Non-SPLA Licensing for Hosted Microsoft Software

Most businesses seeking to license Microsoft software for the purpose of delivering hosted software solutions over the Internet turn first to the company’s Services Provider License Agreement (SPLA). SPLA is Microsoft’s flagship licensing model for commercial hosting services, and it offers the primary benefit of permitting a licensed hosting company to pay on a month-to-month basis only for the products ordered by its customers. For many businesses, that model may work fine, but others may not want to undertake the expense or hassle of entering into yet another contractual relationship with Microsoft. In those cases, businesses may want to consider the Self-Hosted Applications (SHA) rights that are available for certain products licensed under one of Microsoft’s several other, volume-licensing models (e.g., Open, Select, Enterprise). Some of the notable differences between SHA and SPLA include:

  • SHA rights are available for products licensed under most Microsoft volume-licensing models without signing a separate agreement, provided that the licensed company maintains Software Assurance for the products to be hosted. SPLA requires a separate contract with Microsoft and limits the available license sources to a handful of authorized resellers.
  • SHA-rights-eligible products generally are limited to server software (e.g., Windows Server operating systems, SQL Server database software, Exchange Server messaging software). SPLA permits hosting companies to offer a wider range of hosted products, including workstation software like Office.
  • Under SHA rights, the hosting company’s solution must offer end-users significant, primary, value-added functionality over the base functionality of the products hosted under SHA rights. The hosting company may not simply “pass through” the software from Microsoft to the end users, as is generally permissible under SPLA.

In addition, as mentioned above, while SPLA allows a hosting company to monitor and adjust its license spend on a month-to-month basis, use of SHA rights requires the hosting company to forecast its needs accurately in order to avoid purchasing too many or too few licenses. However, for companies with relatively static customer bases that want to use existing license agreements to certain kinds of server software, SHA might be an attractive alternative.