Microsoft CSP Program for Enterprises: Pros, Cons, and Cost Considerations

Microsoft CSP Program for Enterprises

Introduction – CSP Moves Beyond SMBs

The Microsoft Cloud Solution Provider (CSP) program was originally designed for small and mid-sized businesses, but it’s increasingly being adopted by enterprises as well.

In a CSP model, an organization purchases Microsoft licenses through a third-party partner, typically on a per-user, per-month subscription basis.

This approach contrasts with the traditional Enterprise Agreement (EA) model, where large organizations sign a direct 3-year contract with Microsoft for volume licensing.

Why are big enterprises looking at a program meant for smaller companies? The answer lies in flexibility.

CSP’s monthly subscription structure allows companies to adjust license counts on the fly, which can be very attractive for dynamic environments.

Microsoft itself is encouraging cloud-centric licensing models, positioning CSP as a modern alternative or complement to EAs. Read our complete guide to Microsoft Licensing Programs.

However, CIOs and CFOs should approach this with a strategic mindset, being skeptical of vendor positioning and focusing on what’s truly beneficial for the business.

In this article, we’ll break down how the CSP program works for enterprises, its pros and cons versus an EA, and key financial trade-offs to consider.

How CSP Works for Enterprises

When an enterprise opts for CSP, it licenses Microsoft products through a certified partner rather than directly from Microsoft. The partner handles the provisioning of licenses, billing, and often support services.

Nearly all the major Microsoft cloud offerings are available via CSP: this includes Microsoft 365 (Office 365 suites, Enterprise Mobility & Security, Windows Enterprise), Azure cloud services, Dynamics 365, Power Platform, and more.

In essence, the CSP program can cover the same subscription products as an EA would – the difference lies in contract structure and who manages the relationship.

Key characteristics of how CSP operates in an enterprise context:

• Monthly subscription billing: Licenses are typically billed per user per month (or per resource per month for Azure). You receive a monthly invoice from the partner for the subscriptions in use. This means you can increase or decrease license quantities on a month-to-month basis as needed. (Some CSP partners also offer annual prepaid options, but the month-to-month flexibility is a hallmark feature.)
• Partner-managed relationship: Your organization works with a Microsoft Cloud Solution Provider partner who administers the licenses. They often provide an online portal to add/remove users, and they bundle in support or managed services. The partner may add a small margin on top of Microsoft’s standard pricing, or they might offer value-added services (like adoption training or cloud optimization) to justify their role.
• No long-term contract required: Unlike an EA’s 3-year commitment, CSP does not force a multi-year lock-in. You can subscribe and cancel subscriptions as needed. (Under Microsoft’s newer “New Commerce Experience” in CSP, you have the option to commit to 1-year or 3-year terms for certain discounts, but it’s not mandatory for most seat-based subscriptions.)
• Coverage of all cloud products: Enterprises can acquire their Microsoft 365 seats, Azure consumption, and other cloud licenses via CSP. For Azure specifically, CSP operates on a pay-as-you-go model with monthly billing for actual usage, rather than requiring upfront consumption commitments. This can simplify things like spinning up new cloud resources without negotiating an amendment to an EA.

In summary, CSP for enterprises means purchasing the same Microsoft cloud services through a flexible, month-to-month partner arrangement. It provides a different balance of cost and flexibility compared to the traditional direct Enterprise Agreement.

Pros of CSP for Enterprises

For large organizations, the Cloud Solution Provider model offers several potential advantages when compared to an Enterprise Agreement.

