The year was 2008, the stock market crashed, the world was crazy, but there’s a silver lining to every sticky situation. In 2008 my son, SPLA Man Junior, was born. It was also the year SPLA started to change. Acquisitions were happening, data centers began to scale and expand into different regions, hosters were signing multiple agreements in multiple countries, AWS and Azure were getting started, and the world became right again. Nowadays, SPLA Man Junior is catching on real quick that he wants nothing to do with SPLA (smart boy). The world is once again in turmoil, and now SPLA organizations face another challenge that could jeopardize their business. Where they signed, the SPLA agreement mattered.
Don’t be Joe
Let me provide an example, Joe Hosting is located in the Netherlands but has a small datacenter located in the USA. Joe decided to sign his SPLA agreement in the USA. Not a bad idea; after 2008, the US dollar fell dramatically compared to other regions. The problem with Joe is the small datacenter in the US is not his primary business. As part of SPLA, you should sign your primary business, not where you have a small data center. Unfortunately for Joe, he is out of compliance. The big bad wolf can come knocking, force to sign a new agreement in the country he should have signed years ago, thus increasing his costs, and perhaps add a licensing compliant audit on top of it. Good ol’ Joe is stuck.
The good news? SPLA Man is here. If you find yourself in a pickle like Joe, all is not lost. Any time there’s a dilemma, there could be an opportunity. Maybe now is a good time to look at your datacenter licensing, what areas of your business can be optimized, what licensing can be removed, what technology can be deployed, and finally, be on a transformation road map to success. We can also provide you education regarding your agreement. Our team can certainly assist and offer you options. If you have questions about your SPLA agreement, it’s imperative to understand your potential risk before it becomes a risk. Have a question or want to talk more about your options? Email email@example.com
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As we venture into 2021 (see ya 2020!) I thought I would put together a list of talking points from SPLA providers to Microsoft. The response is from hundreds of calls, meetings, emails, etc., who directly or indirectly (kind of like a SAL 😊) voiced their opinion on SPLA and the feedback they would like to give to Microsoft. If you would like to join the community to receive licensing advice, learn what others are doing, and learn/provide feedback, please email firstname.lastname@example.org. We would love for you to participate. Here are the top 10 questions Microsoft is asking and the hosting community’s response.
- Why not move to Azure? The response was not surprising and certainly repeated throughout the community. It boils down to cost, customer service, and customer needs. Cost: A SPLA provider knows its price in running its datacenter. They made the investments in hardware, know the storage/network costs, etc. Azure is not as simple and can quickly increase (so there’s fear in that). Customer Service: The reality is customers still want local and accessible business partners. They know they can call their local rep and get an answer. Customer needs: In a way, Microsoft is a competitor when it comes to the datacenter. End customers can just as quickly go to Azure themselves or go to an array of CSP partners or MSP providers. Hosting companies want to hold onto their customer base. Some customers want a private cloud. Ironically, as many years SPLA has been in existence, they do not want it to go away. They built their business on SPLA. There is even a petition they would sign if it did go away.
- Why are you with AWS? ISVs moved to AWS didn’t do it because Microsoft was terrible; it just wasn’t available. It takes time to move to the public cloud; many ISVs have been on the journey for quite some time. They started using AWS for platform as a service: to develop applications. Once the application(s) was created, they leverage the same datacenter for hosting. For traditional SPLA (non-ISV), many providers used AWS for infrastructure and continue to do so today. Everyone talks about moving to the cloud; no one talks about moving away. There is also the mindset that AWS is not Microsoft. Using AWS allows them to use another vendor as opposed to putting all their eggs into one basket.
- Why are you so pissed?
- Silly question, but there is a bit of animosity when you look at Microsoft and the SPLA providers’ historical relationship. For one, service providers very rarely spoke to Microsoft. When there is a change, SPLA partners are the last to know. Resellers do not care about SPLA, Microsoft does not (or at least in the past) care about SPLA, the only ones who cared about SPLA were/are the SPLA providers, and this idiot named SPLA Man. Secondly, these price increases. They are upset that pricing continues to go up, especially on the one product they must report: RDS. Let’s face it, in SPLA, there are only three products commonly licensed – RDS, SQL, and Windows. Microsoft raised the pricing on all three throughout the years.
- Why are you reporting Office when there’s Office 365? Service providers state there’s a massive push for desktop as a service and VDI. Again, not all customers want to move to Azure, and it’s easier to package everything under one umbrella. It’s also not compliant to license Office 365 out of their datacenter without QMTH. The second reason has to do with multiplexing. A lot of ISVs have Office as a component in their application. As we all know, you run Excel; Excel must have a license.
