Comparing Volume Licensing Programs: Open License vs EA:
- Open License: Entry-level, suitable for small businesses, no minimum purchase.
- Enterprise Agreement (EA): Volume discounts, ideal for large organizations.
- Commitment: EA requires a 3-year commitment; Open License is more flexible.
- License Types: EA covers cloud and on-premises, while Open License focuses on perpetual software.
- Cost: EA offers greater savings through volume commitments.
Microsoft Open License vs Enterprise Agreement (EA)
Microsoft offers a variety of volume licensing programs designed to cater to the different needs of organizations.
Open License and Enterprise Agreement (EA) are the most popular options. If you are tasked with deciding which licensing model to choose for your organization, understanding the key differences between Open License and EA is crucial.
Both have strengths and limitations, depending on business size, budget, and growth plans. This guide will help you make an informed decision by examining these two licensing options.
1. Overview of Microsoft Open License and Enterprise Agreement (EA)
- Microsoft Open License: This program is targeted toward small to mid-sized organizations. It provides a way to purchase licenses as needed without significant upfront commitments. Open License is generally suited for businesses that need flexibility, especially those purchasing between 5 and 250 licenses.
- Example: A small marketing agency needing licenses for just 20 PCs might find the Open License program ideal, given its pay-as-you-go structure and minimal commitment.
- Microsoft Enterprise Agreement (EA): This is intended for larger enterprises with a minimum of 500 users or devices. EA is structured for companies seeking comprehensive, cost-effective volume licensing that covers an entire organization. It often includes benefits like access to new versions, Software Assurance, and more.
- Example: A large retail chain with 1,500 employees across multiple locations might prefer an Enterprise Agreement for its streamlined, centralized purchasing and added services.
2. Scalability and Organization Size
The size of your organization is a crucial determinant when choosing between an Open License and an EA.
- Open Licenses are typically recommended for small to medium-sized businesses (SMBs). They allow companies to start with minimal licenses and expand as their needs grow. This model is perfect if you are uncertain how quickly your workforce will scale or want minimal upfront investments.
- Enterprise Agreements are a better choice for larger organizations. They are designed with enterprise-level needs, offering centralized billing and standardized licensing. The agreement generally requires a three-year commitment and is ideal for companies with a more predictable growth trajectory and a consistent number of users or devices.
3. Flexibility in Licensing
Flexibility is another critical aspect when considering an Open License vs EA.
- Open License provides flexibility for organizations that need to purchase software licenses incrementally. This model operates on a perpetual license basis, meaning once you buy a license, it’s yours forever. There are no ongoing costs except for optional Software Assurance (SA), which provides access to updates.
- Example: A startup purchasing licenses for ten employees can expand by buying additional licenses as the business grows, offering much-needed flexibility.
- Enterprise Agreement requires a minimum commitment of three years. This means you need to assess your long-term needs before committing. However, EA does allow for adjustments to the number of licenses during the agreement period—adding licenses as your organization grows or removing them during true-up sessions.
4. Cost Considerations
Cost is often a deciding factor when comparing these licensing options.
- Open License typically works on a pay-as-you-go model, allowing you to control spending based on immediate needs. It’s suitable for organizations that want to avoid large upfront costs.
- Cost Structure: Open License allows smaller payments to be distributed over time as licenses are purchased.
- Budget Example: A small consulting firm may only need five licenses in the first year, keeping initial expenses low.
- Enterprise Agreements are often seen as a more cost-effective solution for larger enterprises. With EA, companies pay a set price based on the number of licenses covered in the agreement. Although this requires a significant initial investment, the benefits of Software Assurance and predictable costs over three years may justify the expense.
- Cost Structure: EA often includes access to new versions, reducing future upgrade costs.
- Budget Example: A tech company with 1,000 employees may find EA beneficial as the cost per license reduces with volume and includes additional benefits.
5. Software Assurance (SA) Benefits
Software Assurance (SA) is important in both Open License and EA.
However, how it’s offered differs between the two models.
- Open License: Software Assurance is optional. This means that smaller businesses can decide whether or not they want ongoing updates and support. This is an advantage if your budget is tight, but it also means you may miss out on useful features.
