Microsoft has the best definition as they have been in this business for years now. They define a SPLA in the following way, “A licensing program that enables service providers and ISVs with a hosted offering to license Microsoft products on a monthly basis to provide services and hosted applications to their end customers.”

Some qualifying questions for entry into a SPLA program might be the following –

1. Do you provide software services and hosted apps on a rental, subscription or services basis?
2. Are you a hosting provider, an ASP, a SI or an ISV that provides software as a service?
3. Is one of your primary objectives to avoid up-front license fees and minimum commitments?
4. Is your goal to maximize the number of end-user served from the same underlying software?
5. Will your customers accept not owning the software or having it located at their site?

If you can answer YES to most of these questions then most likely a SPLA program would fit your business model.

According to Microsoft there are many benefits to using a SPLA. Because the license is subscription based over time it will often cost more than a perpetual license for the same software. However, the benefits far outweigh the cost if the business model is structured correctly.

The following is a list of benefits Microsoft uses for their SPLA program –

• No Upfront Costs
• Most Current Product Versions – You have access to the most current versions of the products available in the program
• Pay Based On Usage – Monthly usage-based cost means you pay only for what was made available the previous month
• Worldwide Distribution – Use Microsoft licensed products to sell your services in any part of the world

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