Microsoft is changing its enterprise licensing model. The Enterprise Agreement (EA) model, built on the foundations of technology stability and predictability, is being gradually phased out in favour of the new Cloud Solution Provider (CSP) model, which takes the unpredictable and dynamic technology environment into account.
“Technology changes so fast, with new offers and services rolled out on an almost daily basis, that the EA model has become untenable for most customers,” says Pieter du Toit, Head of Channel, Mint Group. “The CSP model addresses this challenge, giving customers a new way of managing their environments that aligns with the speed of change and their budgets.”
While this shift offers a number of benefits, it also carries deep implications for how companies manage costs, technology and innovation, and now is the time to do it.
“While it will take around three to five years for the process to be completed, this is the right time for companies to prioritise the change and adapt their approaches to ensure they benefit from the CSP model,” he continues. “This isn’t a simple change in contract terms and expectations, it is a redefinition of the relationship between IT leaders, their technology environments and their partners.”
The EA model was built for a different era with on-premises infrastructure, long-term planning cycles and relatively slow technology change. The CSP model is structured around the consumption-based world, which demands agility and simplicity, addressing the fact that companies aren’t interested in being locked into rigid, three-year licensing agreements that don’t meet their evolving business needs.
“Crucially, CSP introduces greater flexibility with month-to-month licensing, usage-based billing and the ability to scale services and costs on demand,” says Du Toit. “However, while this gives companies much-needed adaptability, it introduces a new layer of strategic responsibility.”
Channel partners are essential to ensuring companies manage the transition smoothly. As trusted advisors, they provide insight and support across key areas that include governance, cost management, security and AI-enablement. Choosing the right partner is a process of security a team that has technical expertise, business understanding and an innate knowledge of the full Microsoft technology stack. From Teams to Azure to Copilot to data estate design, channel partners are expected to deliver proactive support, consult on architecture and compliance, and ensure companies benefit from continuous optimisation across their estate.
“CSP brings agility, but can enable cost sprawl,” says Du Toit. “Often, companies are unaware that 30%-40% of their current subscriptions may be unallocated and this creates a silent, but expensive, drain on their IT budgets.”
Effective cloud management means real-time visibility into usage, an understanding of AI licensing and rigorous application health management. Enterprises need platforms that offer them dynamic dashboards, licence alignment intelligence (such as Copilot suitability analysis) and ongoing environmental health checks.
“Over the next few years, companies have the opportunity to prepare for the journey from EA to CSP at a pace that suits their architecture and strategy,” says Du Toit. “Companies that embrace it, and work with the right partners, will find that they will experience measurable cost benefits and access to smart tools that allow them to deftly manage scale, resilience and innovation alongside spend.”
CSP opens the door to more control, visibility and spend. IT teams can use the new model as a way of modifying and refining their licensing decisions, so they reflect real-time usage and business strategy. It also allows for companies to build closer partnerships with their partners and to approach their investments proactively, achieving the compelling payoff of lower risks, higher agility and a solid IT foundation.
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