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Microsoft CSP explained part I – flexibility in adopting the cloud

If you’ve worked with Empired or Intergen, you’ll likely know that we are a Microsoft Systems Integrator (SI) and a Microsoft Managed Services Provider (MSP). But you may not be aware that we are also a Microsoft Cloud Solution Provider (CSP).

Cloud computing licensing

That’s understandable. CSP is a relatively new programme from Microsoft. I personally receive a lot of questions from customers about this program and thought it would be useful to break the topic down into three parts, each of which I’ll devote a blog post to.

Introduction to CSP

Cloud Solutions Provider (CSP) is a Microsoft program for a customer purchasing Microsoft cloud licences. Some examples of Microsoft cloud licences can include:

  • Office 365
  • Microsoft 365
  • Dynamics 365
  • Enterprise Mobility Suite
  • Microsoft Azure

Microsoft created CSP because they recognised that cloud licensing has some unique aspects that were not handled as well in the previous licensing programs, including flexibility, optimisation management and change management.

CSP for flexibility

Many of the licensing programs that Microsoft offers have a minimum term of purchase. For example, a Microsoft Open Agreement required a two-year minimum commitment. A Microsoft Enterprise Agreement (EA) required a three-year commitment. In addition, some programs required an Enterprise-wide commitment for certain products such as Windows and Office. It was an “all or nothing” proposition.

For some customers, a multi-year, enterprise-wide commitment did not really align with the way they planned to adopt the cloud. Many customers adopt cloud technologies incrementally over an extended period and Microsoft’s licensing programs did not really enable this.

Microsoft CSP was created to give customers more flexibility in the ways they adopted the cloud. Many customers will run pilots and proof of concepts. They want to experiment with a small group of users to prove the technology before committing to a larger purchase and company wide deployment. CSP provides the flexibility to enable these types of scenarios. There is no minimum licensing commitment for most licences in CSP*. Customers can usually start with a single licence if they wish. The minimum purchase term in CSP is a 12-month subscription. Customers have the option to pay monthly or annually. If a customer decides that they no longer need the licence during the 12-month period, they can reduce the quantity to zero with no penalty from Microsoft.

CSP is the best way for a customer to try a Microsoft cloud product to make sure it works in their business for their specific scenario.

Another scenario might be a specific project that has a clearly defined start and finish. Maybe you need to bring on extra staff to work on a project for a known period. CSP allows you to pay only for the period when the project is live. Once the project ends, you can cancel your subscription, so you are not stuck paying for services that are no longer being used.

Maybe you are a retailer who tends to get very busy during the holiday season in November and December, so you have temporary staff to cover this period. You can give your temporary retail workers an Office 365 F1. Or maybe your organisation is going to divest itself of a specific division. Rather than depriving that business of the Microsoft cloud licences they need you can purchase the licences on CSP for as long as you need them. Once the division has been sold, you can cancel the subscription and simply stop paying.

CSP for optimisation management

The cloud changes the nature of a customer’s relationship with their Microsoft partner. Once the customer has migrated to the cloud, there are several aspects of the environment that Microsoft becomes responsible for.

The exact layers that Microsoft manages depends on whether the customer is running Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), or Software-as-a-Service (SaaS). Regardless, the traditional partner support models must change to adapt to this new reality. And while some partners have viewed cloud as a threat to their traditional business model, the cloud also opens up new types of business models for partners.

A specific example of this type of offering from Intergen is called Cloud Optimisation Management. Under this service, Intergen provides on-going advice and guidance on how to best align the Microsoft footprint with the customer’s changing requirements. For example, a recommendation could be to change from an Office 365 F1 to an Office 365 E3 licence when a retail worker gets promoted to a manager position, who has different technology needs.

Intergen could recommend changing the size of a Virtual Machine or App Service to align with historical demand pattern or seasonality. The focus is making sure that the customer’s licensing is optimised to their actual usage. Intergen can also ensure that the customer’s apps have sufficient resources to deliver the required level of performance required by the business.

