Cloud Solution Providers (CSPs)

Cloud Solution Providers (CSPs) offer scalable computing resources such as computing power, data storage and applications on-demand over the internet. This article looks at the complexity of CSP models, comparing Indirect versus Direct CSP models and examining considerations for migration from traditional agreements to a CSP framework. Special attention is paid to perpetual CSP licences and how companies can use Microsoft CSP to enhance their operations and strategic objectives, enabling them to make informed decisions.

What are Cloud Solution Providers (CSPs)?

Understanding Cloud Solution Providers (CSPs) involves recognising the many benefits they offer, along with the diverse range of services for different business needs. Features of using CSPs include:

1. Scalability and flexibility: Companies can scale their IT infrastructure up or down based on current demand without significant upfront investments.
2. Reliability: CSPs provide infrastructure that ensures high availability and minimal downtime.
3. Customisation and responsive load balancing: customised solutions meet specific business requirements, while responsive load balancing ensures efficient use of resources.

CSPs mainly use their data centres to host various services, including Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). This model allows companies to purchase services on a pay-as-you-go basis, aligning costs with actual usage and reducing capital expenditure.

Overview of CSP models

Cloud Solution Providers (CSPs) typically offer their services through two primary models: the indirect model and the direct-billing model. These models address different needs and operational capabilities of partners and provide flexibility and scalability in delivering cloud solutions.

Indirect model:

1. Microsoft is working with partners to identify the most appropriate model for business growth.
2. Partners work with indirect providers for customer support and billing, leveraging their expertise for improved service delivery.
3. This model is ideal for partners who prefer not to manage direct billing and customer support.

Direct billing model:

1. Partners buy Microsoft products and subscriptions directly from Microsoft and sell them to their customers.
2. This model is suitable for partners capable of managing direct customer relationships, including billing and support.
3. Both models allow partners to sell a wide range of Microsoft Cloud services, depending on the market regions or countries in which CSP offerings may be sold. Before ordering a CSP offering on behalf of a customer, the customer must sign the Microsoft Customer Agreement to ensure that the terms and conditions are met and understood.

As for CSP Perpetual Licences, this option within the CSP framework offers companies a cost-effective solution for long-term software use. These licences enable the following

1. Lifetime access: Companies can use the software indefinitely.
2. Flexible deployment: Companies can deploy on-premise, in the cloud or in a hybrid setup.
3. Budget predictability: Fixed costs without worrying about subscription renewals or price changes.
4. Compliance and control: Improved management of software usage and compliance.

The Indirect vs. Direct CSP models

The choice between Indirect and Direct CSP models has a major impact on how companies interact with Microsoft's cloud services, each with its own trajectories and requirements.

Direct CSP model:

1. Pathway: Partners buy directly from Microsoft and resell to their customers.
2. Requirements:
   1. Maintain an Advanced Support Agreement.
   2. Develop your own intellectual property (IP).
   3. Manage a billing structure for customers.
   4. Meeting annual minimum revenue expectations.
      1. Challenges: Complex billing structure and strict revenue expectations.
3. Pathway: Partners sell through an indirect CSP programme, using a distributor or indirect supplier.
4. Advantages:
   1. Faster market access.
   2. Buy SKUs from a CSP provider.
   3. Flexibility in setting profit margins.
   4. Access to experienced support infrastructure.
   5. Incentives directly from Microsoft.
   6. Recognition towards Microsoft Partner status through Partner of Record (POR) status.

Considerations for migration from traditional agreements to CSP

Migration from traditional licence agreements to a Cloud Solution Provider (CSP) model requires careful consideration and planning. With the discontinuation of the OPEN License programme after 1 January 2022, organisations are advised to consider moving to CSP, especially for perpetual CSP licences. Licences with Software Assurance (SA) can still be purchased via OPEN Value or OPEN Value Subscription, with existing OPEN licences with SA being evaluated for transition to a CSP subscription model. This strategic move by Microsoft offers flexibility for customers with specific workloads that cannot be migrated to the Cloud and provides an adaptable framework for modern business needs.

Microsoft-led migration processes will begin on 11 January 2024 for existing commercial licence-based subscriptions, transferring them to new trade at the end of each subscription period. A key condition for this migration is that the legacy subscription is active and not eligible for migration. Partners can schedule these migrations in the Partner Centre for a specific date or on the renewal date of the legacy subscription. It is essential to take into account the restrictions and new rules under the new trade, especially with regard to cancellation windows and the transition from annual to monthly terms, which will affect how partners resell to customers.

CSP Perpetual licences

CSP perpetual licences offer a unique proposition for organisations looking for long-term access to software without the recurring costs associated with subscription models. These licences offer:

1. Lifetime access: Guarantees unlimited use of the software, which helps with long-term planning and budget predictability.
2. Flexible deployment: Organisations can deploy the software on-premise, in the Cloud or in a hybrid environment to meet different IT infrastructure needs.
3. Predictable budgeting: The fixed costs associated with perpetual licences eliminate worries about subscription renewals or fluctuating prices, helping with financial planning and compliance.
4. Control and compliance: Organisations maintain greater control over software usage and compliance, which is crucial for compliance with licensing agreements and regulations.

The transition from traditional to CSP agreements, especially when it comes to perpetual CSP licences, requires a good understanding of the differences in terms, conditions and potential impact on discounts and billing methods.

Perpetual licences through the Cloud Solution Provider (CSP) programme have expanded to the entire market and offer a significant shift from the traditional CSP subscription model. This one-off upfront purchase includes:

1. Licence-only (L-only) offerings: Unlike the traditional model, perpetual CSP licences do not include Software Assurance (SA) and focus only on the licence.
2. Supplied software: Offerings include desktop tools (Visio, Project, Office Suites, Word, Excel, PowerPoint), infrastructure servers (Windows Server, SQL Server, Biztalk Server) and productivity servers (Exchange, SharePoint, Skype for Business, Project Server).
3. CSP Perpetual licences are specifically designed for organisations switching from the OPEN channel and focusing on licence-only products. This model is particularly beneficial for:
4. Hybrid Cloud environments: It meets customers' hybrid needs and provides solutions that bridge on-premise and cloud infrastructures.
5. Customer support: Indirect resellers are in charge of managing customer support issues, including purchasing, accessing licence keys, activation and downloading/following product media. Options for technical support include direct support through the reseller partner, payment per incident through Microsoft or external support solutions.

This approach offers a unique combination of flexibility, control and cost-effectiveness, making it an attractive option for companies looking to maximise their Cloud and on-premise software investments without the recurring costs associated with traditional subscription models.

FAQs

What is a Cloud Service Provider (CSP)?

A Cloud Service Provider (CSP) is an external organisation that provides scalable computing resources that companies can access on demand over the internet. These resources include Cloud-based computing, storage, platforms and application services.

What types of services do cloud service providers offer?

Cloud Service Providers (CSPs) typically offer three main categories of Cloud computing services: Infrastructure as a Service (IaaS), Software as a Service (SaaS) and Platform as a Service (PaaS).

What is the difference between Tier 1 and Tier 2 cloud solution providers?

Tier 1 Microsoft Cloud Solution Providers (CSPs) are direct suppliers of Microsoft products and work directly with Microsoft to serve businesses. Tier 2 CSPs, on the other hand, are indirect partners working with a third-party Microsoft distributor. It is generally easier and faster to become a Tier 2 CSP than a Tier 1 CSP.