Cloud Service Providers vs. Enterprise Agreements: What Works?

Hugo Gonzalez  |  August 20, 2018  |   CSP, cloud service provider, enterprise agreement, ea, microsoft, microsoft office 365, mortgage industry, featured

Cloud Service Providers vs EAsThe ubiquity of the cloud is undeniable.

It used to be that enterprises wanted the biggest and the best software available.

For large-scale purchases, it was important to have a system with all the bells and whistles so that down the road there wouldn’t be any regrets. The sheer time commitment of software contracts meant that company software purchases were based on avoiding regret down the line. With all the system functionality available from the get-go, the idea was that the company could trim the fat by hiding features or customizing modules as they went. The key factor in the purchase was not to leave anything out.

With the rise of the cloud, a new option for software procurement has emerged on the market. This new way boasts flexibility and customization on-the-go. It claims to allow companies to make purchases as needed with impossibly short contract times. It is also completely online-based.

With cloud providers being relatively new to the game, how can you decide on the right choice for your organization? Let’s compare these two purchasing formats by taking a closer look at Microsoft software product offers.

Traditional Enterprise Agreements (EA)

For years, the go-to licensing vehicle for enterprise was the Microsoft Enterprise Agreement (EA). Companies could get their software directly from Microsoft, which meant dealing with the most trusted provider available. With Microsoft’s minimum quantity of 500 users, an EA was ideal for large organizations. The typical EA time span of 3 years was a natural fit for the cycles of large-scale organizations that tend to move methodically when it comes to system migrations.

The EA or “software assurance” tiered pricing was both economical at the high-volume of computers being licensed and perfectly targeted for the purposeful nature of enterprise behavior towards technology.

The Rise of the Cloud

Due to the size of the purchase, on-premise server-based systems and EAs were the only viable option for companies that large.

Nowadays, we have networks of public servers built, hosted, and delivering services over the Internet which are collectively known as “the cloud”. Companies and private individuals can access these networks remotely thanks to a cloud service provider (CSP).

What began as a groundbreaking storage solution quickly became a method for delivering information technology (IT) services to customers who have the ability to retrieve web-based tools and applications from the internet instead of via direct connection to a server.

In Microsoft’s case they have certified CSP partners offering MS applications on subscription basis under the term software as a service (SaaS) despite the fact that the company’s traditional business model uses EAs. As cloud-based services become the norm in the tech industry, the 3-year EA is starting to look outdated to even the most traditional companies like large mortgage companies and financial institutions.

Comparison

EA and CSP software have the same capabilities. An EA covers large-scale packages of software, requires a company-wide purchase, and has a minimum of 500 licenses for the private sector. Payment happens annually with a typical 3-year minimum contract.

CSP software has a more piece-meal structure. A company can purchase in limited numbers without minimum requirements. For midmarket and even enterprises with real distinction of use from department to department, this means being able to pick and choose applications based on usage. Payment is usually on a monthly subscription-like basis for only the needed software.

The result is reduced costs via a pared-down IT budget and the convenience of trial-and-error with new software purchases. Costs are further reduced from the man-hours saved on system and software maintenance since the applications are all hosted in the cloud.

Customization

This is especially appealing to financial institutions who are in need of customization and hyper-specific levels of security for data safety and compliance requirements. ABT is the largest Mortgage Vertical CSP in the country and offers mortgage companies the most flexible licensing options. As a Microsoft certified provider, ABT gives clients the software they trust with customizations especially for mortgage companies and flexibility previously unavailable in the industry. ABT even provides free tools like the MortgageWorkSpace portal that efficiently manages end users. The software provides custom and consolidated billing for both product/subscription and any related services. 

Because there is no need to support bells and whistles that aren’t used by customers, CSPs in this situation are free to focus on quality and customization instead of being limited to general knowledge on a broad range of applications.

Though some enterprises will continue to prefer the EA format based on their gradual adoption practices towards technology, mortgage companies have made a swift transfer to CSP. The flexibility and cost savings for agile companies are impossible to ignore.

To learn more about ABT’s cloud service offerings, read up on the award-winning application MortgageWorkSpace that utilizes Microsoft 365 customized for mortgage companies.

Image: Unsplash

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