Choosing between EA and CSP

25 March 2020

Now more so than ever, organisations need to review their IT spend and how they license their IT estate. The great thing with Microsoft is they have choice.  There are two main models for Microsoft which are similar to the foundations of Cloud – Infrastructure spend v Cloud namely Capex v Opex.  The traditional model has always been Capex which is an Enterprise Agreement directly with Microsoft.  For some time now companies also have the Opex option of utilising a service called Cloud Service Provider (CSP) which Auxilion is currently providing to numerous clients. By utilising CSP you have flexibility and can add or delete instances/end users/applications/security on a monthly basis, you only pay for what you use.  While with an Enterprise Agreement ( 3 year commitment), it is a true up or down one month before your anniversary with your capital outlay required at the time of renewal.

Auxilion’s starting point is a digital persona review for your Microsoft licensing estate.  This engagement involves a review of what your current license consumption is, what the different parts of the business require from an application perspective for their day to day functionality. We will provide information relating to what a CSP engagement will look like from a license, cost and future consumption perspective. Organisations will then have a great degree of visibility in what is needed now and in the future for their workforce with costings aligned.

Enterprise Agreement

An EA should only be used for large organisations; it is a three-year agreement and requires a minimum of 500 licenses to be purchased at the same time. The most frequently purchased licensing options are Office 365 plans. Any combination of the E1, E3, and E5 licenses count.

Organisations opting for an EA are required to pay upfront for the entire year at one time, which can put unnecessary pressure on cash flow. Any user licenses added during the year are paid on the next anniversary, which can also make cross charging quantities difficult. Quantities on the EA can go up during the year but can only come down by providing a notice 30 days prior to the anniversary. If the company divested a division in the first month after their anniversary, they may have to pay for licenses for the following 11 months while not being used.

Cloud Service Provider

CSP licensing is based on a month-to-month commitment, which can be attractive for businesses as can help to ease cash flow constraints. It is also beneficial for organisations who find it difficult to predict longer term usage requirements or those who may want to start with a basic plan as they move to Office 365 (like email only) and then increase the licensing level as users adopt the functionality.


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