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Licensing evolution: Is it time to rethink the EA?

Enterprise Software | Posted on August 23, 2018

If you’re like most organizations, your Microsoft Enterprise Agreement (EA) is one of your largest IT expenses. It has likely served you well for years (or decades), providing discounts for standardizing on Microsoft.

But IT environments have evolved and — with the shift to the cloud, and the lifecycle of software solutions and new features — licensing has become more and more complex. Innovation doesn’t occur in three-year cycles. So, it’s time to ask, is an EA still right for you?

That’s the question posed by Luke Black, Softchoice senior manager of Microsoft programs and our cloud lead Jason Cooper in the recent webinar Evaluating Microsoft Enterprise Agreements. The co-hosts looked at whether, given the technology changes and new licensing options available, an EA remains your optimal licensing choice. 

“The EA continues to be a popular solution for many organizations and has been imitated by many software companies who have come since. But the landscape of how organizations license technology is evolving,” Black said.

“Culturally, we are moving to a subscription or consumption economics model, at the organizational level all the way down to individual consumers.”

While an EA may still be the best choice for some organizations, Black stressed it is time to take stock of the pros and cons of the options now available. He pointed to three high-level challenges that legacy licensing models put on organizations:

  • Long-term contracts — A three-year contract (like that in an EA) may deny you the flexibility needed as your business circumstances change.
  • Unused solutions — Packaged solutions that made fiscal sense at the time of purchase may go unused or undeployed as plans change.
  • Support concerns — Support may not meet current business needs, or you may need to invest up-front in premium support contracts that lack flexibility.

Organizations today are, of course, not limited by the choice of simply signing an EA or not. For organizations moving to the cloud, there are three valid approaches to licensing: Pay-As-You-Go, an EA based on a Server Cloud Enrollment (SCE) and the Cloud Solution Provider (CSP) model. Each model lines up with an approach to software purchasing and your specific business needs.

The Pay-As-You-Go model is a credit/debit card-based approach generally used by organizations with relatively small cloud consumption. It’s flexible and supports burst consumption for a month or two, or to try new services.

The SCE model requires an upfront commitment to consuming a minimum amount of Azure services annually. It may seem like a small amount but can lead to concerns around whether it’s right-sized for the organization’s consumption.

The CSP model discussed in the webinar is a pay-as-you-go approach managed by your partner. In the case of Softchoice, this means having full partner support around cloud deployment and management, as well as mentorship and cost optimization to help clients achieve their cloud objectives.

Microsoft developed its Cloud Solution Provider (CSP) partner program to meet the needs of today’s IT environments. It provides organizations with a flexible, cloud subscription model for customers to buy Microsoft cloud solutions — such as Office 365 and Azure — with full partner support. A modern licensing platform must be built with the cloud in mind, Black noted. And that underlying platform must be connected and seamless. (Which Microsoft has done.)

Engaging a CSP partner helps to overcome one of the most significant challenges with moving to the cloud: uncertainty.

“One characteristic of procuring, implementing and managing cloud (among many others) is a degree of uncertainty that comes with change,” Cooper said. To counter this, a CSP agreement gives “unprecedented levels of control deploying and fine tuning” Azure and Office 365.

With the concept of volume licensing basically eliminated in a CSP agreement, users are onboarded and offloaded based on business needs, and IT consumption is adjusted to match.

(Watch our video to learn more about the differences between EA and CSP models.)

Organizations looking to operationalize their costs with cloud service flexibility would benefit from investigating moving to a CSP model, Cooper suggests. He said beyond its licensing advantages a CSP agreement can help organizations to:

  • Improved support through a deeper relationship with their partner, as they manage the cloud environment. Softchoice, for example, has onshore experts available 24 x 7 x 365.
  • Gain greater flexibility in their cloud contracts without limits or obligations.
  • Have the comfort of a cloud-like buying model for on-premise software purchases.
  • Find new applications for technology, using short-term cloud subscriptions to test or sandbox proof of concepts.

While an EA model might still be right for your organization, in today’s evolving IT landscape it is no longer a given. A more modern approach to licensing that mirrors the way your organization now consumes IT may be in order. A good CSP partner can help you achieve operational excellence, overcome cloud skills gaps, and better manage cloud costs.

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