Key benefits of CSP vs. EA include:

• Flexibility to Scale Up or Down: Perhaps the biggest advantage of CSP is the ability to adjust licenses quickly. You can add licenses when you onboard new employees or start a project, and just as easily remove those licenses when staff count drops or a project ends. This flexibility is ideal for businesses with seasonal workers, project-based contractors, or fluctuating staffing needs. It prevents the over-licensing that often happens in a fixed EA – you won’t be stuck paying for 1,000 licenses for three years if you actually only need 800 in Year 2.
• No Long-Term Lock-In: CSP does not require a 3-year contractual commitment. This is valuable if you want to avoid being tied down or if you’re between EA contract cycles. For example, if your Enterprise Agreement just ended and you’re not ready to commit to a new one yet, you could move some workloads to CSP temporarily. It’s a way to bridge gaps or trial services without a long contract. Essentially, CSP gives you a month-to-month safety net, whereas an EA is a long-term marriage.
• Simpler, More Frequent Billing: With CSP, you typically receive a consolidated monthly invoice for all your licenses and cloud usage, rather than dealing with an EA’s true-up process and big annual payments. The monthly billing can aid cash flow management and provide more immediate visibility into your software spend each month. Many enterprises also find that working with a partner for billing and support can be more responsive – if there’s an issue or change needed, the partner can often adjust it quickly on the next invoice. You’re not waiting for an annual true-up to reconcile license counts.
• Partner Support and Promotions: When buying through a CSP partner, you often gain access to that partner’s value-added services. Good partners will offer perks like free migration assistance, user training, or adoption workshops as part of the deal. They might also reduce their reseller margin or extend promotional discounts to win your business. For instance, a partner could offer a 5% discount off the list price or bundle in some free consulting hours. Additionally, support is typically included (or available at a lower cost) through the partner, which can result in faster assistance compared to Microsoft’s standard support channels. Essentially, you get a single throat to choke – the partner manages your support needs directly and will escalate to Microsoft on your behalf if needed.
• Broad Product Range with One Agreement: Under CSP, you can put multiple Microsoft services under one umbrella with your partner. You could have Microsoft 365 seats, Azure subscriptions, and Dynamics 365 licenses all co-managed by the partner. This one-stop-shop approach can simplify vendor management if you leverage the partner for multiple needs, as opposed to juggling separate Microsoft agreements and portals.

In short, CSP brings agility and service into the licensing equation. Enterprises that value agility and hands-on support might find these pros very compelling, especially if their business is not in a steady-state growth mode.

For more insights, Enterprise Agreement vs. Enterprise Subscription (EAS): True-Down Benefits Explained.

Cons and Considerations

Despite its flexibility, CSP is not a cure-all for enterprise licensing.

There are important drawbacks and considerations to weigh against an EA:

• Higher Per-Unit Costs (Potentially): In an Enterprise Agreement, large organizations usually negotiate significant volume discounts (often 15-20% or more off the list prices, depending on size and commitment). With CSP, pricing is generally closer to retail list price, because you’re essentially buying on a pay-as-you-go basis. The CSP partner might give you a slight break or promo, but you should expect the per-user or per-unit cost to be higher than your EA rates. This means if your user count is stable (or growing), CSP will likely cost more money over the long run than an EA with equivalent products. Enterprises need to do the math: the convenience and flexibility of CSP come at a premium on a per-license basis.
• Less Direct Relationship with Microsoft: When you’re on an EA, you have a direct line to Microsoft’s account team and enterprise support (albeit enterprise support usually costs extra). Microsoft often provides EAs with executive briefings, planning services, or strategic input as part of the partnership. In a CSP model, your primary relationship is with the partner, not Microsoft. Some large customers might feel a loss of intimacy with Microsoft – for instance, your escalations go through the partner rather than directly to Microsoft. You might also miss out on certain EA-exclusive perks (like unique licensing bundles, training vouchers, or roadmap discussions) that Microsoft sometimes reserves for its enterprise agreement clients.
• Hybrid Licensing Complexity: Running EA and CSP simultaneously can introduce complexity in license management and governance. For example, you might have 5,000 users on an EA for Office 365, but a newly acquired division of 500 users on CSP. Ensuring compliance across two licensing models means double the tracking. You’ll need processes to avoid accidentally double-licensing or letting a user fall through the cracks. It can also lead to confusion in budgeting and internal chargebacks if different departments use different models. Governance teams must pay close attention to reconcile usage, entitlements, and ensure they’re not overspending due to overlap or underutilization in either program. In short, mixing models can work, but it requires careful coordination.
• Perception and Internal Buy-In: Although the services are identical whether bought via EA or CSP, some stakeholders in traditional enterprises might be cautious about a partner-led model. There may be a perception that an EA is more “official” or secure. Compliance teams might ask if using CSP has any legal or security implications (it doesn’t inherently – the contract is just through a reseller, and Microsoft’s cloud terms still apply). Nonetheless, getting everyone comfortable with a new licensing approach can be a consideration. It requires educating internal leadership that CSP is a Microsoft-sanctioned program and not an “inferior” option, and that the enterprise is still properly licensed. Additionally, the quality of experience depends on the partner’s competence – a poor-performing partner could turn the supposed benefits of CSP (like support and easy management) into a frustration. So, choosing the right partner is crucial.

