Hybrid Licensing Strategy: Using Microsoft EA and CSP Together in 2025
In 2025, Microsoft’s licensing landscape is shifting, prompting enterprises to rethink how they purchase and manage software. Many organizations are exploring a hybrid Microsoft licensing strategy that combines both the traditional Enterprise Agreement (EA) and the Cloud Solution Provider (CSP) model.
For a full overview – Microsoft EA vs CSP: The Ultimate Guide
This dual approach aims to balance the cost efficiency and predictability of an EA with the flexibility and agility offered by CSP subscriptions.
The following guide outlines why a hybrid EA+CSP strategy matters now, how each model contributes unique benefits, and best practices for blending them. It’s designed for CIOs, CFOs, and procurement leaders seeking to optimize Microsoft licensing for both stability and adaptability.
Why Hybrid Licensing Matters in 2025
Microsoft’s evolving licensing model has made a hybrid approach more relevant than ever in 2025.
Recent changes include a narrowing focus for EAs and an expanded role for CSP:
- EA for larger enterprises: Microsoft is steering the Enterprise Agreement toward its biggest customers. While historically available to firms with 500 or more users, new EAs are now primarily offered to organizations with approximately 2,400 or more seats. Midsize enterprises under that threshold are being guided to alternative licensing channels.
- CSP for everyone else: The Cloud Solution Provider program has grown to accommodate businesses of all sizes. With no minimum seat requirement, CSP is now the go-to option for midmarket and smaller enterprises – and even a supplement for large ones. Microsoft’s investments in CSP (such as multi-year subscriptions and easier tenant license transfers) reflect its push toward a more cloud-first, subscription-based sales approach.
- End of volume discounts: A major change coming in late 2025 is the elimination of tiered volume discounts on cloud services under EA. After November 2025, online service licenses (such as Microsoft 365) will carry a single, consistent price, regardless of organization size. This erodes one traditional advantage of EAs for big customers and brings EA pricing in line with CSP’s per-user rates.
- Predictability vs. flexibility: In light of these shifts, enterprises are seeking a balance between predictability and flexibility. An EA still offers predictability – locked-in pricing and coverage for core needs – while CSP provides the flexibility to scale up or down as circumstances change. Using EA and CSP together allows organizations to get the best of both worlds. They can enjoy stable costs on their baseline usage and tap into on-demand licensing for everything else.
In short, hybrid licensing matters because Microsoft’s licensing future is trending toward agility. Companies that blend EA and CSP can ensure cost-effective stability without compromising their ability to adapt in real-time.
For insights on costs, read EA vs CSP Cost Comparison: Which Microsoft Licensing Model Saves More?.
How EA Provides Stability
The Microsoft Enterprise Agreement remains a cornerstone for large organizations due to the stability it provides.
Key ways an EA delivers predictability and control include:
- Multi-year price lock: An EA is typically a 3-year contract that locks in pricing for the duration of the term. This means all the products you include at signing have fixed per-unit costs for three years, insulating your budget from Microsoft’s annual price hikes or currency fluctuations. CIOs and CFOs value this certainty for long-term planning.
- Budgeting certainty: With an EA, you commit to a set number of licenses (or an enterprise-wide coverage) and can spread payments annually. This structured approach makes it easier to forecast IT spend. There are no surprise bills each month – costs are negotiated upfront, which is ideal for stable staffing levels and core infrastructure.
- Enterprise-wide coverage: EAs often require covering all “qualified” users or devices with certain products, ensuring your entire workforce has the necessary software. This blanket coverage approach simplifies compliance (no one gets left unlicensed) and standardizes technology across the organization.
- Software Assurance benefits: Every EA includes Software Assurance, which provides valuable extras. These benefits can include upgrade rights to new software versions, training vouchers, a home-use program for Office, and hybrid use rights that let you run on-premises licenses in the cloud. For example, with an EA, you can use Azure Hybrid Benefit to apply your Windows Server or SQL Server licenses to Azure VMs, thereby reducing cloud costs. Such perks add to the EA’s long-term value.
