Microsoft EA: When to Go Direct vs. Through LSP

Direct vs LSP: When to Go Direct with Microsoft

Introduction – Why the Direct vs LSP Decision Matters

Microsoft Enterprise Agreements (EAs) have traditionally been purchased through third-party resellers known as Licensing Solution Providers (LSPs).

For most organizations, the LSP route has been the default for acquiring volume licenses and cloud services.

However, a select few enterprises have the option to bypass the LSP and negotiate directly with Microsoft – effectively making an EA direct purchase from the vendor.

This bypass LSP scenario – essentially choosing Microsoft direct vs reseller – is more than just a procurement preference; it can significantly impact your negotiation leverage, pricing outcomes, and support experience.

Choosing between going direct and sticking with an LSP matters because it changes how you interact with the tech giant. It determines whether you have multiple parties to leverage for better deals or a single source of truth. Read our overview for how you should be negotiating with Microsoft Resellers (LSPs)

For CIOs, IT procurement leads, and licensing managers, understanding when it makes sense to engage Microsoft directly (and when it doesn’t) is crucial for a strategic, cost-effective licensing strategy.

In the following sections, we’ll break down how each model works and offer guidance on making the best choice for your organization.

How Microsoft Direct Contracts Work

Direct Microsoft contracting is usually reserved for very large enterprises – think global Fortune 500 companies or organizations with massive annual Microsoft spends (often in the tens of millions of dollars).

In a direct EA (Enterprise Agreement) purchase, your company signs an agreement directly with Microsoft rather than through a reseller.

Microsoft’s enterprise sales team manages the relationship, handles pricing and billing, and works with you one-on-one to tailor the agreement to your needs.

Under a direct contract, Microsoft essentially becomes your reseller and account manager combined. All invoices come straight from Microsoft, and you pay Microsoft directly.

Your organization is typically assigned a dedicated Microsoft account team, which can include account executives, technical specialists, and customer success managers.

These Microsoft personnel align with your business at a strategic level – often engaging in executive-to-executive discussions about roadmaps and deployment plans.

Benefits of going direct include:

• Direct escalation and support: If there’s an issue or a critical need, you have a straight line to Microsoft. There’s no intermediary to navigate, which can streamline communications and problem resolution.
• Enterprise-level alignment: Microsoft’s team will often involve you in strategic programs, such as early technology adoption initiatives, customized training, or pilots for new products. The vendor’s focus is closely tied to your success as a top-tier customer.
• Customized terms: Very large customers may negotiate more flexible or bespoke terms in their agreements. Microsoft might offer custom discounts, additional Azure credits, or contractual concessions that smaller deals typically don’t get.

However, going direct also means you won’t have a third-party advocate in the mix. You’re relying on Microsoft’s information and willingness to accommodate your needs.

This is manageable if you have strong internal licensing expertise and negotiation skills, but it’s something to approach with eyes open.

How LSP Engagement Works

For the vast majority of businesses, an LSP acts as the middleman for Microsoft licensing. An LSP (Licensing Solution Provider) is an authorized reseller that handles the sale and administration of your Microsoft EA, managing everything from contract preparation and renewal orders to ensuring you remain compliant with licensing rules.

In this reseller model, your contract might still be a Microsoft EA at its core, but it’s negotiated and fulfilled via the LSP. You typically receive invoices from the LSP, which in turn handles payments to Microsoft.

LSPs are compensated by Microsoft through rebates or commissions, not by charging you directly for the licenses. This means an LSP’s incentives are aligned with Microsoft’s goals to increase license volume and Azure cloud consumption.

Top LSPs often have sales targets to drive adoption of Microsoft’s latest products and cloud services.

At the same time, because they compete with one another for your business, LSPs can be motivated to offer better pricing or extra services to win or retain your account.

Key aspects of working with an LSP:

• Transaction management: The LSP manages the day-to-day licensing transactions – from quoting prices to submitting your true-up orders (annual license reconciliations) and handling contract paperwork. This offloads a lot of administrative burden from your team.
• Value-added services: Many LSPs provide additional help, such as software asset management (SAM) tools, compliance assessments, training sessions, or dedicated support lines. The quality and range of these services vary by provider – some are very hands-on advisors, while others focus mainly on processing orders.
• Local presence and flexibility: If your organization operates in multiple countries or requires local billing in different currencies, an LSP can often accommodate that. They may have regional offices to provide local language support and handle country-specific tax and invoicing requirements, which is beneficial for global companies.
• Deal influence: While Microsoft sets base pricing and discount limits, a savvy LSP can advocate on your behalf. They often have direct lines to Microsoft’s regional sales teams and can lobby for special price concessions or extra benefits. Additionally, you can pit multiple LSPs against each other in a competitive bidding scenario for your EA renewal, potentially driving down costs – a leverage point you lose if you go direct.

In essence, the LSP model introduces a partner who can simplify licensing logistics and sometimes provide independent advice, but remember that Microsoft still pays the LSP.

