Changes to Microsoft SPLA Licensing

Microsoft’s 2022 licensing updates fundamentally alter how businesses use SPLA (Service Provider License Agreement) licenses in cloud environments. Here’s what you need to know:

Outsourcing SPLA to Hyperscalers Is Ending

• Restricting SPLA Licensing: Microsoft will no longer allow SPLA to be used for running workloads on Listed Provider data centers for new deployments, ounless they are directly licenced with the listed Providers.

• Prior Workflow: Managed Service Providers (MSPs) could purchase SPLA licenses directly from Microsoft and deploy workloads on Listed Providers (AWS, Azure, Google, Alibaba). This allowed MSPs to "rent" Microsoft software on hyperscaler infrastructure at lower costs.

• New Rule: Effective September 30, 2025, MSPs cannot use their own SPLA licenses on Listed Providers’ infrastructure.

  • ✔️Allowed: Listed Providers (e.g., AWS) can still sell their own SPLA licenses (e.g., "license-included" EC2 instances).

  • ✖️Prohibited: MSPs reselling Microsoft software on AWS/Azure using their own SPLA licenses.

• Deadline for Transition: Existing deployments using SPLA on Listed Providers have a grace period until September 30, 2025, to transition. They can either:
  • Move workloads to their own data centers.
  • License directly from the Listed Provider.

Microsoft believes the SPLA program, originally intended for partners offering hosted services from their own data centers, is being misused by managed service providers. These providers are purchasing SPLA licenses and then hosting customer workloads on third-party data centers like AWS, Azure, or others ("Listed Providers") instead of their own.

Quote: "At its inception, SPLA was intended to allow partners to offer hosted services from their own datacenters, not for managed service providers buying through SPLA to host on others’ datacenters. We are making changes to the SPLA program, starting in October 2022, to better align with the program’s intent, and with other commercial licensing programs. To strengthen the hoster ecosystem by focusing the program on breadth hosters and encourage traditional outsourcers and datacenter providers, we are changing the SPLA terms to remove the ability to outsource SPLA licenses on Listed Provider datacenters. Traditional outsourcers and datacenter providers will benefit from this change, and it will help foster the hosting partner ecosystem. Any SPLA partner impacted by this change has until September 30, 2025 to transition from a Listed Provider for SPLA outsourced hosting or to license directly from the Listed Provider outside of their SPLA."

https://blogs.partner.microsoft.com/partner/new-licensing-benefits-make-bringing-workloads-and-licenses-to-partners-clouds-easier/

Why Microsoft Is Making These Changes

• Close the "Rental Arbitrage" Loophole: MSPs could previously undercut the listed provider's hyperscaler pricing by reselling SPLA licenses on cheaper third-party clouds, and then outsource SPLA workflows back to listed providers. 

• Push Adoption of Azure and CSP-Hoster: Microsoft incentivizes partners to use its Azure ecosystem or CSP-Hoster program for hosted solutions.

• Increase Licensing Revenue: SPLA price hikes (effective 2025) and reduced flexibility ensure higher long-term revenue. Microsoft is looking to increase revenue by closing a loophole which it believes lead to license sharing, where MSPs with license designed for smaller servers are able to scale up by outsourcing their SPLA workflows to larger servers such as AWS, or Azure. 

• For MSPs: Migrate workloads to non-listed providers or absorb higher hyperscale licensing costs.

• For End Users: Expect price hikes for cloud-hosted Microsoft software and stricter compliance audits.

• Strategic Takeaway:

  "Microsoft’s changes prioritize control over its ecosystem. Businesses reliant on SPLA must now choose between reduced flexibility, higher costs, or migrating to open formats (PDF/HTML) to minimize licensing risks."

As Microsoft imposes restrictions on SPLA licenses, Users currently outsourcing SLPA to a listed provider will need to take action by September 30th, 2025. 

• Stay with listed Providers: Users can continue to use listed providers, but they will need to license directly with through them, and this will likely result in an increase in licensing costs. Users may also risk licencing audits if they try to try to save money with non-SPLA options such as BYOL.
  
  
• Discontinue use of listed providers: Users can stop outsourcing and instead migrate their work flow away from listed providers. This may save costs by avoiding more expensive licensing agreements from listed providers, but there my be migration costs in moving to a non-listed provider. This also may come with performance issues as non-listed providers may not have the same scalability as listed providers.
  
  
• Cut ties with Microsoft: A 3rd Option user's wishing to stay with listed providers for performance, but also avoiding Microsoft Licensing Issues is to simply not use Microsoft. In this scenario, tools like Office Server Document Converter from Antenna House could be vital. Using a server based converter, users could accurately convert office documents into PDF for archiving, or HTML to be used in CMS apps or DITA architectures. Using a proprietary conversion engine, capable of running on Windows or Linux, that does not require Microsoft or Adobe products, you could safely convert and use your content with a listed provider with no dependencies on Microsoft which could have a considerable amount in licensing fees.

Key Dates and Actions

While many businesses may choose to abide by the new licensing terms set by Microsoft, some organizations, particularly those focused on archival purposes with a vast array of documents, may find it advantageous to transition away from DOCX formats to PDF. Here are some reasons why:

• Cost Savings:
  PDF files do not require licensing fees for viewing or sharing, unlike DOCX files which may necessitate licenses for Microsoft Office suite.
  
