So You Want To Buy Microsoft Cloud Services… But How?

Cloud services make many things easier, but first things first – you need to purchase the right solution for your business. It’s not always easy, as there are so many different options and ways of buying them. How can you know which one is best for your organization? The CSP program might be the answer. In this article, I will guide you through the various options of purchasing cloud services and will answer any questions you may have about the CSP program.

There is one thing you can’t say about IT. Licensing is not simple. There are a lot of SKUs, ways to buy the same thing, and licensing programs.

And here’s another term – maybe you’ve heard about it. It’s the CLOUD SOLUTION PROVIDER, aka the CSP.

If you haven’t yet, you may become familiar with it when you decide to purchase some cloud services for your company based on the Microsoft cloud.

• What is CSP?
• Is it better than just buying through a web page?
• What’s in it for you?

Today I will demystify the CSP program for you and describe its terms, conditions and value clearly to help you make an informed decision for when the time comes to buy your online services.

Let’s take a deep dive into it.

What exactly is the CSP program?

In short – the CSP program allows you as a customer to purchase Microsoft Online (Cloud) services from a Microsoft Partner (like Predica) and not through the Microsoft website.

Why would you want to do this?

Let’s start with stating what these cloud services can be:

• Licenses for SaaS products like Office 365, Dynamics 365, Enterprise Mobility Suite or Power BI. They are usually purchased based on the number of users (i.e. seat-based services)
• Azure infrastructure and platform services, where you pay for actual usage (i.e. usage-based services). A good example are Azure virtual machines, Azure Websites or Azure SQL.

So far, so good, it is fairly simple. Either you need to count your users or estimate your Azure usage. When it comes to buying those services, you will find that there are different models and programs for doing it. (Keep it simple! Huh?)

How to decide?

It’s not easy to navigate the whole offering. These programs are covered on the Microsoft web pages, but let’s try to quickly summarize them here for your benefit and understanding.

There are four main ways to buy Microsoft online services (there are a few more, but these 4 are the ones Microsoft will keep long-term):

• “Pay-as-you-go”: probably the most familiar option. You can go to the Azure web page, input your credit card number and it will be charged when services are being used or licenses purchased, based on the billing period. Easy-peasy. But not always, as we’ve found – sometimes, the key problem here is to find a credit card to be used and a person authorized to use it.
• Enterprise Agreement (EA): usually applied to larger organizations. It is a dedicated agreement between your company and Microsoft which sets out the licensing terms. Big guns for big companies.
• Microsoft Open License Program (MOLP or simply Open): buy a pack of licenses or a set of usage (Azure) vouchers that you can activate as needs grow. This might be easier for procurement departments used to buying a specific SET OF UNITS for a certain budgeting period, which with cloud services based on usage is not straightforward.
• Last but not least, a Cloud Service Provider (CSP): and here we are – I will cover it in detail in the rest of the article. Stay with me.

How does a CSP operate?

Cloud Services Provider, aka your local partner delivering cloud service. Key questions we will cover:

• How can a CSP benefit you and your organization?
• When might it be useful?
• When to avoid it? (Yes, there are such cases.)

How do we know these things? As a company, we have been in the CSP program as a Tier-1 provider (first lesson: there are different CSP providers; read more about tiers here) since March 2016 for EU and EFTA (second lesson: CSP providers are regional) and we’ve learned a thing or two about how it works through providing services for our customers. BTW – if you are interested, we’re also covering the MEA region as of March.

We always learn things the hard way – through practice!

What are CSP ups and downs and why should you care as a customer?

The first thing you need to understand is the division of responsibility between your local partner and Microsoft if you purchase services through a CSP. Here is a handy table which summarizes it:

Complicated – let’s make it more practical.

What does it mean for me?

These will be your CSP’s obligations and duties and some of the benefits coming from this split:

1. Your CSP will be issuing your bill on a monthly basis. You will receive a local invoice based on your service usage issued by a local company, according to local regulations and laws (local might mean EU). Microsoft is not involved in this process and credit cards are not required (may depend on how the CSP addresses payments).
2. There are no upfront payments. You are being billed based on your service usage, after the billing period. This might be more attractive than annual seat commitment licenses or EA/Open Azure packages.
3. Your local CSP partner is providing you with support for your services. It is your CSP partner who will receive all your support calls. They can handle them on their own or report to Microsoft, but for you – your provider is the point of contact in case of a problem.
4. CSP is working on discounted service prices compared to standard prices. This might but doesn’t have to result in lower costs for you. Remember – your partner takes on the support, billing and license / subscription management duties, and the CSP agreement might come with some additional services you request from your provider.