In summary, the CSP program offers a trade-off between volume discounts and direct Microsoft engagement for greater flexibility and convenience.

Enterprises should weigh the higher unit costs and potential complexity against the benefits of increased agility.

In many cases, CSP might be best used tactically for certain scenarios rather than wholesale replacing an EA that is delivering strong discounts.

Cost Comparison – CSP vs EA

To really understand the trade-off between CSP’s flexibility and EA’s discounts, let’s look at a simple cost scenario.

Consider an organization with 1,000 users that needs Microsoft 365 E3 licenses (a common enterprise subscription that includes Office apps, Windows, and EMS).

Suppose under an Enterprise Agreement, the company negotiates a 20% volume discount off the retail price. With CSP, you typically pay the standard retail price every month.

We’ll compare two scenarios over 3 years:

1. Stable usage: All 1,000 users require licenses for the full 3 years.
2. Declining usage: 1,000 users in year 1, but then the workforce shrinks to 800 users from year 2 onward (dropping 200 licenses after the first year).

For simplicity, let’s say the list price of M365 E3 is $30 per user per month (so $360 per year), and the EA price with 20% off is $24 per user per month. Here’s an illustrative cost comparison:

Assuming ~ $30/user/month list pricing and a 20% EA discount. Figures are for illustration.

In the stable usage scenario, the Enterprise Agreement clearly saves money – about $216,000 less over three years in this example, thanks to the volume discount.

Even though the EA locks you into paying for all 1,000 users, the lower per-unit price makes it more cost-effective if you truly need all those licenses throughout.

In the declining usage scenario, the EA cost remains the same (you’re generally committed to that 1,000 user count for the term, regardless of whether your usage drops). With CSP, however, you stop paying for the 200 unused licenses after Year 1, reducing your costs.

Over three years, CSP in this scenario costs around $936k versus $864k for the EA. The EA still edges out slightly in total cost here, but the gap has narrowed to a difference of ~$72k. Essentially, CSP avoided a lot of wasted spend on unused licenses, but not quite enough to fully offset the EA’s discount advantage in this particular example.

If the usage drop were even larger (say you downsized to 600–700 users), CSP could end up cheaper overall because you’d be avoiding paying for hundreds of unnecessary licenses for multiple years.

This highlights a key point: the more uncertainty in your future license needs, the more value CSP’s flexibility has in potentially reducing costs. Conversely, if you expect your license count to remain high and steady, an EA’s upfront discounts will likely yield a lower total cost.

The financial trade-off comes down to predictability versus elasticity. EA = predictability and discount, CSP = elasticity and pay-as-you-go economics. Smart enterprises will model out both options (or even a hybrid approach) using their own numbers to see where the crossover point lies.

When CSP Makes Sense for Enterprises

Given the pros and cons above, when does it actually make sense for a large organization to use the CSP program?