• Long-Term Compatibility:
  PDF is a widely accepted format for long-term archival, ensuring that documents remain accessible and readable even as technology evolves.
  
  
• Preservation of Formatting:
  PDF files preserve document formatting across different platforms and devices, guaranteeing that archived documents retain their original layout and appearance.
  
  
• Structured Format:
  PDFs can be structured using tags, which define the logical order of content (headings, paragraphs, tables, etc.). This allows assistive technologies like screen readers to navigate the document effectively and provide a clear understanding of the content for visually impaired users.
  
  
• Text Accessibility:
  Text within a PDF can be extracted and converted to speech by screen readers, enabling visually impaired users to access the document's content. DOCX files, while containing text, might not be readily accessible to screen readers if the format isn't properly structured.
  
  
•  Alternative Text Descriptions:
  PDFs allow embedding descriptions for images and other non-text elements. This provides context for users who rely on screen readers or other assistive technologies.
  
  
• Enhanced Security:
  PDF files can be password-protected and encrypted, providing an additional layer of security for sensitive documents stored in archives.
  
• Smaller File Size:
  PDF files are generally smaller in size compared to DOCX files, making them easier to store, share, and archive without consuming excessive storage space.
  
• Searchable and Indexable:
  PDF files can be easily searched, indexed, and archived, simplifying the retrieval of specific information within large document collections.
  
• Universal Accessibility:
  PDF readers are available for free on most devices and operating systems, ensuring universal accessibility to archived documents without the need for specific software.

By transitioning to PDF for document archival purposes, businesses can enjoy cost savings, ensure long-term compatibility, enhance document security, and simplify document management processes. Moreover, PDF's ability to preserve formatting, reduce file size, and facilitate searchability makes it an ideal choice for businesses with extensive archival needs.

In light of the upcoming changes to Microsoft SPLA licensing terms, businesses engaged in frequent publishing of content may find it advantageous to consider transitioning away from DOCX formats to HTML. Here are some reasons why:

• Avoidance of Licensing Issues:
  HTML content does not require licensing fees for creation, viewing, or sharing, offering businesses a cost-effective alternative to DOCX formats.
• Structured Data Possibilities:
  HTML content can be structured using markup languages like DITA (Darwin Information Typing Architecture), allowing businesses to organize their content into structured data sets. This structured approach enables content reuse, automation, and dynamic publishing.
  
• Content Reusability:
  Structured HTML content can be easily reused across various platforms, channels, and outputs, streamlining content management processes and ensuring consistency across multiple channels.
  
• Automation Opportunities:
  With structured HTML content, businesses can implement automation workflows for content creation, management, and publishing. This automation can significantly reduce manual effort and streamline content production cycles.
  
• Enhanced Searchability:
  Structured HTML content, especially when organized using DITA or similar standards, facilitates enhanced searchability and discoverability of information within documents, improving the overall user experience.
  
• Dynamic Publishing Capabilities:
  HTML-based content can be dynamically generated and published, allowing businesses to deliver personalized and targeted content to their audience in real-time on a Website or in a CMS application.

By transitioning to HTML for content publishing and structured data, businesses can not only avoid potential licensing issues but also unlock opportunities for content reuse, automation, and dynamic publishing. Embracing structured data standards like DITA enables businesses to organize their content effectively, streamline workflows, and deliver content in a more efficient and impactful manner.

Antenna House OSDC (Office Server Document Converter) is a versatile document conversion solution designed to seamlessly convert various document formats, including DOCX, to PDF or HTML. With its robust capabilities, OSDC offers businesses a flexible and efficient way to store their files as PDF or HTML on cloud server environments. Here's an overview of OSDC and its potential benefits:

1. Document Conversion Flexibility:

   • OSDC provides comprehensive support for converting DOCX files, along with other popular document formats, into HTML or PDF and more! This flexibility enables businesses to transform their documents into widely accessible and platform-independent formats suitable for cloud storage.

2. High-Quality Output:

   • Antenna House is renowned for its commitment to producing high-quality document output. With OSDC, businesses can expect accurate and visually appealing PDF and HTML files that preserve the integrity of the original documents, including formatting, images, and other elements.

3. Batch Processing Capabilities:

   • OSDC supports batch processing, allowing businesses to convert multiple DOCX files to PDF or HTML in a single operation. This capability streamlines document conversion workflows and improves productivity, especially for organizations with large volumes of documents to process.

4. Scalability and Performance:

   • Antenna House OSDC is designed to handle large-scale document conversion tasks with efficiency and reliability. Its scalable architecture ensures consistent performance, even when processing a high volume of documents, making it suitable for enterprise-level deployments. Conversions can be queued scaled up for instantaneous conversions in an application.

By leveraging Antenna House OSDC for document conversion, businesses can effectively store their files as PDF or HTML on cloud server environments, ensuring compatibility, accessibility, and long-term preservation of their documents. With its advanced features, flexibility, and seamless integration with cloud platforms, OSDC offers a compelling solution for businesses seeking efficient document management in the cloud era.