Thursday, January 19, 2006

Microsoft Software As A Service Agreements The Service Provider License Agreement (SPLA) enables service providers and ISVs with a hosted offering to license Microsoft products on a monthly basis to provide services and hosted applications to their end customers. It's a pay-per-use model that works in arrears - hosters provide a report of the license units used that month and pay after they're done. SPLA incorporates Software Assurance so there is only one license and one price to pay for usage. There is a version specifically for ISVs which you should look at if you're currently a SaaS ISV using the Microsoft perpetual license model. As Sam Ramji observes:

"Two good examples of why this is useful:

1. Cashflow management: under the perpetual license you would need to buy the software up front and amortize the cost over a multi-year period. SaaS is a cashflow-focused business model with little room for capital expenditures that need to be rationalized later (as seen by the standard practice of leasing hardware rather than buying)
2. Seasonal volumes: if usage goes up one month, and down the next, there's no need to buy additional perpetual licenses, guess what the necessary capacity will be, and suffer for guessing too high (if you're in Operations at a SaaS company, you know how challenging this can be - as they say, "it's hard enough to predict the past, let alone the future"). Instead, SPLA users report & pay month to month, so payments go down when usage goes down.

The team that came up with SPLA, led by Pascal Martin, has partnered with Rackspace and other hosters so that SaaS ISVs can transfer their existing operations to an MSP. They are working hard on the next version of the ISV-focused hosting solution - more news on this in the near future."

From the Microsoft Web site: Benefits of the Program

This licensing program is designed based on direct feedback from our Service Provider partners:

* Competitive Pricing: SPLA pricing incorporates Software Assurance (Microsoft's new maintenance offering) in providing service providers with the most current versions of the products available in the Program for one simple monthly price.
* Pricing Stability: SPLA price changes (if any) will only occur on an annual basis in January and will be proportional to price changes in the Microsoft Open Licensing Program during the preceding year.
* Use Rights Protection: The Service Provider Use Rights (SPUR) document details all product use rights for this program. Product use rights are specific to each version and will not change for the duration of the program.
* Cash Flow Management: With SPLA, service providers have near zero start-up costs, since they only pay for licenses based on what they used to provide services each month.
* Academic SKUs: Academic pricing on selected server products is available when service providers deploy services to Qualified Education Customers.
* Standardized reporting: MOET (Microsoft Order Entry Tool) is the standard Web-based order-entry tool for this program. This easy reporting tool helps service providers report their monthly license usage to Microsoft Operations Centers.

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