- Negotiation leverage: Large EA customers traditionally had volume-based discounts, and even with those fixed, big spenders can still negotiate extras. Microsoft tends to offer incentives for strategic commitments, such as adopting new products (e.g., security suites or Microsoft 365 E5), committing to Azure consumption, or agreeing to longer-term contracts. Enterprises with an EA have a dedicated Microsoft account team, which provides an opportunity to negotiate custom terms, payment flexibility, or bundling deals that smaller agreements might not be eligible for.
In summary, an EA provides a stable foundation for Microsoft licensing. It shines when you have a predictable core of users and services that won’t undergo radical changes. The organization benefits from locked-in pricing, broad coverage, and the support and perks that come with being a committed Microsoft enterprise customer.
How CSP Provides Agility
On the other hand, Microsoft’s Cloud Solution Provider program provides the agility and scalability that modern businesses require. CSP licensing, especially under the newer Microsoft New Commerce Experience (NCE), offers flexibility in ways an EA cannot:
- No minimum commitment: Unlike an EA, CSP has no minimum user count or revenue commitment. You can start with one license if needed. This makes CSP ideal for organizations of any size and for scenarios where a large upfront commitment is not desired.
- Quick scaling up or down: CSP subscriptions can be adjusted relatively quickly. Need 50 extra Microsoft 365 seats this month for a project? Add them via your CSP portal as soon as possible. Project over, and 50 people rolled off? You can drop those subscriptions after their term is up (monthly or annual) to avoid ongoing costs. This elasticity means you pay for what you use, when you use it.
- Flexible billing options: Under NCE, CSP offers both monthly and annual subscription terms (and even multi-year for some products). You can choose from month-to-month plans for maximum flexibility (great for short-term needs or testing), or annual plans for better pricing for longer-term users. The ability to mix and match term lengths under the same CSP agreement gives fine-grained control over commitments.
- Perfect for a variable workforce: CSP shines for contractors, seasonal workers, and new initiatives. For example, retailers can use CSP to license holiday seasonal staff for just the months they work. A company launching a pilot program or a short-term task force can equip those team members through CSP without altering any enterprise contract. When the work is completed, licenses can be easily canceled or reallocated.
- Partner-led support and services: When you buy via CSP, you’re working with a Microsoft partner who can add value. These partners often provide consulting, migration assistance, or support as a bundled package with the licenses. They handle administration in the Microsoft portal, which can help offload some of the burden from your IT team. Additionally, CSP partners can often offer consolidated billing and help optimize your subscriptions on a month-to-month basis. In short, CSP offers a service-oriented experience that can be highly agile, especially when paired with a capable partner.
With CSP, the control is in your hands (or your partner’s) to rapidly adapt your licensing to current needs. This agility is increasingly crucial in the fast-changing business environment of 2025. It complements the rigidity of an EA by filling in gaps and handling the dynamic aspects of your workforce or projects.
Benefits of Combining EA and CSP
Using EA and CSP together can yield a licensing strategy that is both cost-effective and highly flexible. Key benefits of this hybrid approach include:
- Cost Efficiency: Lock in discounted or stable rates for your steady-state needs via an EA, and avoid overpaying for fluctuating users by putting them on CSP. The EA covers your known, persistent usage (often at the best available rates for those volumes), while CSP ensures you only pay for additional licenses when needed. This prevents the common EA issue of “shelfware” – paying for more licenses than you actually use – because excess can be managed through CSP on a short-term basis.
- Agility: A dual licensing strategy adds agility to enterprise licensing. You maintain the EA’s predictable core for baseline operations, but any spikes, reductions, or experimental usage can be handled through CSP without delay. This agility enables the organization to respond to changes (such as new hires, projects, acquisitions, or downsizing) in real-time, rather than waiting for an annual true-up or contract renewal. It’s a safety valve for the unpredictable.
- Risk Management: Combining models reduces the risk of both compliance gaps and overspending. You’re less likely to find yourself under-licensed (since you can always quickly add via CSP if you outgrow your EA counts) and also less likely to grossly over-commit (since you didn’t have to size your EA for absolute peak usage). Essentially, the hybrid approach right-sizes your licensing on a continual basis. It also diversifies your sourcing, which can be a buffer against vendor or contract changes.
