SPLA — Service Provider License Agreement

The Service Provider License Agreement (SPLA) is a monthly, usage-based licensing program designed for service providers and Independent Software Vendors (ISVs) who host Microsoft software for their customers. Unlike traditional internal-use licensing, SPLA provides the legal right to use Microsoft products to deliver commercial services and hosted applications to third-party end users.

Core Mechanics and Usage

The fundamental distinction of SPLA is the "Right to Host." Standard Volume Licensing agreements (such as the Microsoft Customer Agreement or Enterprise Agreement) strictly prohibit the use of software for commercial hosting or providing software services to external parties. SPLA is the mandatory vehicle for any scenario where the software is running on the provider's infrastructure but accessed by a customer.

• Monthly Reporting: Licenses are reported and paid for "in arrears." Providers calculate the high-water mark of usage for the previous month and report it to their SPLA Reseller.
• No Upfront Cost: There are no long-term commitments or buy-in fees; providers only pay for what they authorized for use in a given month.
• Version Rights: SPLA always grants access to the latest version of the software, though providers may choose to run older versions if required by their customers.
• Global Deployment: While the agreement is signed with a specific entity, it generally allows for the deployment of software to customers worldwide.

Key Licensing Models within SPLA

Common Misunderstandings

• Internal Use Prohibitions: A service provider cannot use SPLA to license their own internal corporate employees (e.g., their own HR or Finance department) unless those employees are directly supporting the hosted service environment. Internal operations usually require standard internal-use Volume Licenses.
• OEM vs. SPLA: OEM licenses, which are pre-installed by hardware manufacturers on physical servers, cannot be used for hosting services. A provider cannot buy a server with an OEM Windows license and then rent out virtual machines (VMs) using that license; they must use SPLA for the Windows Server OS.
• The "Ownership" Fallacy: Under SPLA, the customer never owns the license. If they leave the service provider, they cannot take the licenses with them.

Related Terms

• License Mobility: A benefit for end customers with Software Assurance that allows them to bring certain on-premises licenses into a provider's shared hardware environment.
• Flexible Virtualization Benefit: A recent policy update allowing customers to use their own subscription licenses on any authorized outsourcer’s shared infrastructure.
• DCP (Data Center Provider): A secondary provider that provides infrastructure services to the primary SPLA holder.

Practical Note: Buying and Documentation

When reviewing a quote from a managed service provider (MSP) or hoster, SPLA costs are typically rolled into the "Managed Services" line item or listed as a "Monthly Software Fee." Unlike perpetual licenses, these will appear on every monthly invoice. On an official Microsoft agreement, this will be identified by a "Public Customer Number" (PCN) and the "SPLA Agreement Number." If you are a business using a third-party's servers, ensure they have a valid SPLA in place; otherwise, your organization may be technically non-compliant, as your own Volume Licenses might not permit hosting on shared hardware without specific mobility rights.

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