Scenarios on Microsoft licensing for MSP and their customers


Dedicated Scenario – 3 options available

Option 1

MSP customer decides to bring their own Microsoft software (such as Exchange) and infrastructure (Windows) via their own volume licensing agreement. They do not have software assurance on the software. Can they do this? 

Yes. Why? Everything is dedicated. Server, virtual machine all are dedicated to one single organization. Software Assurance is NOT required.

Option 2

MSP customer decides to bring the MS software but the hoster will provide the infrastructure in a dedicated environment. Again, customer does not need Software Assurance if it’s a dedicated environment. In this scenario, the managed service provider (you) will provide the MS Windows license via SPLA and not report the other applications the customer brings over since it is already covered via their own volume licensing agreement. This is applicable, it’s dedicated (VM and physical servers)

Option 3

The customer is a healthcare company that needs a dedicated environment due to regulatory compliance. They do not own any software; they would need the service provider to supply the software licenses. Can managed service provider do this? Yes, the hoster would report everything under Microsoft SPLA. The hoster (you) CANNOT use your own Microsoft volume licensing agreement to provide the solution, but you can certainly provide SPLA. Please be aware that if you own a volume licensing agreement, you cannot use the same hardware your volume licensing agreement resides as your hosted solution.

Also keep in mind that SPLA is non perpetual, when the customer leaves, they can no longer use the software they were accessing.

Summary of Dedicated

Dedicated is applicable for both SPLA and end customer owned volume licensing. Dedicated also means dedicated hardware and dedicated VM’s. In dedicated environments, the end customer DOES NOT need software assurance. From a compliance perspective, it is defined as the following:

 “Any hardware running an instance of Microsoft software (OS or application) must be dedicated to a single customer. For example, a SAN device that is not running any Microsoft software may be shared by more than one customer; since, a server or SAN device that runs Microsoft software may only be used by one customer.” (source: Microsoft VDA FAQ)

Hybrid Scenarios – 3 options available

Option 1

Managed service provider decides to offer their customers a shared infrastructure, but they want the same applications to run on premise. A good option would be to have the customer purchase the server applications (think Exchange, SharePoint) with software assurance (SA) and run them on premise. You as the service provider would run the same applications in your shared environment BUT report the SAL for SA SKU - much cheaper option than standard SPLA prices. I wrote about this here. This also works well for Disaster Recovery options.

Option 2 (not really a hybrid but just go with it)

You can use license mobility. Microsoft likes to define this as a “hybrid option” but to me, hybrid insinuates the ability to run on premise and in your cloud. License mobility is a SA benefit for certain applications (SQL, CRM, SharePoint, Exchange, Lync) that allows customers to leverage their investment in SA and transfer those licenses into a hosters shared infrastructure. Reason why I don’t think this is truly a hybrid is the customer is TRANSFERRING licenses into your datacenter. This means that if a customer wants to move back to their own datacenter, they have to wait 90 days. (transfer license rule). With SAL for SA, nothing is being transferred. Windows does not have mobility rights, this will need to be reported under your own SPLA. I wrote about license mobility many times -  Here, you can also check out the Microsoft site for more of a definitive definition.

Option 3

Good Ole’ SPLA. Customer can run their own servers on premise, you just report SPLA licensing in a shared environment. The new SPLA agreement even allows MSPs to run SPLA software on customer owned hardware as long as you still manage it.

Shared Scenarios – 2 options

Option 1

License Mobility – see above

Option 2

SPLA. We all know what that is.


Thanks for reading,


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