- Cloud Transition Flexibility: Many enterprises are in a hybrid IT state, with some workloads on-premises and others in the cloud. An EA often still covers on-prem licenses and provides transition rights (thanks to Software Assurance), while CSP is inherently cloud-first. Using both allows you to elegantly straddle the traditional and cloud worlds. For instance, you might retain core server licenses and CALs under EA (with rights to use them in Azure or on-premises), but adopt new cloud services via CSP for specific teams. As you gradually shift to cloud services or new Microsoft Cloud offerings, you can pilot them in CSP and then integrate them into your EA if they become core. This hybrid licensing approach ensures you’re not locked into one model as Microsoft’s offerings evolve.
In essence, a hybrid EA+CSP strategy strikes a balance between financial and operational considerations.
You gain the efficiency of long-term commitments for what’s steady, and the freedom of on-demand subscriptions for what’s not. This can maximize value and minimize waste in your Microsoft licensing spend.
Real-World Scenarios for Hybrid EA + CSP
To illustrate how a split licensing strategy works in practice, consider these common scenarios where combining EA and CSP makes perfect sense:
- Enterprise with seasonal staff: Imagine a large retailer or hospitality company that has a stable full-time workforce of 5,000 (covered by an EA) and an extra 500–1,000 temporary employees who join during peak seasons. The full-time employees receive enterprise-wide EA licenses, ensuring they’re always covered at a fixed cost. Seasonal workers, however, are equipped via CSP subscriptions that can be started just before the busy period and terminated afterward. This way, the company isn’t stuck paying year-round for licenses that are only used for a couple of months. The EA provides a cost-effective base for core staff, and CSP handles the seasonal surge seamlessly.
- Global company with acquisitions: Consider a corporation that frequently acquires smaller companies. The parent organization might have an EA in place for its primary operations, but when it acquires a new business unit mid-term, folding them into the existing EA can be complex (and might have to wait until renewal). Instead, the new acquisition’s users are put on CSP licenses immediately to maintain productivity. This bridges the gap until the next EA renewal or integration milestone. Over time, the acquired unit can either transition into the main EA or remain on CSP if it operates more independently. The hybrid model allows the enterprise to expand and integrate at its own pace without encountering licensing issues.
- Organizations piloting new technology: A large company wants to try Microsoft’s latest solution – say, a limited roll-out of Microsoft Viva modules or Azure AI services – but isn’t ready to commit enterprise-wide. Through CSP, the IT team can buy a small quantity of licenses for a pilot group, on a short-term basis. If the pilot is successful, they’ll formally adopt the tech in the next EA cycle; if not, they simply cancel those CSP subscriptions. Similarly, development teams spinning up test environments in Azure or evaluating Power Platform tools can use CSP to experiment without affecting the EA. This approach encourages innovation and testing with minimal financial risk, while the EA remains focused on proven, core services.
These scenarios demonstrate the versatility of a hybrid licensing strategy. Whether dealing with seasonal fluctuations, corporate expansions, or experimental projects, the combination of EA and CSP provides a toolkit to address each need optimally.
Governance Best Practices for Hybrid Licensing
Managing two licensing models simultaneously introduces complexity. To reap the benefits without confusion or waste, organizations should enforce strong governance over their hybrid licensing.
Best practices include:
- Centralize oversight: Maintain a clear, central inventory of all licenses – both EA and CSP – to prevent duplicate assignments and overlooked usage. Ideally, one team or system (such as a SAM tool or dedicated licensing manager) should track who has what license. Central oversight prevents scenarios like a user accidentally getting a license via EA and another via CSP for the same product.
- Define clear usage policies: Establish rules for when to use EA vs. CSP. For example, full-time employees might always get an EA-provided license, whereas contractors and interns are assigned CSP licenses by default. Alternatively, you might decide that any long-term need (lasting over 1 year) is addressed through EA at the next cycle, while shorter-term needs (less than a year) remain in CSP. Clearly documented guidelines will help managers and IT teams make consistent decisions and reduce arbitrary choices.
