Mixing and Matching: EA + CSP Hybrid Licensing Strategies

Mixing and Matching: EA + CSP

Introduction: Why Hybrid Microsoft Licensing Is Emerging

Microsoft’s enterprise customers have traditionally faced a binary choice in licensing: either lock into a long-term Enterprise Agreement (EA) or opt for the pay-as-you-go Cloud Solution Provider (CSP) model.

Each approach has distinct advantages – EAs offer volume discounts and budget certainty, while CSP agreements deliver agility and month-to-month flexibility.

Today, enterprises are realizing they no longer need to choose exclusively between EA or CSP.

Now, a hybrid Microsoft licensing approach is emerging that combines both models to achieve the best of each. Read our overview, Microsoft EA vs Alternatives (CSP, MCA, etc.): Which Path Is Right for You?.

A hybrid strategy aims to strike a balance between stability and agility in software licensing. Large organizations often have diverse needs across departments and user types.

By combining EA and CSP, companies can place their stable, mission-critical services under the predictability of an EA, while simultaneously utilizing CSP for areas that require flexibility.

This blend allows CIOs and IT procurement leaders to optimize costs and avoid the “all or nothing” dilemma. Mixing EA and CSP allows you to tailor licensing to each part of the business, rather than offering a one-size-fits-all deal.

Why Hybrid Makes Sense

A hybrid licensing model can make perfect sense when an organization’s workforce and projects have varying requirements.

Enterprise Agreements work best for core services and users that stay constant, whereas CSP shines for variable or unpredictable needs. Combining the two means you use each program where it’s strongest.

Here’s why a partial EA, partial CSP approach is gaining traction:

• Stable core, flexible edge: Keep essential, steady workloads under an EA for predictable costs and volume discounts. Meanwhile, assign CSP licenses for branch offices, affiliates, or teams that expand and contract. For example, a headquarters’ 1,000 full-time staff might be covered by EA, while a smaller regional office or new acquisition uses CSP subscriptions that can scale up or down.
• Seasonal and contract staff: Use CSP for temporary or seasonal workers so you pay only for the months those users need licenses. There’s no sense paying year-round for accounts used only during a holiday rush or short-term project. With a hybrid setup, your EA covers permanent employees, and CSP handles the seasonal surge without long-term commitments.
• Testing and new projects: Leverage CSP to pilot new Microsoft services or products outside of your EA. If a department wants to try a new collaboration tool or a niche cloud service, they can subscribe via CSP on a trial basis. This way you avoid amending your EA mid-term or overcommitting to licenses that might not pan out. Successful trials can later be folded into the EA at renewal, while unsuccessful ones simply end with no strings attached.

In essence, hybrid licensing lets you mix EA and CSP to align with real-world usage patterns. Mission-critical, predictable needs get the cost efficiency of an EA, and dynamic needs get the flexibility of CSP.

This approach avoids the extremes of one-size-fits-all licensing by recognizing different parts of the business have different needs.

To illustrate the differences between these models, consider how each approach functions on its own versus in combination:

Key Considerations in Hybrid Licensing

Adopting a hybrid EA+CSP model introduces new considerations. It’s not a silver bullet – rather, it’s a strategic trade-off between cost savings and added management complexity.

Enterprises should weigh the following factors before mixing their Microsoft licensing:

• Management complexity: Running both an EA and CSP means dealing with two procurement channels and billing systems. Your IT asset managers will need clear processes to track licenses in two environments. Overseeing a dual model can be complex, but good governance and coordination can keep it under control.
• Volume discount impact: Shifting too many licenses out of your EA into CSP could reduce the volume tier or discount level you qualify for in the EA. In other words, a smaller EA commitment means less bargaining power for discounts. Forecast how many licenses you can shift to CSP without significantly eroding your EA’s price advantages.
• Avoiding shelfware: On the plus side, a hybrid approach helps eliminate “shelfware” – the excess licenses paid for but not used under a big EA. By sizing your EA to your true baseline and using CSP for the overflow, you reduce overcommitment and waste on idle, unused licenses.
• Internal coordination: Hybrid licensing requires coordination between procurement, IT, and finance. You’ll need policies to determine when to use an EA license versus a CSP license for a new user or project. Without clear rules, there’s a risk of confusion (for example, accidentally double-licensing someone via both EA and CSP). Strong governance can turn this complexity into an opportunity for better control.
• License true-ups and renewals: Under an EA, you typically true-up (i.e., report and pay for any added users) annually and renegotiate every 3 years. In a hybrid model, short-term increases can be handled via CSP, potentially avoiding large true-up bills. However, you must plan carefully so that when the EA renewal comes, you can adjust counts appropriately. You gain flexibility mid-term with CSP, but renewal time becomes a critical checkpoint to recalibrate your EA/CSP mix.

Read our MCA article, Microsoft Customer Agreement (MCA) vs Enterprise Agreement: 2025-206 Update.

License Portability Between EA and CSP

Moving users between EA and CSP licensing pools is possible, but it requires timing and planning. There isn’t an automatic “port” of a license from one program to the other; instead, you strategically shift assignments at appropriate times.