- Enterprise Agreement: In EA, Software Assurance is typically bundled into the agreement, providing access to new software versions, training resources, and support without additional costs. This is advantageous for enterprises needing the latest technologies to stay competitive.
6. Ideal Use Cases
The suitability of an Open License vs EA depends on the unique needs of your business.
- Open License is best suited for organizations that:
- Need minimal licenses and flexibility.
- Have less predictable growth or budget constraints.
- Are you interested in owning licenses perpetually?
- Example: An open license would benefit a local non-profit organization that needs to license 20 PCs and has a limited IT budget.
- Enterprise Agreement is ideal for:
- Enterprises with 500+ users or devices.
- Organizations that want predictability in costs over several years.
- Companies that need the latest technology and Software Assurance bundled in.
- Example: A multinational healthcare provider needing to keep all 1,000 workstations up-to-date may find EA’s cost consistency and included support worthwhile.
Key Takeaway: Choose an Open License if you need ownership and flexibility. Go for EA if you are a large enterprise looking for a standardized and efficient volume licensing approach.
7. Licensing Commitment and Renewal
- Open License: Open License involves less commitment. It is generally a two-year agreement, after which licenses are perpetual, and businesses do not need to renew unless they wish to add more licenses.
- Enterprise Agreement: An EA, on the other hand, typically lasts three years with an option to renew or modify after that term. The renewal often involves renegotiating costs and updated licensing needs and may include new services or support.
8. Cloud and Hybrid Integration
With the increased adoption of cloud services, many companies need licensing models offering cloud integration options.
- Open License: Typically focused on on-premises licensing. However, companies can still use this model to acquire licenses for hybrid scenarios, though it lacks the advantages offered through bundled services for the cloud.
- Enterprise Agreement: EA provides easy integration with Microsoft 365, Azure, and other cloud-based services, making it a top choice for companies looking to migrate to the cloud or use hybrid solutions. EA allows companies to add licenses for cloud services seamlessly and even transition on-premises licenses to the cloud as needs evolve.
FAQ comparing volume licensing programs: open license vs. EA
What is Microsoft Open License?
Microsoft Open License is a flexible licensing program for small—to mid-sized businesses. It allows them to purchase software as needed with a lower upfront cost.
Who benefits most from an Enterprise Agreement (EA)?
EA benefits large organizations with 500+ users or devices, as it provides volume pricing and additional support.
Can small businesses use an EA?
Yes, but it’s generally not recommended due to the higher upfront costs and long-term commitments.
Does an Open License require a minimum purchase?
Yes, Open License typically requires a minimum of five licenses, making it flexible for smaller companies.
Does EA include Software Assurance by default?
Yes, EA comes with Software Assurance, which provides access to new software releases, support, and training resources.
How long is an Open License agreement valid?
An Open License agreement is valid for two years, after which customers can renew or let it expire.
How is payment handled in an EA?
EA involves a fixed yearly payment model, making managing costs easier for large businesses.
Can Open License customers upgrade to EA later?
Yes, businesses can switch to EA if their licensing needs expand over time and require more comprehensive coverage.
What is the key difference in pricing between an Open License and an EA?
Open License allows for pay-as-you-go pricing, while EA offers volume discounts but requires a long-term commitment.
Is Software Assurance optional with an Open License?
Yes, Software Assurance is an optional add-on to Open License, offering additional benefits such as updates and training.
Does EA support cloud solutions?
EA can include cloud services like Microsoft 365 or Azure, making it suitable for hybrid environments.
What happens if I cancel an EA early?
Cancelling an EA early can incur penalties, as it is designed for a long-term commitment, typically three years.
Can I purchase just one license through Open License?
No, Open License requires a minimum of five licenses for the initial purchase, but you can add more individually later.
Is EA limited to on-premise solutions?
No, EA covers both on-premise and cloud-based products, providing flexibility for modern IT environments.
Can I pay monthly with an Open License?
No, Open License does not offer monthly payment options; payment is made upfront for two years.
Is Software Assurance renewal automatic with EA?
Customers must manually renew Software Assurance at the end of the agreement term if they wish to continue receiving benefits.
