The CSP Hoster Assessment: Microsoft launched a new initiative to ensure compliance within the CSP Hoster Program. Just because you are not using SPLA does not mean you are immune to compliance risk.
What do you need to do?
The first thing you should do, is take a breath. You will be fine. (maybe) Nah, the world does not end because of an audit, but you do need to prepare. Here is a checklist to ensure what you are doing is accurate. Have a question? email info@splalicensing.com to learn more.
Are you a CSP Hoster? Dumb question, but this is for CSP Hoster only, not the Flexible Virtualization Benefit.
Are you providing the customer with the licenses? Meaning you are not using your own licensing, correct? Remember in the CSP Hoster program, the end customer is the licensee.
When was your last audit? This is important because usually there is a settlement date.
Are you reporting the licenses accurately to Microsoft?
How are you tracking the licenses and deployments? Do you have a way to track SPLA and CSP?
Remember, in any engagement, Microsoft is trying to verify what you are doing is accurate and fits withing the licensing terms. Unfortunately, with hosting, there are several different terms and conditions to adhere to. There’s the SPLA (SPUR) there’s volume licensing (EA’s) and now CSP and Flexible Virtualization. If you are not sure what the rules are, let’s set up some time to review in greater detail. This is a great opportunity to eliminate any risk before it becomes a risk.
In certain markets, Ukraine, Turkey, Iraq, Brazil, India, Poland, and a handful of others SPLA is paused. What does “pause” mean and what impact does this have if I am a hoster in the US or UK?
Well, kind of like an audit. take a breath. SPLA is not dead. In fact, globally, SPLA continues to grow. This pause is for net new hosters who want to sign up in the program. If you are an existing hoster, there’s no impact. You can continue to use SPLA and even renew SPLA with updated terms. I think the bigger question is SPLA moving forward, and what changes do I see happening. To answer that question, let me share an example.
This morning I had the pleasure of speaking to a large hoster in Europe. We discussed SPLA and his thoughts on CSP. He’s an infrastructure provider, mainly hosting Windows, RDS, and a little SQL. Most customers bring licenses into their datacenter. He’s not interested in using Azure or AWS, he wants to host out of his datacenter, and uses it to differentiate amongst the larger providers. End customers bring licenses into their datacenter and they host it.
Wow SPLA Man, that’s a turn pager of a story. Tell me more!! Sure. I think this hoster is what SPLA is about. No one is a SaaS provider using SPLA. Hosters don’t provide Office as a service through the SPLA program. They provide Windows Server (it’s cheap) and they provide SQL (it’s expensive). What he likes about SPLA is the flexibility. He controls the customer end-to-end. Unlike CSP hoster, Microsoft does not know who the end customer is in SPLA. That’s where I see SPLA changing. In fact, with this latest announcement, they state “change is the first in a series of changes evolving the SPLA program. Future changes, including new SPLA agreement templates and a new process of reporting and submitting END CUSTOMER USER DATA for compliance verification are also planned”
End customer data has and always will be the problem with SPLA for Microsoft. They want to control the end customer and know why and how they are purchasing their software. Other than that, SPLA is a huge benefit to Microsoft. Differentiates Microsoft from AWS and the like.
If you are an infrastructure provider (like in the story above) what should you do now? I will keep saying it, start with education. Arm yourself with the best licensing practice around. This licensing environment in which we live is changing rapidly. Second, I would communicate these changes to your customer and how they may impact the way they purchase Microsoft products. All the changes that happened over the last few years, has zero impact to SPLA. It is all about the end customer. Last, I would start developing a SAM practice internally. You need to clean up your own mess before you do anything else. You should look into using OctopusCloud
More to come on this. I am also doing an interview with AWS and Microsoft. Stay tuned for more.
CSP Hoster replaces SPLA. In the words of Lee Corso (College football commentator for those unaware): “Not so fast, my friend.”
I like to think of CSP-Hoster as an entity who hosts CSP Products. That’s deep. The CSP Hoster is indeed an organization that hosts CSP solutions, however, there are some things to consider. Let’s dive into the pros and cons of going the CSP Hoster route.
Pros
CSP Direct partners who are also hosters (essentially all QMTH hosters) the ability to control the entire end-end solution for their end customers. They procure (sell the CSP licenses through their CSP Direct authorization), they install using media/keys, they can help ensure compliance since end – customer licensing is becoming more and more complex, and finally they host the solution for the customer.