They have sales quotas and vendor alliances, so their guidance won’t be completely impartial. It’s the classic intermediary situation: a good LSP balances Microsoft’s interests with yours, whereas a poor one might just push whatever Microsoft tells them to.

Any end customer needs to understand the dynamics between LSP and Microsoft, LSP Margins, and Incentives for Microsoft Licensing.

Comparison Table – Direct vs. LSP

To highlight the differences, here’s a side-by-side comparison of going direct with Microsoft versus using an LSP:

When to Go Direct

Not every organization can opt for a direct relationship with Microsoft – and even if you can, it might not always be the best move.

Here are scenarios where going direct is typically advantageous or worth considering:

• Massive annual spend: If your Microsoft licensing spend is in the tens of millions per year, you likely have the clout to negotiate directly. Microsoft generally reserves direct EAs for customers that represent significant revenue. At that scale, even small percentage discounts mean big dollar savings, so Microsoft might offer you special pricing or perks to keep your business.
• Global footprint and complexity: Enterprises operating across many countries or regions (North America, EMEA, APAC) may prefer a single, unified agreement directly with Microsoft. Direct engagement can simplify the management of a global contract and ensure consistency in terms and pricing worldwide, as opposed to juggling multiple LSP agreements and local variations.
• Need for executive alignment: If you want Microsoft’s top-level attention – say your CIO wants a direct line to Microsoft’s senior leadership or you need influence over product direction – being a direct customer helps. You’ll have Microsoft’s strategic account team involved, which can facilitate executive business reviews, faster escalations for critical issues, and even input into Microsoft’s product roadmap or special investment funds for your projects.
• Strong internal licensing expertise: Going direct means you won’t rely on a reseller to interpret Microsoft’s complex licensing rules for you. Suppose your organization has licensing experts or a dedicated software asset management team that can handle the intricacies of the EA (true-ups, compliance, optimizing usage). In that case, you can thrive without an LSP’s hand-holding. Essentially, if you don’t need the “training wheels” an LSP provides, direct engagement can work in your favor.
• Desire for a closer partnership: Some companies like to be seen as strategic partners to Microsoft. Direct relationships can foster that partnership dynamic – you might collaborate on case studies, join customer advisory boards, or get invited to exclusive previews. If those perks and the sense of being “in the inner circle” matter to your business, direct might be worth it.

How to get the best deal via an LSP, Getting Maximum Discounts via Resellers: 2025 Strategies for IT Buyers.

When to Stick with an LSP

For many organizations, the indirect route via an LSP remains the safer and more beneficial choice.

Consider staying with (or starting with) an LSP in cases like these:

• Moderate spend or size: If your Microsoft spend doesn’t reach the lofty levels needed for direct, you’ll be going through an LSP by necessity. But even if you could go direct, a mid-sized enterprise might receive more attentive service from a good LSP than from Microsoft’s team (which prioritizes the very largest accounts).
• Need for local support and invoicing: Companies with diverse regional offices or complex billing requirements often value the flexibility of LSPs. A local reseller can invoice in local currency, navigate country-specific procurement regulations, and provide on-site or in-time-zone support. Microsoft’s direct sales team might not offer that localized touch in every region.
• Valuable LSP services: If you rely on your LSP for extras like regular compliance audits, optimization reports, or help desk support for licensing questions, it makes sense to stick with that model. Those services act as a safety net, ensuring you don’t overlook a licensing obligation or overpay for unused software. Microsoft, in a direct capacity, typically won’t provide that level of ongoing operational assistance.
• Leverage through competition: One major advantage of using LSPs is the ability to introduce competition. At renewal time, you can invite multiple LSPs to propose pricing and incentives. This lets you play the field and often results in a better deal (whether it’s deeper discounts or bonus services). If you go direct, you lose that competitive leverage since there’s no alternative supplier for the same Microsoft products.
• Limited internal resources: Smaller IT procurement or IT asset management teams might appreciate the administrative support an LSP provides. Managing an EA involves tracking licenses, usage, and compliance, as well as handling the paperwork associated with renewals and true-ups. If your team is stretched thin, having a reseller partner manage those details and send timely reminders can prevent costly mistakes (like missed true-ups or lapses in coverage).

Checklist – Deciding Direct vs. LSP

Use the following checklist to guide your decision-making process.

This ensures you consider all important factors before choosing the direct route or sticking with an LSP:

• Confirm eligibility – Check with Microsoft whether your organization qualifies for a direct EA contract (criteria typically include your annual spend, seat count, and overall strategic importance as a customer).
• Benchmark potential benefits – Identify what you might gain by going direct. Will Microsoft offer deeper discounts, more credits, or improved support? If possible, discreetly ask peers or licensing advisors about the experiences of similar enterprises.
• Weigh internal capabilities – Do you have the in-house expertise and availability to manage licensing tasks that an LSP typically handles (compliance tracking, true-ups, optimization)? If not, account for the cost of building that capability or the risks of going without it.
• Compare LSP proposals – If you’re staying indirect, run a competitive bid among multiple LSPs. Compare their pricing, service offerings, and track records – the lowest quote isn’t always the best overall value.
• Align with long-term strategy – Consider your 3–5 year roadmap with Microsoft. For example, if a major cloud migration is on the horizon, choose the model that offers more flexibility or incentives to support your future Azure growth.