- Isn’t licensing getting easier? Not really. Yeah, it’s easier to license a USL than a SAL, but service providers face various challenges when it comes to licensing. They have end customers who want to leverage their existing licenses (including Office 365), the CSP program. However, many indirect providers face challenges with on-premise licensing, cloud licensing, and hybrid. They long for the days of just SPLA and License Mobility.
- Should we discontinue SPLA? This was answered briefly earlier; the short answer is absolutely not. SPLA is not easy to remove, like the Open or EA programs. SPLA provides flexibility. Although the licensing challenges will always be there, at the end of the day, SPLA provides options for everyone. Microsoft gets to have a competitive advantage over public cloud providers such as Google and AWS. With Microsoft, you can have a private cloud (SPLA), public cloud (CSP), or on-premise (volume licensing). It provides options for the customer, and it provides options for the hosters. Why change it?
- Isn’t the Listed Provider use right helping? No. It is making it more challenging. The service providers appreciate you did not extend the Listed Provider restriction for the entire SPLA community, but it does restrict them on their public cloud options.
- Should we remove individual SPLA Resellers? Maybe that’s not a bad idea. Why keep a SPLA Reseller who is not CSP Indirect authorized? Service providers must work with multiple resellers: (1) for CSP Indirect business and (1) for SPLA.
- Should we add partner benefits to SPLA? Service providers would LOVE that. Let SPLA attribute to their cloud competency and give rebates back to the SPLA hoster. SPLA Man does not understand why Microsoft would not do this. Yes, SPLA is a mature program, but provide us (the SPLA hoster) a reason to continue to develop our applications, host our applications, invest in resources, expand our business, and grow our mutual partnership? Yes, you can achieve this through CSP, but there is so much business in the private cloud that Microsoft could and should take advantage of.
Again, if you are a service provider and would like us to help you with your challenges and maybe discuss all the different options available to you, please shoot us an email at email@example.com
Thanks for reading,
Many CSP Direct partners who also have an SPLA agreement have asked if their SPLA usage reporting will go towards the 300k requirement to remain CSP Direct authorized. Unfortunately, they are two separate programs, and one does not affect the other.
The other question we get asked is: Can CSP replace SPLA for Windows, RDS, and SQL? The answer again is no. You are not allowed to host CSP products from your datacenter. You can; however, license CSP products on-premise for your customers or in Azure.
Whenever you license CSP for on-premise deployments, the software will follow the Product Terms, which (A) Prohibits hosting, and (B) Requires CALs. When you deploy in Azure, you can host to third-parties, and there’s no CAL requirement.
What is a service provider to do? If you already invested in a platform, services, and billing systems to enable CSP Direct sales and still feel nervous about achieving the 300k requirement, here’s a quick list of things you may want to consider.
- Microsoft recently discontinued the Open licensing program. In doing so, they added perpetual licensing to the CSP program. Do not think of CSP as a cloud-only solution, rather an opportunity to maybe expand your sales to include on-premise licensing sales. On-premise CSP sales will go towards your 300k number.
- If you are only CSP Direct authorized to have the QMTH addendum, make a cost comparison of running the same solution in Azure versus investing in sales and other activities to reach the 300k mark. Is it worth it, or can you forgo the CSP authorization and use Azure?
- Lower your cost for certain CSP products. You do not make money from the sale of CSP licensing anyway. Stop thinking your Exchange Online price increase is going to grow your bottom line. Lower your cost to win customers and raise it later. You can add services such as migration and cloud support to increase margins. The 300k will not be based on your margin; it is based on Microsoft’s revenue billed.
Those are only suggestions, and a lot of this requires a change in business strategy, not just licensing. Many service providers have asked about the future of SPLA. I recently wrote an article regarding the future of the SPLA program. You can download it here https://mscloudlicensing.com/product/whitepaper/ Some of the proceeds will go towards our charity, Mow Down Cancer, Inc.
Thanks for reading,
I recently wrote a paper that outlines my opinion on SPLA and the future of the program. What is really going on with SPLA? Will Microsoft discontinue the program? If so, why haven’t they done so already? So many questions surrounding the program but in the end, service providers just want a direction. There’s also CSP, Audits, and SPLA FAQ’s to help identify ways to not only be compliant but license the most cost-effective way possible. To download a copy, please go to our sister site Whitepaper – Cloud Licensing (mscloudlicensing.com
There is a small fee but a portion will go directly to our 501C3 Charity – Mow Down Cancer, Inc. Find out more at www.mowdowncancer.org
Thanks for reading,
Many service providers have emailed us asking about an email sent out to partners titled “Microsoft Service Provider License Agreement (SPLA) Review” What is it and what should you do?