- Regularly review CSP usage: Unlike the fixed EA, CSP subscriptions can proliferate if not monitored – various departments might add licenses over time. Conduct periodic reviews (monthly or quarterly) of all CSP subscriptions and their usage. Look for opportunities to remove or reassign unused licenses, and to right-size any over-provisioning. This keeps the “agility” from turning into overspending. Some organizations implement an approval workflow for new CSP additions to ensure they’re truly needed and to record their intended duration.
- Align renewal and true-up cycles: Coordinate your EA timelines with CSP subscription terms for smoother management. For instance, if your EA renews every three years in July, consider setting CSP annual subscriptions to also renew in the same month. This alignment enables you to evaluate your total licensing needs holistically at once. During an EA annual true-up or renewal planning, you can review CSP usage to decide if some of those licenses should be absorbed into the EA (for a potentially better rate) or remain separate. Synchronizing cycles simplifies budgeting and eliminates the need for constant off-cycle adjustments.
- Use tools and partners wisely: Utilize any available management tools from Microsoft or your CSP partner to gain visibility. Many CSP partners provide dashboards or reports that can be very useful. Likewise, at EA renewal time, ask Microsoft or your licensing advisor for a holistic view of your consumption. A well-coordinated partner or licensing specialist can help ensure your hybrid strategy is optimized and compliant.
By implementing these governance practices, an organization can confidently operate a dual licensing model. The goal is to maintain clarity, control, and cost-effectiveness across both EA and CSP environments without letting one fall through the cracks.
Strategic Considerations in 2025
As you plan out your licensing strategy this year, keep in mind a few strategic tips to maximize value under the latest conditions:
- Lock in expiring discounts: If you have an EA up for renewal soon, 2025 might be the last chance to secure traditional discounts. With Microsoft ending volume-based price breaks for online services after November, some enterprises are considering early renewal of EAs to lock in current pricing for one more term. While Microsoft won’t always allow early or short-term renewals, it’s worth discussing with them if your agreement expires in late 2025 or 2026. Just be sure that solid usage forecasts justify any early renewal – you don’t want to overcommit simply to secure a discount that you don’t fully utilize.
- Choose CSP partners for value: Not all CSP resellers are created equal. When augmenting your EA with CSP, select a partner who offers more than just license transactions. Look for providers that provide value-added services, such as proactive cost optimization, fast support, onboarding assistance, or expertise in Microsoft products. A good partner will help manage the CSP side of your hybrid licensing, ensuring you actually realize the agility and savings that CSP can provide. They can also act as advisors, suggesting when to shift certain workloads or users between EA and CSP for the best results.
- Negotiate EA flexibility: As Microsoft is aware, customers have CSP as an easy alternative, which may give you leverage to negotiate more flexibility into your EA. For example, you could seek more lenient true-up/down terms, the ability to swap certain product licenses as needs change, or shorter renewal terms if you anticipate a major change ahead. Microsoft may be open to creative solutions to keep large customers on EAs, especially in light of the pricing model changes. Don’t be afraid to ask for terms that accommodate a hybrid approach – such as permission to keep a portion of users on CSP without violating any “enterprise-wide” clauses. Crafting an EA that acknowledges your need for agility will make the dual approach smoother.
- Plan for a CSP/MCA future: In the long run, Microsoft’s direction is toward the Microsoft Customer Agreement (MCA) and CSP models, which are more cloud-aligned and flexible. Enterprise Agreements may gradually phase into a new form or be offered only in exceptional cases. It’s wise to future-proof your strategy by building internal proficiency in managing subscription-based licensing. Over time, you might shift more of your spend into CSP or MCA if it offers equal value. Keep an eye on Microsoft’s roadmap – for instance, if new products or features are only available via CSP/MCA, be ready to adapt. The hybrid model you use today could be a stepping stone toward an eventual fully cloud-first licensing approach when the timing is right.
By thinking strategically about these considerations, you can ensure that your hybrid licensing approach not only addresses today’s needs but also sets you up for success as Microsoft’s licensing ecosystem continues to evolve.
Read more about your options: Microsoft EA vs CSP vs MCA-E Licensing Comparison.