Pitfalls to Avoid

As you weigh direct vs. reseller options, keep an eye out for these common pitfalls:

• Assuming “direct” guarantees the best discount: Don’t fall into the trap of thinking Microsoft will automatically give you rock-bottom pricing just because you went direct. Microsoft is a savvy negotiator; it will still aim to maximize its revenue. Sometimes, an LSP hungry to win your business might cut margins or bundle services in ways that lead to a better overall value for you than a straight, direct deal.
• Underestimating the LSP’s influence: It’s easy to think an LSP is just a “box checker” for orders, but a good LSP can advocate for you within Microsoft. They often have channels to escalate issues or request exceptions on your behalf (especially if they are a major partner for Microsoft in your region). Dismissing them entirely might mean losing out on a potential ally who can help you navigate Microsoft’s bureaucracy.
• Overlooking service and support quality: Price is important, but so is the quality of support. If your current LSP resolves licensing issues quickly, assists with complex deployments, or proactively keeps your compliance on track, that service has real value. Conversely, if you switch to direct and find that you’re now one of many customers waiting for a response from Microsoft’s team, you might regret losing the dedicated attention you had. Always factor in the soft elements like responsiveness, expertise, and the relationship trust you’ve built.
• Switching at the wrong time: Timing matters. Avoid trying to change your model at a chaotic moment – like right before a big renewal deadline or during a major project rollout. For example, shifting from an LSP to direct (or vice versa) is best done at an EA renewal after careful planning. Rushed changes can lead to contractual confusion, missed opportunities, or simply scrambling to learn a new process under pressure.

FAQ – Direct vs. LSP

Q1: Can any company bypass LSPs and go direct with Microsoft?
No – direct Microsoft agreements are typically invitation-only and aimed at very large customers. In practice, only organizations meeting certain revenue or seat count thresholds (and usually with a global presence) can negotiate a direct EA. Most mid-sized and even many large enterprises will still be routed through an LSP due to Microsoft’s sales policies.

Q2: Do direct Microsoft deals guarantee bigger discounts?
Not necessarily. While Microsoft may give top customers some preferential pricing or incentives, the discounts you receive still depend on how well you negotiate and your overall value to Microsoft’s business. In some cases, LSPs can secure comparable (or occasionally better) discounts by advocating for you or sacrificing part of their reseller margin to win your business. Going direct also means losing the ability to pit resellers against each other, which can reduce competitive pressure on pricing.

Q3: What services do LSPs provide beyond handling transactions?
Many LSPs go beyond simple order fulfillment. They often assist with licensing assessments (helping you choose the most cost-effective licensing options for your needs) and provide Software Asset Management tools or services to track usage. Good LSPs conduct periodic reviews to keep you compliant and suggest optimizations (for example, identifying unused licenses or recommending subscription models to save money). Some also offer training, adoption support for new Microsoft products, or consulting around migrations (like planning a move to Azure or Microsoft 365). In short, an LSP can act as an extra layer of support and expertise for managing your Microsoft investments.

Q4: Can I switch from an LSP to a direct agreement in the middle of an EA term?
Generally not mid-term. If you’re already under a three-year Enterprise Agreement facilitated by an LSP, you’ll typically continue with that reseller until the EA expires. You can, however, start discussions with Microsoft during that period if you believe you’ll qualify for a direct contract at renewal. Any switch to direct usually happens at the time of EA renewal. In special cases, Microsoft might allow a mid-term change (via a formal “Change of Channel” process), but it requires coordination and isn’t common.

Q5: Who handles Azure commitments and cloud spend negotiations in each model?
In a direct model, you discuss cloud commitments (like Azure pre-spend commitments or annual Azure credits) directly with Microsoft as part of your EA negotiation. Microsoft will work with you on forecasting your cloud usage and may offer incentives or discounts based on committing to certain spending levels. In the LSP model, your LSP will help coordinate those discussions: they’ll gather your cloud requirements and usage projections, then work with Microsoft to structure an Azure commitment that fits your needs. The LSP presents you with the options and any Microsoft-offered incentives. The key difference is that with an LSP, you have an intermediary facilitating and potentially advocating for a better cloud deal on your behalf, whereas with direct negotiation, you’re negotiating one-on-one with Microsoft.

Read about our Microsoft Negotiation Services

Do you want to know more about our Microsoft Negotiation Services?

Please enable JavaScript in your browser to complete this form.

Name *

Email *

Company

Message *

Submit