Increased incentives. In one example, a CSP Direct provider increased margin by 15% and increased rebates +4%. This is pretty common in the CSP Direct space. There’s no middle man like there is in the CSP Indirect program and the SPLA program (buy from a reseller who then buys it from Microsoft) with CSP Hoster you buy from Microsoft and sell to the end user.
More options especially with End of Security Updates (ESU). Eligible in CSP, it is an add on license to help extend the life line of a specific product. (Such as SQL 2012/Windows 2016, etc.)
Relaxed licensing rules. As an example, if a CSP Hoster wants to sell Windows Server through the CSP program there are no CALs required. Another cost savings for the end customer. If they use the flexible virtualization benefit, CALs are required.
Separates you from competition. Every entity (outside of Listed Provider) can be an authorized outsourcer who can leverage the Flexible Virtualization Benefit. But not every entity can be a CSP Hoster.
Cons
CSP Direct authorization. Microsoft wanted to roll this out to a small subset of customers first and that is the reason for the CSP Direct requirement. If you are not CSP Direct authorized, use the Flexible Virtualization Benefit. CSP Direct authorization is a massive undertaking, support, platform, and commitments. No thank you.
Microsoft has access. That’s right. Microsoft will know who your customers are, where they are from, and what they are buying. This is often overlooked. Especially in an audit.
Incentives are better than SPLA, but one thing consistent with Microsoft, incentives only go one direction. Down.
Summary
If you are not CSP Direct authorized, don’t worry about it. Use Flexible Virtualization and educate your customers on the different license options. That is the best way to differentiate yourself. If you are CSP Direct authorized, CSP Hoster is a good way to not only differentiate yourself but also look at different revenue streams. Take a look at my article, Azure Arc There’s just a lot of options you can take a look at.
CSP Hoster allows a CSP Direct provider (Who has SPLA) to install, manage, and host CSP products to third parties. Currently, you have to be authorized by Microsoft. My take? Don’t worry about #CSPHoster if you are not authorized. Flexible Virtualization is your better option.
What is Flexible Virtualization?
Flexible Virtualization (Sometimes not so flexible..haha) allows end customers to bring licenses with SA or subscriptions to an authorized outsourcer. Similar to license mobility without the forms. The only issue I see with Flexible Virtualization is that there are so many ways to purchase licenses.
What is an Authorized Outsourcer?
Glad you asked. EVERYONE can be an authorized outsourcer. My 90-year-old neighbor (Sorry, Helen) can be an authorized outsourcer, and so can most hosters. You DO NOT have to have a SPLA agreement to be an authorized outsourcer. An authorized outsourcer is not a Listed Provider. The bad news is competition has grown exponentially with this definition. Since you do not have to have a SPLA, now SPLA and Managed Service Providers (MSP) are competing. Differentiate yourself.
How do you differentiate yourself?
Know the licensing. Think of a simple product like Windows Server. SPLA, you license the physical cores. EA, you license server, and CALs. Flexible Virtualization: you can license by virtual core. There’s a lot of confusion. When there is confusion, there is opportunity.
Is License Mobility dead?
Like my neighbor, Helen, it does appear license mobility has one foot in the grave, doesn’t it? License Mobility exists because of Listed Providers. Since listed providers are not allowed to be an authorized outsourcers, license mobility is required in those scenarios where end customers are using AWS and the like.
What about QMTH?
Unlike Helen, she’s dead.
What about SPLA?
SPLA will never die. In fact, Microsoft has incentives for hosters who report over 2 million a year in licensing. If you have a question on that, email info@splalicensing.com
Can I mix SPLA and BYOL?
Yes. But not for the same product. For example, you can’t license Windows by SPLA and Windows by EA.
SPLA Man took a vacation and the world turned upside down for SPLA partners! As most of you are aware, there’s been a lot of changes with hosting and more specifically how end customers deploy technology from your datacenter environment. In this post, let’s review these changes and discuss the challenges that accompany them. Have a question? Email info@splalicensing.com to learn more!
The Announcement
In October, Microsoft announced a new strategy for end customers (not SPLA) to deploy workloads on shared infrastructure from a third-party datacenter environment. This includes software subscriptions, software assurance benefits, etc. There was also a change to how Listed Providers deploy workloads. The article can be found here in case you missed it. https://www.microsoft.com/en-us/licensing/news/options-for-hosted-cloud
So what does all this mean? What’s the catch? There’s no catch. Microsoft made these changes in response to service providers long ago when QMTH came to fruition. Maybe there’s no catch, but there are specific things to consider.
