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Office 365 Licensing Explained: Enterprise vs. Direct vs. Cloud Service Provider (CSP)

Whether you already have Office 365 or Microsoft 365, or you’ve made the (smart) choice to migrate over to it, you’re now faced with the decision on how to purchase or renew your Microsoft licenses. Microsoft offers their customers a few ways to obtain licenses — and we’ll discuss them all here — but we recommend partnering with a trusted advisor who can purchase and manage your licenses and help you leverage your Microsoft tools to their full advantage.

Common Office 365/Microsoft 365 Licensing Options

For a typical business, there are three common licensing options for Office 365 or 
Microsoft 365:

  • Enter into an Enterprise Agreement (EA) directly from Microsoft (typically for larger organizations)
  • Purchase licenses online directly from Microsoft
  • Purchase licenses from a Microsoft Cloud Service Provider (CSP)


Enterprise Licensing Agreements
Enterprise licensing agreements require a three-year term, come with quite a few limitations, and are reserved for larger companies. Microsoft has even recently increased the various stipulations a company must meet in order to be eligible for an Enterprise Agreement, so the average organization is not able to purchase a license this way. However, if you do meet the eligibility requirements, you could get access to special discounts and services through Microsoft.

Based on the limitations for Enterprise agreements, this post focuses on detailing the pros and cons of the other two licensing types — Direct and CSP.

Using A Cloud Service Provider vs. Buying Direct
In most cases, companies of any size will benefit from having their Microsoft licenses managed through an experienced Cloud Solution Provider (CSP). By working with a CSP, you gain access to many advantages over purchasing direct from Microsoft.

Primary Advantages of Using a CSP Over Buying Direct
The two biggest advantages of purchasing a license through a certified CSP are access to pricing discounts and flexibility.

Pricing and flexibility — they go hand in hand
When purchasing a license directly, you have the choice to pay annually or monthly but must make a yearly commitment. If you choose to pay yearly, you will pay the lower advertised price but be required to pay the full amount up front each year. If you choose to pay monthly, you will pay a higher monthly amount. By partnering with a CSP, you’re able to take advantage of the annual commitment price without making an annual commitment! This provides a level of flexibility that most companies desire.

Through direct purchasing, you have to make a yearly commitment to get the better, lower price. However, as you scale and the size of your company changes, you may find yourself needing fewer licenses or needing to change your license to a different type. Unfortunately, when buying direct, you can only make changes on a yearly basis. This means you could end up paying for licenses you don’t really need.

By purchasing through a CSP, you can adjust or change your license types on a monthly basis and have the security in knowing that your licenses can keep pace with the dynamic needs of your company. Aside from general business cycles that drive change, companies often need to hire for short periods of time (temporary staffing, interns etc.) and need licenses for less than a year. Working with a CSP, your company will have the flexibility needed to manage your licenses. Your CSP will also provide detailed pricing information on a monthly basis and will make sure you’re getting the lowest price possible.

Other Advantages to Partnering with a CSP
While pricing and flexibility may be the two primary advantages of working with a Microsoft Cloud Service Provider, you also get the benefits of working with a trusted and experienced advisor, and access to advanced IT support.

Access to an experienced advisor
The CSP you choose should double as a trusted advisor to help you both select and maintain the most appropriate licenses for your business and to help you grow and adopt the breadth of services that are included with your Office 365 investment — at no extra cost. Anytime you need to expand your Office 365 instance, you can take comfort in knowing you have a cloud partner that is familiar with your businesses unique goals and challenges.

Fully supported
In addition to being your trusted advisor, your CSP should also provide support for your licensing. When you encounter a problem, your CSP is there to help. You could contact Microsoft support, but this can be challenging as the agent is not familiar with your business. In addition to knowing your organization, most CSPs have experience troubleshooting many common issues and can resolve them without contacting Microsoft.

So, whether or not you need to renew an existing Office 365 or Microsoft 365 license, or purchase a new one, it’s clear that working with a CSP is the way to go.

Ready to make the switch? Great! Withum is a certified Microsoft Cloud Service Provider. Reach out to us online or call us, 240-406-9901.

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