SPLA versus Volume Licensing

Overview

This topic continues to arise for companies that are seeking to decide between adopting volume licensing or SPLA (Service Provider Licensing Agreement) for delivering services to third parties.

The requirement for use of SPLA is often assessed based on determination of the customer as a ‘service provider’ and provision of a ‘service’, and that does not meet the eligibility criteria for Volume Licensing, based on the specifics of the service description, and service architecture topology.

For example, the ‘self hosted’ exception covered in this article, available under volume licensing,  enables a company to use licenses purchased under their own volume agreement and use them with their own intellectual property application, hosted as part of a service to a third-party, rather than the normal requirement to purchase licenses for services via SPLA.

The rationale for careful assessment purchasing via SPLA or Volume Licensing is not only to enable compliance with software licensing, but also to enable cost reduction, as many business  look to assess alternatives to SPLA as prices were increased in January 2018 and January 2019, and Microsoft look to incentivise adoption of the Azure cloud platform. This article will explore the licensing criteria and exceptions for use of Volume Licensing or SPLA respectively to support organizations that are attempting to navigate this particularly challenging licensing topic.

SPLA Price Increases

Effective January 1, 2018 monthly prices for the following products increased:
By 10% for Windows Remote Desktop Services SAL
By 10% for Windows Server Standard (Processor license)*
By 10% for Windows Server Datacenter (Processor license)*
By 10% for SQL Server Standard Core
By 10% for SQL Server Enterprise Core
By 10% for SQL Server Web
By 10% for SQL Server Standard SAL
By 5% for Core Infrastructure Server Suite Standard (Processor license)
By 7% for Core Infrastructure Server Suite Datacenter (Processor license)
(* Applicable to For Agreements that still have the right to report these sku’s)
Effective January 1, 2019 prices for the following products increased:
By 10% for Windows Server Standard Core
By 10% for Windows Server Datacenter Core
By 5% for Core Infrastructure Server Suite Standard Core
By 7% for Core Infrastructure Server Suite Datacenter Core
By 15% for Windows Remote Desktop Services SAL

What is a Service Provider?

The Microsoft definition of a ‘service provider’ could be categorized as a broad catch-all that can often apply SPLA almost by default, unless valid exclusion criteria apply. The requirement for use of SPLA is often determined based on determination of the customer as a ‘service provider’ and provision of a ‘software service’ that does not meet the eligibility criteria for Volume Licensing, based on the specifics of the service description, or service architecture topology.

The Microsoft Product Terms state that you as the customer:

may not (and is not licensed to) use the Products to offer commercial hosting services to third parties” under Volume Licensing.

[Ref: Microsoft Product Terms, Universal License Terms, April 2019, Page 7].

The term “commercial hosting services” is not explicitly defined in binding contract documentation, but there is supporting guidance provided in published licensing guides that are leveraged in this article.

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