Gone are the days of pre-committed expenses under Microsoft's Enterprise Agreement software licensing!
Additional EA vs. CSP information below
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For years, the go-to licensing vehicle for enterprise was the Microsoft Enterprise Agreement (EA). Companies could get their software directly from Microsoft, which meant dealing with the most trusted provider available. With Microsoft’s minimum quantity of 500 users, an EA was ideal for large organizations. The typical EA time span of 3 years was a natural fit for the cycles of large-scale organizations that tend to move methodically when it comes to system migrations.
The EA or “software assurance” tiered pricing was both economical at the high-volume of computers being licensed and perfectly targeted for the purposeful nature of enterprise behavior towards technology.
Due to the size of the purchase, on-premise server-based systems and EAs were the only viable option for companies that large.
Nowadays, we have networks of public servers built, hosted, and delivering services over the Internet which are collectively known as “the cloud”. Companies and private individuals can access these networks remotely thanks to a cloud service provider (CSP).
What began as a groundbreaking storage solution quickly became a method for delivering information technology (IT) services to customers who have the ability to retrieve web-based tools and applications from the internet instead of via direct connection to a server.
In Microsoft’s case they have certified CSP partners offering MS applications on subscription basis under the term software as a service (SaaS) despite the fact that the company’s traditional business model uses EAs. As cloud-based services become the norm in the tech industry, the 3-year EA is starting to look outdated to even the most traditional companies like large mortgage companies and financial institutions.
EA and CSP software have the same capabilities. An EA covers large-scale packages of software, requires a company-wide purchase, and has a minimum of 500 licenses for the private sector. Payment happens annually with a typical 3-year minimum contract.
CSP software has a more piece-meal structure. A company can purchase in limited numbers without minimum requirements. For midmarket and even enterprises with real distinction of use from department to department, this means being able to pick and choose applications based on usage. Payment is usually on a monthly subscription-like basis for only the needed software.
The result is reduced costs via a pared-down IT budget and the convenience of trial-and-error with new software purchases. Costs are further reduced from the man-hours saved on system and software maintenance since the applications are all hosted in the cloud.