This constant optimisation ensures that the end users have the licensing they need to be productive. Most importantly, the customer is not being charged for licences and services that they are not using.

Intergen provides this offering as part of a managed service for customers operating in the cloud or in a hybrid model.

Cloud optimisation management is an example of how a modern partner can provide on-going value and advice to a customer beyond simply selling a licence. This is essential to provide a differentiated set of services in a market that has a natural tendency towards commoditisation.

CSP for change management

As customers started to deploy Microsoft cloud technologies, Microsoft realised that the way that customers engage with partners needed to change. In the on-premises world, Microsoft partners were segmented depending on whether they focused on licensing (aka Licensing Solutions Partner or LSP) or implementation (aka Systems Integrator or SI).

Many partners tended to focus on one or the other segment. In the cloud era, these relationships needed to fundamentally change. Microsoft needed to create a category of partner that could help in both areas for the benefit of customers.

This is one of the key differences between CSP and other Microsoft licensing programs. CSP is NOT simply a mechanism for a partner to sell a licence and then walk away. Microsoft Cloud Partners are measured on their ability to help customers activate and consume the cloud licences that they sell. After all, what value is there for a customer to pay for a licence, but then not use it? Microsoft’s intent with CSP is to change this behaviour. CSP partners are now accountable to sell the licence and then continue to work with a customer, helping them adopt the technology and realise the benefits of their investment.

Another major change is the release cadence of new features and product releases. Traditionally, Microsoft would release new products on a three or four-year cycle. The cloud release cadence has fundamentally changed this. A new version of Dynamics 365 is being released every six months. The Office 365 team releases new features every month. Even Windows 10 has become a cloud service with new versions every six months.

The pace of change has increased dramatically. Unlike the on-premises world where the customer can decide when to apply an update, cloud updates MUST be accepted because the services are all multi-tenant. Microsoft cannot allow one customer to be running a five-year-old version of Office 365. They need all customers running on the same version of the cloud to be able to support and maintain their financially backed SLAs. Another key difference is that upgrades are included in the cost of the cloud service. Rather than focusing on the upgrade itself, partners are shifting their offerings to focus more on the change management aspects of cloud upgrades. Microsoft will handle the back-end upgrade. But there are sometimes significant changes in the UI and the introduction of new features. Microsoft CSP partners can now focus their attention on these regular changes and make sure their customers are ready for them.

If you are interested in learning more about Empired’s InterConnect Change Management capabilities, you can read more about this service here.

CSP target industries

Similar to other Microsoft licensing programs, CSP has different pricing models, in four different verticals:

  1. Commercial
  2. Academic
  3. Government
  4. Not for Profit (NFP)

By default, customers buy under the Commercial program. The pricing for Commercial is generally higher compared to the other industries. If a customer meets the requirements for Academic, Government, or Not for Profit, then they can buy under these programs for a lower price.

I won’t go into the specific requirements for customers to qualify for these industry discounts. But it is important to know that these options exist. If you qualify for an industry discount under another Microsoft licensing program, there is a very good chance you qualify for a similar discount under CSP. If you want to know more about this, please contact us.



*Note: There a few products which still have a minimum number of licences required, which is greater than one user. For example, Microsoft Dynamics 365 for Talent has a five-user minimum. Dynamics 365 Unified Operations has a 20-user minimum. Please see the Dynamics 365 Licensing Guide for more details. In the next blog post, I’ll look at the differences between indirect and direct Cloud Service Provider models.


This blog is part of a three-part series about the Microsoft Cloud Solution Provider (CSP) program and Microsoft Licensing for the cloud

Microsoft Cloud Solution Provider and licensing

Posted by: Harris Schneiderman, Regional Sales Manager, Seattle | 06 August 2019

Tags: Office 365, Cloud Solution Provider, CSP, Microsoft Licensing, Microsoft Licensing for the cloud

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