I spoke with Christoph Harvey, CEO of Deskcenter AG at Microsoft’s Inspire Conference in the summer.
In this article Christoph shares his views on Microsoft’s SAM announcements (see video below) and provides an introduction to Microsoft SPLA.
“SPLA“ is the original Microsoft term for “Service Provider License Agreement“ and regulates the pay per use terms and conditions for Microsoft customers. With a SPLA license agreement the customer reports the monthly peak usage of each Microsoft product they make available to their end user customers. Hence, this agreement is usually preferred with customers, who experience larger fluctuations in software uses and/or who manage software and IT assets for end user customers. Hence, SPLA customers are usually Hosting companies; CSP’s (Cloud Service Providers) and large data centres of IT shared services organizations, financial institutions and telecommunications companies.
SPLA is growing 35% to 40% in terms of annual revenue, which hosting companies and CSP’s (Cloud Service Provider) currently need to manage. On the one hand it’s a nice problem to have. On the other hand, it can wreak havoc in your licensing and cost of ownership base, when you cannot manage the growth of licensing and IT assets accordingly.
Recording and reporting consumption of a SPLA license agreement is the responsibility of the SPLA license holder, i.e. usually the Hosting company, CSP or data centre provider. At the moment these organizations have been reporting consumption manually, without the support of a made for purpose SPLA license and software asset management tool. The manual approach often is very cost intensive (i.e. on average 2-3 people who collate information for several days at the end of each month in each data centre. This being done manually then also bears repeated potential for usually inadvertent false reporting, which can haunt the Hosting company/CSP at the time of a license review or audit.
Not only do customers carry a fair size risk of being under licensed when being audited. A lot of SPLA customers also miss out on cost savings, which can be gained when using a SPLA license and software asset management solution. The cost savings come from reducing the reporting of consumption from days to minutes, knowing the reported information is accurate and compliant and also making sure that all licenses reported are also associated with the right contracts, insuring optimized license costs on an on-going basis (i.e. utilizing inheritable contracts to report licenses against or reporting licenses outside of SPLA consumption where possible, like SQL licenses in association with SAP contracts or utilizing allowed test periods for licenses, etc.).
SPLA resellers, who manage the contractual relationship on behalf of Microsoft and consolidate consumption reports from Hosting companies and CSP’s, are remunerated on the accuracy, compliance and on deadlines by which they report their customers each month. By offering their customers the use of a SPLA license and software asset management tool, they can give their clients compliance peace of mind, support them in optimizing their monthly licensing positions and insure timely reporting for maximum financial benefits for them and their clients. All of which will lead to greater customer retention for the SPLA reseller, which is one of the key success factors for him, since a Hosting company/CSP has the choice to switch between SPLA resellers from month to month.