What the heck is SPLA, and how does it affect me?

Takeshi EtoWe occasionally receive inquiries from potential customers who are concerned about the Microsoft license fees they may be responsible for paying when hosting on the Everleap infrastructure. So I thought I would talk about how Microsoft licensing works for hosts and hosting customers.

Typically when software is purchased, only the person or business that purchased the software is licensed to use the software. But what if a business wants to “rent out” the use of software to their customers? Enter the Service Provider Licensing Agreement, or SPLA for short.

Microsoft SPLA LicensingThe SPLA license is designed to accommodate businesses that provide Software as a Service (SaaS). For example, a business may offer Microsoft Exchange Email and SharePoint hosting for customers. Or, as in our case, a Windows hosting company offers web hosting services to customers on a platform powered by Microsoft software. To cover this SaaS type business model, Microsoft has a SPLA program.

Under the Microsoft SPLA program, the hosting partner pays monthly license fees for every piece of Microsoft software that they use as part of their SaaS solution. In essence, it’s a pay-as-you-go software licensing model. And since the SPLA fees are not perpetual, the partner has the flexibility to scale up and down their Microsoft software use – only paying for what they are using in a particular month. All hosts that provide any form of Microsoft-based hosting are required to participate in the Microsoft SPLA program.

At Everleap, we own our servers so we pay Microsoft monthly SPLA license fees for every copy of Windows Server and SQL server that we use. Since we operate hundreds of servers – with a constant stream of new servers coming online and other servers being decommissioned – keeping track of all the Microsoft software is a lot of work, so we have systems in place to help us manage licensing. On top of that, new Microsoft technologies are introduced and other technologies are deprecated, so SPLA pricing and models can change. It’s a lot of moving parts, but luckily, as a hosting customer, you don’t need to deal with it at all.

Since our cloud hosting plans generally run in multi-tenant shared hosting environments, the customer hosting fees, in aggregate, help to cover the Microsoft SPLA fees (along with other costs, like hardware, bandwidth, salaries, office rent and utilities, marketing…etc.). So no single customer pays the full licensing fees associated with the particular Microsoft software they are using. By sharing infrastructure resources, the software licensing costs are reduced for all customers. Even with our Reserved Cloud Servers, where customer sites run on a private server, the hosting solution uses a cluster of servers so the infrastructure is still “shared.”

However, at Everleap, there is one service where a single customer has to cover the whole of some SPLA fees, and that is our Managed SQL solution. For Managed SQL, we install a private SQL server instance that is used by only one customer on a private VM. Since the SQL instance is not shared with any other customers,  the Managed SQL hosting fees do include the full cost of the SQL Server license. Moreover, the SQL SPLA fees are priced by CPU Core with a minimum of 4 cores. Which is why the two plans we offer are 4 CPU Core and 8 CPU Core. From a licensing perspective, there is no benefit in running SQL on a 2 CPU core server, since you’ll be paying the same SPLA fees for a 4 CPU core server.

I’m sure this is way more information than you ever needed about SPLA, but perhaps now you know a bit more about what’s happening behind the scenes. File it under: “Knowledge that could possibly come in handy some day.” 🙂

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