection

Choosing the right CSP partner for your organization

Selecting the right CSP partner is crucial to ensure a smooth and effective cloud transition. The right partner should align with your business goals, technical needs, and scalability requirements. When evaluating a CSP partner, consider their experience with Microsoft solutions, industry expertise, and ability to scale with your business growth. It’s important to choose a partner who understands your unique requirements and can provide tailored (licensing) solutions. Also consider if they are up to providing the level of support you need. Your partner is your first point of contact for license-related issues and should provide reliable support, ensuring you feel confident in resolving any challenges. Additionally, you need to benchmark the pricing offered by your partner. Since they can add a margin to their buy-price, effective negotiation is essential to secure the best value for your licenses.

Evaluating value-added services, expertise and support

A good CSP partner doesn’t just offer licenses; they should also provide value-added services that help you optimize your Microsoft solutions. Look for partners with a proven track record in offering support services such as technical guidance, cost optimization, and ongoing licensing management. Assess their level of expertise in cloud solutions and whether they can help you with migration, compliance, and governance. Additionally, consider their customer support capabilities, ensuring they offer responsive, knowledgeable assistance when you need it.

13. Licensing tools and resources

LicenseQ Hub

This tool offers customers deep insights into the actual usage of their granted subscriptions. By analyzing consumption patterns and usage trends, LicenseQ Hub helps organizations optimize their licensing strategies, identify underutilized resources, and ensure cost efficiency. It complements other tools by focusing on actionable insights derived from real usage data.

Microsoft licensing calculators

Microsoft provides a variety of licensing calculators that help businesses estimate costs and determine the most suitable licensing options. These tools allow organizations to input their specific requirements, such as the number of users or subscriptions, and receive cost estimates for different Microsoft products and services. They can be particularly useful for making informed decisions and understanding the financial impact of different licensing models.

Partner Center and Azure Cost Management Tools

The Partner Center is a key resource for CSP partners to manage customer subscriptions, billing and licensing. It provides an interface for tracking usage, adjusting licenses and handling renewals. This is a partner facing resource, so end customers should check if they provide these details through their client facing portals as well. If we look specifically at Azure, the Azure Cost Management tool is another valuable tool that helps businesses monitor and optimize their Azure usage. It provides insights into spending patterns, usage trends, and potential cost-saving opportunities, ensuring that businesses can manage their cloud resources effectively and stay within budget.

Resources for staying updated on licensing changes

Microsoft regularly updates its licensing policies and pricing. Staying informed of these changes is essential to ensure compliance and cost-effectiveness. Microsoft’s official licensing website, newsletters, blogs, and updates that your partner receives through Partner Center are great resources for keeping up to date with new offerings, changes to existing programs, and updates related to the New Commerce Experience (NCE). With our monthly Licensing Update, you’ll always stay well-informed. Sign up now and receive the update in your inbox every month for free!

Finally, note that most product-specific language can be found on the Microsoft Product Terms page. These terms also apply to your CSP licenses – just be sure to select MCA as your licensing program on the Product Terms page to view the relevant details.

FAQs

1. What is the Microsoft Cloud Solution Provider (CSP) program?

The CSP program allows businesses to purchase Microsoft cloud services, such as Microsoft 365, Azure, and Dynamics 365, through certified CSP partners. It offers flexibility with monthly or annual billing, scalability, and value-added services from partners.

2. How does CSP licensing differ from the Enterprise Agreement (EA)?

While EA is designed for larger organizations with predictable licensing needs and multi-year commitments, CSP provides more flexibility, allowing businesses to adjust licenses monthly and access cloud-focused services without upfront commitments.

3. What licensing models are available in CSP?

The CSP program supports:

• User-based licensing (e.g., Microsoft 365)
• Consumption-based licensing (e.g., Azure)
• Device-based licensing (e.g., Microsoft 365 for shared devices)
• On-premises/server subscriptions
• On-premises perpetual licenses (without Software Assurance)

4. Can I combine CSP with on-premises licensing?

Yes, CSP supports hybrid environments by allowing businesses to integrate with on-premises licenses, such as through a Server and Cloud Enrollment (SCE), enabling seamless cloud and on-premises operations. Or by finding a CSP-Hoster to help you with offering outsourced environments.

5. What is the New Commerce Experience (NCE), and how does it affect CSP?

The NCE introduces new subscription terms (monthly, annual, and multi-year commitments) with different pricing tiers. It also includes stricter cancellation policies, offering discounts for longer commitments while maintaining flexibility for short-term needs.

The NCE introduces new subscription terms (monthly, annual and multi-year commitments) with different pricing per subscription term. The monthly subscriptions are 15% more expensive than annual subscriptions. Additionally, annual subscriptions billed on a monthly basis are priced 5% higher than those paid upfront for the full year.

Make sure you understand these pricing models. The CSP program also includes stricter cancellation policies (needs to be cancelled within 7 days of the order), and offers discounts for longer commitments while maintaining flexibility for short-term needs.

6. How can I optimize costs in CSP?

Cost optimization strategies include:

• Leveraging reserved instances for Azure.
• Rightsizing subscriptions to match actual usage.
• Reducing unused licenses.
• Taking advantage of multi-year discounts and commitment plans (currently only available for select Dynamics products or for cloud subscriptions in certain regions, such as Asia, but not yet widely available elsewhere).

7. What is the CSP-Hoster Program?

The CSP-Hoster program allows certified CSP partners to offer hosting services for Microsoft products, similar to the SPLA program but with cloud-specific features for outsources. It supports scenarios like VDI and Windows Server hosting.

8. What tools are available to manage CSP licenses?

For example, our LicenseQ Hub tool. This innovative tool helps businesses gain real insights into their actual usage of granted subscriptions. By analyzing usage patterns, it identifies underutilized resources and highlights opportunities to optimize costs, ensuring that organizations get the most value from their licensing investments.

9. How do I choose the right CSP partner?

Selecting a CSP partner involves evaluating their expertise, value-added services, technical support, and ability to customize solutions to your organization’s needs. Look for a partner who can provide proactive advice, compliance guidance, and ongoing optimization.

10. I want to switch to another CSP partner during my current subscription. Is this possible?

Depending on the terms and conditions agreed upon with their partner, customers can switch from one CSP partner to another. This transition is not limited to the subscription end date; it can also be done mid-term. The transfer process typically takes up to 72 hours to complete. In practice, we see many partners don’t adhere to this and block the transfers. Read more here. If you find yourself in this situation, reach out to hear how we can help!

11. What are the different duration and billing options for CSP licenses?

While Azure consumption is always billed at the end of each month, Cloud Subscriptions offer various flexibility options. Subscriptions can be purchased on a monthly or annual basis. Additionally, for certain Dynamics subscriptions, a three-year option is available. The table below provides an overview of these options for easy comparison.

12. I have multiple end dates for my different CSP Subscriptions. Is there a way to align these?

In the New Commerce Experience, partners can align subscription end dates (coterminosity) to streamline billing and management. This feature allows new or renewed subscriptions to share the same term end date as existing ones and can be managed via Partner Center or APIs. Coterminosity applies to license-based subscriptions and follows specific rules, such as restrictions on aligning different term lengths.