In short summary – a CSP gives you:

• More flexible payments / no billing up-front.
• Easier to contract and process with procurement / purchasing department (believe us, this is a major benefit to some organizations, big time).
• Support provided by a local partner; depending on your relationship with them and their skills it might be an advantage.

When does it make sense to turn to CSP?

Good question – from our standpoint it is when:

1. You have a good working, trusting relationship with the partner, either historically or you are buying the Microsoft Online services together with the partner’s offering (products, IP or services).
2. There are some attractive pricing offers available only via CSP. It might actually save you a lot of money to purchase services through CSP in a timely manner – ask your supplier for advice before any purchasing decisions in the future.
3. You need to provide online and additional services to your team or company, but you don’t want to go through the entire purchasing decision cycle. You may negotiate online services and your partner services as part of CSP billing and go for it on a monthly basis. No long negotiations or commitments.
4. Your IT department is small, overloaded or in the process of learning necessary cloud skills to adopt, manage and support the Microsoft cloud platform. In the CSP model, your provider can do this for you and help you with provision and management of services.

Sounds too perfect? Now, let’s see some different scenarios

When shouldn’t you turn to CSP?

There are a few examples when other ways of licensing might be more suitable:

1. You are a large organization with resources in your own IT department that have the necessary skills and can manage MS online services. In this case, large usually means at least 1000 employees (not in IT only, of course). Most often an Enterprise Agreement will suit you better.
2. You are a small company (e.g. a startup or a small business). It might be simpler to just use your credit card to start buying services you need directly from the Microsoft website.
3. In Poland (but similarly in other countries; do consult your accounting department, or just buy from an EU-based partner like us), if you are not a VAT payer, a 23% VAT is applied to the invoice by the partner (vs 0% on the invoice from Microsoft Ireland, for instance). This will likely not compensate any discounts the partner can give you.

It is best to learn from examples, so let’s look at a real-life one:  When do we use the CSP model at Predica?

Case study

First example – a common use case, Office 365 or EMS licenses.

Most enterprise-level organizations have Enterprise Agreements in place, and it makes more sense to use those to buy Office 365 or EMS.

On the other hand, for small companies in SMB sector, a typical CSP is not the right partner either – there are dedicated, large volume resellers working only in this segment.

However, there is a case where it makes sense to go for a CSP even for large organization – it is when the organization needs:

• Dynamics 365 (CRM/xRM)
• Azure platform services (development, integration, data platform).

Dynamics first!

In our Dynamics 365 projects which usually also involve usage of Azure services (web portals, integrations, data analytics), we are using the CSP scheme heavily.

The reason for that is that we are also providing support and control over deployment and this is what business users of the platform are expecting. One contract, one place to go to with all the issues and problems. And one entity accountable for it.

It is much easier and is much more welcome from the client perspective in such (usually) mission-critical applications.

The Azure platform follows!

When it comes to Microsoft Azure, almost all of our current development projects are based on it and the CSP option has been proven effective in those instances.

With most of our small and medium clients who often do not have existing agreements and Azure subscriptions, we use the CSP model to run production environment workloads and support them end-to-end. This simplifies the process for the client: they know we have the people with the right skills, Microsoft MVPs among them, and that we will take care of the whole solution.

With large-scale clients who usually have production environments on Azure, we use the CSP program to establish and fund development and test environments for their solutions.

In both cases, it is usually important to the client that through a CSP they can establish a well maintained, supported environment with fixed fee billing as part of the overall service agreement.

Q&A

I hope you have a better understanding of the Cloud Solution Provider program right now. To put it in a short statement – it is the Microsoft cloud provided by your trusted, local partner. Same scale, same services, with friendly faces you know to provide and support them.

To make it 100% clear we have prepared a short Q&A on the subject to address all possible doubts.

Q: If I have existing services on Azure, can I still benefit from the CSP program?
A: Good news! If you have existing services you can still transfer them to a CSP of your choice. Of course, if it makes sense for you.

Q: If I buy services from a partner like Predica (of course us, why not?), am I tied to this partner?
A: No, it is still your money and your service. You are free to transfer to any other CSP of your choice. There are even ways to transfer to other purchasing programs, though it may be a bit tricky (but no worries – we know how to do it).

Q: If I have existing cloud services purchased in other schemes, can I still use the CSP program?
A: Sure you can, the cloud is all about flexibility (oops, some marketing materials got in the post!). You can mix these services in different models.

Q: If CSP, why Predica?
A: The best way to answer this question – give us a try, and you will know for yourself after the first project!

Still unsure which model to use for your upcoming project?

We have advised clients on Microsoft deals from several thousand to nearly a million euro. Why not use this expertise? Contact us and spend some time talking about it.