There are several scenarios where CSP can be particularly advantageous for an enterprise:

• Volatile or project-based workforce: If your organization frequently scales up and down – for example, bringing on contractors, project teams, or seasonal staff – CSP is a natural fit. Companies in consulting, outsourcing, or retail sectors (with holiday staff surges) often fall in this category. The ability to dial licenses up and down month-to-month means you pay only for what you actually use. Over a few years, this can translate to substantial savings by avoiding the over-licensing that would happen under a fixed EA. It also reduces the hassle of trying to forecast your license needs years in advance.
• In between EA cycles or trials: Maybe your Enterprise Agreement is expiring this year, and you’re unsure if you want to renew immediately. Or perhaps you anticipate a merger, acquisition, or divestiture that makes your long-term user count uncertain. CSP can act as a bridge solution. Enterprises sometimes use CSP for a year or two in between EAs to maintain flexibility until their situation stabilizes. It’s also useful for trialing new Microsoft services on a small scale – for example, testing Power BI or Dynamics licenses via CSP before deciding to roll them into your next EA.
• Subsidiaries, affiliates, or divisions with autonomy: Large organizations aren’t monolithic; you might have a subsidiary that operates semi-independently or a new business unit that isn’t aligned to the main EA. CSP allows those smaller entities to get the tools they need without being tied into the corporate EA (which could be complex, or maybe the main EA doesn’t cover their scenario). In some cases, enterprises deliberately keep certain divisions on CSP to give them budget autonomy or agility separate from the central IT contracts. This can also be useful for joint ventures or international branches where an EA’s centralized terms don’t easily apply.
• Cloud-first, agility-prioritized strategy: Some enterprises have a philosophy of staying as agile as possible, even if it means potentially higher costs. A cloud-native startup that’s grown into a larger company, for instance, might never sign an EA because it values the ability to pivot quickly. If your organization’s culture is to avoid long-term vendor lock-ins and you’re comfortable adjusting budgets dynamically, CSP aligns well with that mindset. Agility over absolute cost is a conscious choice here – the business might willingly forego a big discount in exchange for the freedom to reduce licenses or switch things up on short notice.
• Not meeting EA minimum requirements: Enterprise Agreements typically require a minimum number of users or devices (often around 500), and are rumored to be increasing to 1,000 in some cases. If a part of your organization doesn’t meet those minimums – for example, a smaller country office or a spin-off business with 300 users – then CSP might be the only viable way to get enterprise-grade Microsoft licenses for them. In such cases, CSP isn’t just making sense; it’s essentially a necessity.

Ultimately, CSP makes the most sense for enterprises that prize flexibility and have uncertain growth/consumption patterns.

If your environment is stable and you can accurately predict needs, an EA’s economics might serve you better.

But if change is the only constant in your user counts or service consumption, CSP can align your costs more closely with actual usage.

Checklist – CSP Fit for Your Enterprise

Still on the fence about whether the enterprise CSP program is right for you?

Use this quick checklist. If you answer “Yes” to most of these questions, exploring CSP could be worthwhile:

• ✓ Do you expect your user or license counts to fluctuate significantly over the next few years (due to seasonality, projects, or business changes)?
• ✓ Are you under the typical EA minimums (e.g., you have fewer than the required number of seats to qualify for an Enterprise Agreement, or a sub-unit that doesn’t meet the threshold)?
• ✓ Do you want to avoid a 3-year contractual commitment and keep your options more open in case your strategy or needs change sooner?
• ✓ Is cost predictability less critical than flexibility for your budgeting purposes (i.e., you’re okay with monthly spend varying as long as it aligns with actual usage, rather than locking in a fixed annual cost)?
• ✓ Do you prefer a hands-on partner relationship for licensing and support, as opposed to managing a contract directly with Microsoft? (A good CSP partner can act almost as an extension of your team.)

If many of the above points resonate with your situation, then the Cloud Solution Provider route might fit well. On the other hand, if you found yourself answering “No” to most, an Enterprise Agreement or other volume licensing arrangement might be more suitable. Every organization is different – the key is aligning the licensing model to your operational and financial realities.

