Microsoft is making big changes to its licensing environment, with another disruptor to how enterprise customers purchase Microsoft solutions. As of January 1, 2025, Microsoft will be significantly reducing incentives and revenue streams for its Licensing Solution Providers (LSPs)—a move that further accelerates the decline of the traditional Enterprise Agreement (EA) and pushes more customers toward direct purchasing models or Cloud Solution Providers (CSPs).
This shift raises major questions:
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What happens to EA customers who rely on LSP’s?
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Will LSP’s continue to provide value, or will Microsoft phase them out entirely?
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How should businesses respond to this changing landscape?
Let’s break down the key points and what your business should do next.
Microsoft Is Defunding LSPs—Why Now?
Microsoft Licensing Solution Providers (LSPs) have traditionally played a key role in Microsoft’s EA ecosystem. These partners helped large enterprises navigate licensing complexities, optimize agreements, and manage renewals.
However, Microsoft has been gradually reducing its reliance on LSPs, instead shifting toward direct sales models like Microsoft Customer Agreement for Enterprise (MCA-E) and CSPs.
Key changes taking effect in 2025 include:
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EA renewals no longer being possible for certain enterprise customers (those impacted typically have less than 2,400 licenses and reside in the “Level A” tier).
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️LSP incentive reductions that could reportedly drop to as little as $8,000 annually, making it extremely difficult for many LSP’s to continue supporting EA customers.
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Greater push from Microsoft for customers to purchase through Cloud Solution Providers (CSPs) or direct agreements (MCA-E) instead of traditional LSP-led EAs.
Why is Microsoft doing this?
While it’s hard to tell for sure. There could be a couple reasons why, including Microsoft wanting direct control by having more customers transact directly through MCA-E.
Microsoft could also be looking to expand CSP’s because it’s more flexible and allows for pay-as-you-go services.
Lastly, Microsoft has for a long time, been optimizing its definition of EA customers with their growing synergy through their partner-enabled ecosystem.
What This Means for Enterprise Agreement (EA) Customers
If your business currently relies on an LSP for licensing and EA renewals, these changes could have significant implications for how you purchase and manage Microsoft solutions.
With Microsoft cutting LSP incentives, many LSP’s may no longer invest in EA-related support. This could result in slower response and reduced support.
Microsoft is steering businesses toward two primary alternatives:
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The Microsoft Customer Agreement for Enterprise (MCA-E)
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A Cloud Solution Provider (CSP)
For more on the pros and cons of each, check out or blog on the recent changes to enterprise agreements and how to mitigate them [LINK].
With LSP’s losing financial incentives, now is the time to rethink your licensing strategy. A CSP may be a better fit for businesses that want hands-on guidance, licensing optimization, and better support and services.
What to Look for in a CSP Partner
Not all CSPs are created equal. When researching Microsoft CSP partners, consider these key factors:
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Microsoft Expertise: Does the CSP have a deep understanding of Microsoft solutions, licensing, implementations, migrations, and cloud strategy – are they credentialed and certified?
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Hands-On Support: Does the CSP offer 24/7/365 customer and technical support?
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Cost Optimization Services: Can the CSP help you reduce costs by ensuring you only pay for what you need?
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Flexibility & Scalability: Does the CSP provide custom solutions that consider your unique business’s needs and growth.
If your EA is expiring soon or you’re worried about the impact of Microsoft’s LSP defunding, Trusted Tech Team can help your businesses navigate this transition with ease. As a Microsoft CSP with deep expertise, we ensure you get the right solutions—at the right price—with white-glove support that puts you first.