The key opportunity is at your EA renewal or anniversary.

At that point, you can decrease your EA seat count for roles you plan to cover via CSP going forward, or conversely bring into the EA any users that started in CSP but have become permanent needs.

To make license movement seamless, watch out for overlapping terms. If you intend to switch a group of users from CSP to EA at the EA renewal date, align the end of their CSP subscriptions accordingly. For instance, if your EA renews on July 1, end any overlapping CSP subscriptions by June 30.

This avoids double-paying during a transition month. Similarly, plan for the reverse: if you will off-board some users from EA to move them onto CSP, do it at renewal so you’re not stuck carrying their licenses on the EA after they’ve transitioned.

Another portability tip is to synchronize billing cycles. CSP licenses can often be billed monthly or annually. If you use annual CSP subscriptions (for a discount), try to align those renewal dates with your EA cycle.

This makes it easier to re-evaluate and shuffle users between EA and CSP in one coordinated period. In practice, you adjust one channel down while the other ramps up, maintaining service continuity without wasted spend.

Negotiation Angle with Microsoft

Microsoft’s sales teams traditionally prefer customers to sign one big EA, but a hybrid stance can actually be used as a negotiation advantage. By showing you’re willing to allocate some licenses through CSP, you give yourself an alternative channel that Microsoft must contend with.

When you negotiate your EA, explain that you need some flexibility (for innovation projects or seasonal surges) and will use CSP if the EA terms don’t accommodate those needs.

This approach often pushes Microsoft to improve their EA offer – whether via deeper discounts or extra perks – to win as much of your business as possible under the EA.

Additionally, negotiate explicit pilot flexibility in your agreement. Ask Microsoft to allow certain new projects or workloads to run in CSP as trials without forcing them into the EA immediately. If those pilots succeed, you can incorporate them into the EA at the next true-up or renewal.

Similarly, seek EA terms that grant a bit of CSP-like agility, such as the right to adjust a portion of licenses at annual intervals if needed.

Microsoft might not agree to everything, but raising these points sets the tone that you expect a blend of cost savings and flexibility. It signals that you won’t sacrifice agility – a core benefit of CSP – even as you commit to an EA.

Should you exit your EA? – When to Exit the EA: Is a Microsoft EA Right for You?

Case Example: Seasonal Workforce Optimization

To see the hybrid approach in action, consider a large retail enterprise with a fluctuating staff. This company has 3,000 core full-time employees who require Microsoft 365 licenses all year, plus an extra 500 temporary employees hired each holiday season.

In a traditional all-in EA, the company would likely license all 3,500 users for the full year, paying for those extra 500 even during the off-season.

Instead, the retailer adopts a hybrid licensing strategy: it signs an EA for the 3,000 permanent staff to get the volume discount, and uses CSP subscriptions for the additional 500 seasonal workers only during the months they’re employed.

By not overcommitting to 500 surplus licenses year-round, the company avoids significant unnecessary spend. Those seasonal CSP licenses might be active for only three or four months of the year, and then they can be dropped.

In this scenario, the enterprise achieved roughly 15% annual cost savings compared to an all-EA approach, all while ensuring every user had the access they needed when they needed it.

This real-world example demonstrates how a hybrid EA+CSP model can drive cost efficiency and flexibility hand in hand – the company pays for baseline needs at a discounted stable rate and only incurs additional license costs when demand actually arises.

5 Actionable Next Steps

1. Segment Your Workforce: Break down your user base into categories (e.g. core staff, contractors, seasonal hires, subsidiaries). Identifying which groups have steady year-round needs versus those that fluctuate is the first step to spotting hybrid licensing opportunities.
2. Model the Costs: Perform a cost comparison of an EA-only approach versus a CSP-only approach versus a hybrid mix for your organization. Include factors like EA discounts, CSP rates, and any overprovisioned licenses. This financial model will quantify potential savings and justify whether a hybrid strategy makes economic sense.
3. Align Contract Renewals: Coordinate the timing of your EA renewals and CSP subscription terms. For example, plan CSP annual subscriptions to co-terminate with your EA anniversary, so you can seamlessly adjust license counts in each channel. Alignment prevents gaps in coverage and avoids overlapping payments during transitions.
4. Negotiate Pilot Flexibility: When talking to Microsoft or your licensing partner, explicitly get the freedom to use CSP for certain pilot projects without it counting against your EA commitment. Make it part of your EA negotiation that you reserve the right to keep some usage variable. This sets the expectation that a hybrid approach is part of your strategy.
5. Build Governance Processes: Establish clear internal processes for managing licenses across both EA and CSP. Decide who approves new license assignments, how to prevent duplicate licensing, and how to track usage month to month. Clear guardrails will ensure your hybrid model delivers the intended cost and agility benefits without devolving into chaos.

Read about our Microsoft EA Negotiation Service.

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

Please enable JavaScript in your browser to complete this form.

Name *

First

Last

Email *

Company

Message *

Submit