FAQs

Can CSP fully replace an EA for large enterprises?
CSP can replace an Enterprise Agreement in some cases, but it depends on the enterprise’s priorities. Technically, any Microsoft cloud service you can get via EA is also available in CSP, so functionally you could run entirely on CSP. However, large enterprises often still maintain EAs to capture large-volume discounts and other benefits that come with that direct agreement. For a very large organization with stable needs, completely ditching the EA in favor of CSP could mean paying a lot more over time. Many enterprises choose a hybrid approach – keeping an EA for core, steady licenses and using CSP tactically for variable or new needs. If your enterprise is extremely nimble or your EA renewal terms are unfavorable, you might consider fully switching to CSP, but it’s usually done with careful cost analysis and sometimes after piloting CSP with a subset of services.

Is CSP pricing negotiable for an enterprise customer?
Unlike an EA, where you negotiate pricing and discounts directly with Microsoft, CSP pricing is mostly set by Microsoft’s published rates (catalog prices) plus whatever margin the partner adds. You typically won’t get the kind of deep discount in CSP that you might in an EA negotiation. That said, CSP partners do have some flexibility to offer promotions or cut their margins for big clients. For example, a partner might offer you a 5-10% discount off the retail rates if you commit to moving a large number of users to them, or they might bundle in free services that effectively save you money. Also, Microsoft occasionally runs promotions (e.g. CSP annual subscriptions at a few percent off, or Azure credits) that the partner can pass along. So while you’re not “negotiating an EA” in the traditional sense, an enterprise definitely can shop around among CSP providers for the best overall deal and service package. Treat the partner selection as a negotiation – you might get better terms (like a lower management fee or added support) from one provider versus another.

Can we mix EA and CSP licensing within one organization?
Yes, an enterprise can use both an EA and CSP at the same time. This is a common scenario during transitions or for organizations that have distinct business units. For example, you might keep your corporate headquarters and main workforce on an EA, but use CSP for a smaller acquired company or for a specific cloud project. Microsoft’s licensing rules allow this mix; there’s no all-or-nothing requirement. The advantage is you get the best of both worlds – discounts on your stable base via EA, and flexibility via CSP for the rest. The drawback, as discussed earlier, is the governance complexity: you need to manage two channels and ensure you’re not overspending or double-licensing. It’s wise to coordinate centrally (perhaps through your IT asset management or SAM team) to monitor both the EA and CSP usage. Some organizations even involve their Microsoft account rep when using CSP, just to keep everyone in the loop and possibly leverage that information in future EA negotiations.

Does the CSP program include Azure as well as Microsoft 365, or is it only for seat licenses?
CSP absolutely includes Azure in addition to Microsoft 365 (and other products like Dynamics 365, Power BI, etc.). Through a CSP partner, you can purchase Azure subscriptions under what’s called the Azure Plan in CSP. Instead of an upfront monetary commitment (as would be typical in an EA for Azure), Azure through CSP is billed on a pay-as-you-go basis monthly, the same as if you bought Azure directly with a credit card – but consolidated with your other Microsoft charges via the partner. The CSP partner can also help manage and optimize your Azure usage. So yes, the CSP model covers both the seat-based licenses (Office 365/M365 plans, EMS, Dynamics user licenses, etc.) and consumption-based services like Azure. It’s a full-fledged alternative channel for almost all Microsoft cloud services. Just be aware that things like Azure Reserved Instances or other long-term Azure discounts can also be handled in CSP, often with similar terms – you’d work with your partner to take advantage of those if needed.

How does support differ between EA and CSP?
With an Enterprise Agreement, support from Microsoft is not automatically included in the licensing cost – enterprises usually purchase a separate support contract (such as Microsoft Unified Support or Premier support) which can be quite expensive, or they rely on basic support which is limited. In a CSP model, the partner provides your support as part of the service. Good CSP partners will offer 24/7 support for critical issues, advisory help, and they’ll handle escalating problems to Microsoft if needed. Effectively, the partner becomes your first line of support for any Microsoft product issues. This can be a big plus if the partner has a strong support team, because they might resolve issues faster and more personally than calling Microsoft directly. However, it’s important to clarify the support terms with your CSP provider – some include unlimited support in the margin you pay, while others might have tiers or charge for premium support. Also, for very complex issues, the CSP partner will still involve Microsoft, but you won’t be the one directly opening a ticket with Microsoft in most cases – the partner does that on your behalf. So, the difference boils down to partner-led support vs. Microsoft-led support. Many enterprises appreciate the high-touch support model of CSP partners, but you should vet the partner’s capabilities. In either case, you should not be left without support; it’s just a matter of who you call first (and whether you’re paying extra for it outside of your licensing fees).

