Licensing Logic: What’s new in the Microsoft Products and Services Agreement?

Written by David Cattanach on September 20th, 2015

MPSA, the Microsoft Products and Services Agreement is the evolution of Microsoft’s Volume Licensing (VL) programs. It has been maturing and developing steadily since introduction in late 2013.

Where does MPSA fit in?

Figure 1 below gives a high-level representation of where MPSA sits within the current VL agreement family. You can read the MPSA at-a-glance document and visit the MPSA page for an overview of the program itself.

Figure 1: MPSA (purple area) within the VL program landscape. FY is based on Microsoft’s financial year, e.g. FY16 spans July 2015-June 2016

What’s new in MPSA?

The latest enhancements to MPSA include:

1. MSDN and Visual Studio available through MPSA.

2. Microsoft Azure available through MPSA on a pay-as-you-go basis. Customers can start using Azure immediately and will be billed at the end of each quarter for what they’ve used. This eliminates the need to determine and pay upfront monetary commitments; customers only pay for what they use.

3. Availability of the Enterprise Cloud Suite (ECS). Previously, ECS was only available through an Enterprise Agreement.

4. Multi-year durations so customers can opt for 1, 2 and 3 year subscriptions for certain Online Services.

5. Price Protection for the duration of a subscription when customers purchase a subscription to an Online Service.

6. Same Service Alignment for packages and online services so that after the first order is placed all subsequent orders for the same product will align to the same end date.

Let’s explain some of the newer concepts in detail.

Multi-year durations with Price Protection

Wouldn’t it be glorious to be able to budget for 3 years of online services in the warm knowledge that you can add seats at the same price, or even less? That’s the key with multi-year duration and price protection. It is possible to do a workaround at the moment by buying up to five years’ worth of seats and keeping them in the VL portal until needed. For example, if I want 500 seats of Office 365 E3, I could place 5 orders for 500 seats of E3 and I would receive 5 VL keys. I use the first key in year one, the second in year two, etc. Once purchased, a customer has up to five years to activate an online services key.

But what if I wanted to add another 100 seats? I’d need to buy the E3 licences again and pay the prevailing price. So the workaround is not ideal and price protection with a multi-year duration is superior.

If a customer buys a multi-year subscription for Office 365 they get a price ceiling for all subsequent orders within that 2 or 3-year duration. This price ceiling is equal to the current price taken from the price list at time of the initial order. When they place a future order for the same product, they can be confident they will never pay more than the price ceiling and may even pay a lower price if the price drops or there’s a promotion or concession at the time of order.

Figure 2: Example of price protection in a multi-year duration agreement

In figure 2, a customer has a Purchasing Account Anniversary (PAA) every January. In October, they purchase 2,300 ECS user subscription licences (USL). In a single-year agreement, this purchase would be pro-rated up to their PAA so they would pay for 3 months. The customer would like to lock prices in for 3 years so they are committing to 2,300 ECS USLs each year until the third PAA, January 2018, and in return they will gain price protection for all subsequent ECS USLs made by that Purchasing Account. With the first year pro-rated, this gives them 27 monthsof certainty.

When the customer makes the initial purchase in October, there happened to be a price list promotion (shown by the blue tick). That was the best price for the customer so that price is applied to the whole order of 27 months. They can choose to pay the full 27 months in advance or they can spread payments. The price ceiling is also set at the price list figure.

Figure 3: Example of price protection for additional purchases in a multi-year duration agreement

In May 2016, the customer wants to add another 700 ECS USLs (figure 3). Because they are adding to a service they already have and for which there is price protection, Same Service Alignmentcomes into play and these purchases will align to the same end date. This means that they place an order for 20 months of the service (click).

At the time of purchase, there is the price ceiling which was the price set at the original purchase back in October 2015. But the current price list is also checked along with any promotions or concessions that might apply to see if any of these prices are lower than the price ceiling. Whichever price is the best (shown here as the purple tick) is used and locked for this new 20-month order and again payments can be made upfront or spread.

As this is a commitment, subscriptions can’t be reduced within the multi-year duration agreement. Protected prices also apply to a single Purchasing Account (PA); this is an important factor because many organisations buying through MPSA do so through several PAs.

Expect More Enhancements to MPSA in the Future

Since launch, the MPSA has been hugely successful. Whilst the Enterprise Agreement remains the most appropriate VL program for customers who are able to make an enterprise-wide commitment, the MPSA is perfect for transactional purchasing of on-premises and online licences. Select Plus has now been retired and since July 1^st no new commercial Select Plus agreements can be signed, and from July 1^st 2016, no new orders will be taken on existing commercial Select Plus agreements.

MPSA will continue to mature and evolve and will eventually become the Volume Licensing platform for all future offers. We’ll continue to keep you up to date with blog posts and readiness events.