Be Mindful Of Historical Usage When Licensing Microsoft Products Under SPLA

The Services Provider License Agreement (SPLA) is Microsoft's preferred licensing option for businesses wanting to use Microsoft products in support of hosted software solutions made available to end users over the Internet. For many companies, SPLA is a good fit, in that it incorporates a monthly reporting mechanism, rather than an up-front license purchase, and allows hosting providers to float their usage up or down as demand for the hosted solutions increases or decreases.

However, SPLA also carries risks, notably including the risk of monetary exposure arising from audits. Microsoft's licensing rules can be confusing and counter-intuitive, and in the event of an audit, licensing errors typically are magnified due to the fact that SPLA gives Microsoft the right to extract payment of historically unreported amounts at higher than list prices for the products in question. As a result, an error that may have a $5,000 price tag at monthly rates can result in a