Which program fits your organization? – EA vs. MPSA vs. CSP: Choosing the Right Microsoft Licensing Program.

Five Expert Recommendations

To wrap up, here are five strategic tips from licensing experts when considering Microsoft CSP for enterprise use:

1. Always model a 3-year TCO for EA vs. CSP: Before making any decision, run the numbers for your specific situation. Calculate the total cost of ownership over 3 years (or whatever term you care about) under an EA versus under CSP. Include all relevant factors – license costs, possible EA discounts, support contract costs, partner fees, etc. This financial analysis will give you a clear picture of the trade-offs. Often, the tipping point depends on your assumptions about growth or shrinkage. Having a solid TCO model ensures you’re making a fact-based decision rather than guessing. It also arms you with data if you need to justify the choice to executives or negotiate with Microsoft.
2. Use CSP as leverage in EA negotiations: Even if you ultimately prefer to stick with an Enterprise Agreement, the existence of CSP as an option can strengthen your hand in negotiations. Let your Microsoft rep know that you’re evaluating CSP alternatives – this signals that you’re not afraid to walk away from the table. We’ve seen enterprises secure better discount percentages or more favorable terms in their EA by demonstrating a willingness to shift some spend to CSP or other models. Essentially, CSP is competition to Microsoft’s EA, and competition can get you a better deal. Be genuine, of course – if an EA renewal isn’t meeting your needs, you should be ready to use CSP. But even as a negotiation tactic, it’s useful to remind Microsoft that the old EA isn’t your only choice.
3. If adopting CSP, choose a partner who adds value: Not all CSP resellers are equal. For enterprise needs, you want a partner with experience managing large clients, one who offers strong support and possibly additional services, such as license optimization or technical guidance. Look for partners that provide value beyond just reselling licenses – for example, quarterly reviews of your consumption, recommendations to save money on Azure, training sessions for your admins, or help with user onboarding/offboarding automation. Also, consider the partner’s financial stability and relationship with Microsoft (top-tier “Direct CSP” partners may have more influence and better escalation paths). Switching CSP providers is possible, but it’s smoother if you pick the right one from the start. Don’t be shy about asking for customer references and service commitments when selecting a CSP partner.
4. Avoid siloed EA and CSP management – coordinate internally: If you do mix models (some licenses on EA, some on CSP), establish clear internal governance for how they’re used. For instance, establish policies on which situations warrant CSP versus EA, and have a single owner or team responsible for tracking both pools of licenses. Coordinate true-ups and CSP monthly adjustments together in your IT asset management process. The goal is to optimize your overall Microsoft spend. You might discover, for example, that you should shift 200 idle licenses from EA to CSP or vice versa at renewal time. But you’ll only catch that if someone has holistic visibility. Siloed decision-making (where one department signs up for CSP unbeknownst to central IT, which manages the EA) can lead to inefficiencies or even compliance gaps. Encourage communication between procurement, IT, and finance whenever Microsoft licensing is involved, regardless of channel.
5. Think of CSP as a tactical tool, not one-size-fits-all: For most large organizations, CSP is best used as a complement or a tactical option rather than an outright replacement of an EA. It shines in certain scenarios (as we discussed) but might be less optimal in others. You might treat CSP as a flexible buffer – e.g., keep 80% of your stable workforce on EA and use CSP for the 20% that’s variable. Or use CSP during an interim period or for certain cloud projects. By viewing CSP in this strategic light, you can maximize its benefits (agility, convenience) without unwittingly giving up the advantages of an EA where those still make sense. In short, be intentional about where each licensing model is applied. The ultimate goal is to get the best combination of cost savings, flexibility, and risk management for your enterprise.

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