FAQ – Hybrid Microsoft Licensing in 2025
- Can EA and CSP run concurrently without overlap? Yes. An Enterprise Agreement and CSP subscriptions can coexist in the same organization. Many companies already use both simultaneously. The key is to delineate which users or use-cases belong to each licensing model to avoid confusion. Technically, there’s no conflict – you’ll simply procure some licenses via your EA and others via your CSP partner. Just ensure that you manage them cohesively (for example, avoid accidentally double-licensing a person for the same product via both channels). With proper tracking and a clear policy, EA and CSP operate smoothly in parallel.
- How do true-ups work if using CSP for growth? Under an EA, you normally perform an annual “true-up,” adding any additional licenses that were deployed beyond the initial agreement count (and paying a pro-rated amount for those). If you’ve been handling growth via CSP, those extra users might not need to be added to the EA true-up at all, since they were never using EA-provided licenses. In practice, organizations might use CSP to cover unexpected growth during the year, then, at true-up time, decide whether to officially incorporate those new users into the EA (for example, if the growth proved to be permanent) or keep them on CSP if the need was temporary. This approach can save money – you’re essentially renting licenses via CSP only for the time they’re needed, rather than immediately committing to them for the full EA term. Always ensure, however, that this doesn’t violate any EA contract terms about enterprise coverage. Generally, short-term or external staff can safely remain on CSP without impacting EA true-ups.
- Is hybrid licensing more expensive to manage? The management effort may be slightly higher, but the goal is to achieve overall lower costs due to increased efficiency. With two licensing streams, your procurement and IT asset management teams will have to oversee both an EA and one or more CSP accounts. This means tracking two sets of invoices and adhering to two sets of compliance rules. That said, many find the extra effort worth it for the cost savings and flexibility gained. Good governance (as discussed above) and possibly using a unified management tool or process can keep the overhead low. Financially, if done right, a hybrid approach should reduce waste and unused licenses, which in turn lowers your effective spend. While administrative overhead is a consideration, hybrid licensing should not be more expensive in total cost; in fact, it can be more cost-efficient.
- When does it make sense to move fully to CSP? It could make sense if your organization highly values flexibility or if the benefits of an EA no longer justify the commitments. For companies well under the 2,400-user mark (who Microsoft is nudging to CSP anyway), sticking solely with CSP often simplifies operations. Even larger enterprises might consider going full CSP if they are 100% cloud-driven, have very fluid user counts, and don’t need the legacy perks of EA (like on-premises rights or fixed 3-year pricing). If Microsoft’s removal of volume discounts means your EA isn’t saving you much money, the argument for EA diminishes. A full CSP model means you pay only for active users/services and can adjust quickly. However, moving fully to CSP might increase per-seat cost for very large numbers of users (since EAs sometimes still offer bespoke deals or billing terms). It’s often a gradual evaluation: some organizations, as they approach EA renewal, will compare the three-year cost of a new EA vs. the equivalent in CSP and decide from there. The tipping point typically occurs when the benefits of flexibility and simplicity outweigh the few remaining advantages of the EA.
- What governance controls prevent overspending in hybrid setups? To avoid overspending, implement controls such as regular auditing of license usage (to find and eliminate unused licenses on both EA and CSP), approval processes for new CSP license additions (so they’re reviewed for necessity), and setting defined owners for license management. Additionally, utilize reporting tools – for example, Microsoft 365 admin center reports combined with CSP partner reports – to gain a comprehensive view of your deployment. Some organizations set budgets or alerts for CSP consumption to catch unexpected spikes. Essentially, treat license management as an ongoing discipline: reconcile your active users with assigned licenses frequently, and enforce that when someone leaves or a project ends, their licenses are promptly removed. By maintaining transparency and control over each side of the hybrid model, you can prevent the “creep” of overspending and ensure the hybrid strategy delivers the intended savings and agility.
Deploying a hybrid EA+CSP licensing strategy in 2025 can feel complex, but with the right approach, it empowers an enterprise to be both cost-conscious and nimble.
By understanding the strengths of each model and adhering to best practices in governance, organizations can confidently navigate Microsoft’s licensing changes and leverage them as an advantage.
The result is a tailored licensing setup that fits your business’s unique rhythm – steady where you need stability, and flexible where you need freedom.
Read about our Microsoft EA Optimization Service.
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