For example, if you are an end customer, you can buy licenses from whoever you want (even Microsoft directly in some instances), but they can’t deploy it wherever they want. Your customer wants to deploy licenses they already purchased in AWS; well, they can’t for certain workloads. But guess what? They CAN in your datacenter! Think of Windows Server with Software Assurance. Your end customer wants to leverage their existing Windows licenses and not buy SPLA Windows licenses. They can deploy Windows Server with SA in your shared cloud environment but not in a Listed Provider. This is a GREAT time for service providers to help end customers with the options available. The challenge for service providers is that most are not educated on the different deployment options, nor do they know what software their customers own or how they bought them.
I think another challenge service providers face competition. Every service provider can offer the same solution as mentioned above. If you do not stay on top of your customers, someone else will. And finally, just because Microsoft allows something to happen doesn’t always mean you should license that way. Given the Windows Server example above, it might be cheaper for your customer to buy Windows Server from you rather than buy Windows Server with Software Assurance. You can offer a more affordable price for running Windows Datacenter than if they were to purchase it outright. Secondly, is it more profitable to have your end customers bring their licenses? As much as we sigh about SPLA, it is also a great revenue stream.
Maybe as this year comes to a close, we can plan for next year. If you have questions on any of this, or perhaps you want to get a good grasp on your licensing now, let’s have a discussion. Email info@splalicensing.com, and we can help.
In this article, let’s review the new licensing changes in greater detail. A LOT of questions on this change, so let’s get started! As always, if you have questions, please email info@splalicensing.com
Windows Server
For starters, Windows Server licensing rule change. In the past, (not specifically for SPLA) Windows Server was only available in CSP for Windows Standard edition. Fast forward to today, CSP will now have both Standard and Datacenter options. Great!
For end customers, they also have the option to license Windows Server by virtual machine, making it easier to move Windows Server workloads to a public cloud (as long as the hoster is not a Listed Provider). Other requirement is the Windows Server MUST have Software Assurance. No SA, NO outsourcer.
My Take?
Great move although now Hosters REALLY need to educate themselves on pricing options and licensing rules. DO NOT try and do this without assistance. Think about this from an end customer perspective:
1. They can leverage their EA to move to the cloud for Windows Server. Question is do they have SA on ALL workloads and associated CALs?
2. They can move workloads such as Office, Visio, and Project as well as Windows 11. Do you know the purchasing rights and do you know for certain they have SA? Are you CSP Direct? See below for more details on Office.
3. Is it less expensive for them to buy Windows Datacenter licenses through you in SPLA instead of buying perpetual licenses? That is the big question and often overlooked.
4. How are you going to track CSP, On -premise, and SPLA?
Our team can help you identify the best option for your customers. I also believe this is a GREAT way to differentiate yourself amongst your competitors. I work with SPLA partners all over the world, the one common denominator is not understanding the licensing rules and trying to do this alone. The best option is to outsource your licensing if you are unsure of what to do and how to properly educate your customers. Need help? Email us at info@splalicensing.com
Office, Visio, Project
If your end customer has license AND SA, they can use and authorized outsourcer (you if you meet the requirements) for shared hosting. Other terms may apply so stay tuned. If your end customer has license only, you have to isolate the hardware for the customer.
My Take?
This is great considering it provides options, but tracking the licenses may be difficult. This is especially true if you use a Listed Provider such as AWS. Most of these new rules do not apply to Listed Providers so stay on top of it!
Microsoft 365
If you purchase these licenses through CSP or through volume licensing the end customer has the ability to leverage an existing Authorized Outsourcer for both dedicated and shared environments. This is not defined as License Mobility, but “Extended Use Rights”
My Take?
Same as above to be honest. Windows Server and SQL have the same benefit in CSP (sorry, forgot to mention that) but the complexity still exists. As an example, for Windows Server through CSP, not only are you purchasing the Server licenses, but you are required to buy CALs. In SPLA, no CAL requirement to host. Microsoft 365 is a big deal and will be a bigger deal once they open it up to everyone.\
Windows 11
The big news here is mobility and the removal of a Qualified Operating System for VDA deployments. There’s going to be a lot of information on this. Microsoft stated the following:
Source: Microsoft Sept 2022 training
Other announcements? Last but not least….CSP for Hoster program. Basically allows hosters to deploy and manage CSP workloads from a datacenter environment.
Must be QMTH authorized, have an active SPLA and be CSP Direct. More details on this to follow. If you have a question, I encourage you to email us at info@splalicensing.com to help walk us through your specific questions.
SPLA Licensing 