As the email states, Microsoft does have the right to verify compliance. This is not an audit, but a quick check up on SPLA partners and their reporting habits. As we all know, Microsoft licensing is not the easiest to navigate, even Microsoft knows this. No one, is 100% compliant all the time, and this is just a way for Microsoft to verify it.
If you did receive this email, the first step is to breathe. Again, its not an audit and no one will shut down your business from Microsoft. What I would recommend is to spend a few minutes with SPLA Man (me) to walk you through the process. I did this the past two days with several hosters. Although no two service providers are the same, the one common theme from the last two days is they all receive zero (I mean zero) help from their SPLA Reseller.
That’s why we are launching a new program to assist service providers with the complexity of licensing and make it easier for you to get answers to your licensing questions and potential risks. Please reach out to us to learn more. Email me directly at firstname.lastname@example.org. If you have a licensing question, go to our sister site http://www.mscloudlicensing.com and leverage our forum.
No worries! A SPLA Review is not an audit 🙂
Thanks for reading,
As if 2020 wasn’t hard enough for service providers and MSPs, Microsoft is making new eligibility requirements for CSP Direct partners starting January, 2021. This was announced to all partners earlier this week.
What are the new eligibility requirements?
New revenue target of 300K (USD) in CSP sales during the preceding twelve months is one of the major changes. CSP partners will need to meet this new requirement at the anniversary date of their support plan. In other words, if you have a support plan coming up for renewal soon and do not meet this requirement, you must put on your selling shoes and get to work or look at other alternatives. Active support plan (Premiere Support as an example) is also another requirement.
I think it is important to understand your options. If you don’t meet the requirements you must move to the CSP Indirect program. If you are close to hitting your 300k in sales, start looking at CSP perpetual licenses as a new revenue stream. Open licensing is going away, maybe perpetual licenses could be an option?
If you are CSP Direct authorized for the QMTH program only, this change will be significant. As part of QMTH, you must be CSP Direct authorized.
If you have questions on how this change will impact you, please email email@example.com
Thanks for reading,
Our goal has always been to build a community of resources to help hosting providers and MSPs with their licensing. Our sister website, http://www.mscloudlicensing will be launching several new resources including our new podcast titled Fireside Chat with SPLA Man starting in November. Hope to see you there!
Thanks for reading,
This has taken over the spot for the #1 asked question by SPLA hosters. (For those curious, SPLA VDI was #1).
To answer this question specifically, the answer is no. There’s no option to license M365/O365/Windows 10/Azure through a SPLA agreement. That doesn’t mean you cannot offer it through other channel programs such as CSP. To understand more about CSP, please visit csplicensing.com
You cannot host M365 from your datacenter without a QMTH addendum or dedicated infrastructure. Word to the wise, do not try to be QMTH authorized without really understanding what it takes to do so. There’s a lot of investment and upfront capital to get the authorization and other metrics to achieve – not the least which being CSP Direct authorized.
To understand the different options and program eligibility, I encourage you to reach out to our team at firstname.lastname@example.org We have helped thousands of SPLA partners with their licensing optimization strategies.
Thanks for reading,
This is a follow up from our original post “Licensing CSP On Premise Products”
SPLA Man has gone mad! How can you sell Microsoft software without SPLA???!!! Sure, if you host the Microsoft software SPLA is still part of the equation, but if you want to sell outside of SPLA, here are a few ideas.
We’ve all heard of CSP, but most of us think of CSP as selling Office 365 or Azure. That’s true, but you can also sell CSP perpetually to your end users. I think this is a pretty big deal for both VAR partners and hosters.
Let’s say you have a customer who needs software for on premise. Maybe its a hospital or government agency who has strict policies against software as a service where they have to buy the licenses, not lease it. In the past, the only way a VAR or SPLA provider can offer their end customer Microsoft volume licensing is by partnering with an authorized reseller and they would be required to bill your end customer directly. Not their rule, but Microsoft. Fast forward to today, you can now buy CSP on premise perpetual software, add your own markup, and sell to your end customer. This is available through the CSP Indirect model which is ideal for partners.
The reason I feel this is important is because it gives you options. You can sell your customer almost the entire Microsoft catalog, offer different deployment options, and control your own margin. You can offer your customer SPLA, Microsoft cloud, on premise, or a combination of everything.
I know I wrote about this before, but I still get asked A LOT about reselling software outside of SPLA.
If you have questions on CSP and how this program can benefit you, please shoot us an email at email@example.com
Thanks for reading,