LearningCenter Post167

Paying 20% More for your Software then you need to yet still being audited?

Unveiling the Discrepancy: Exploring Over-Licensing Claims vs. Increasing Software Audits by Vendors

How is it that analysts such as Gartner and IDC make statements that most customers are over-licensed but software vendors are increasing the number of audits that they perform?  It has been well documented for instance, that Microsoft will audit about 30,000 Enterprise customers in North America over the next 3 years.

The answer is actually quite simple.  Software licensing is designed to be very confusing.  So confusing that although most customers have good intentions when it comes to Software Asset Management (SAM) practices that one of two things happens:

  • Enterprises purchase the wrong types of licenses (think of the many editions Standard, Enterprise, DataCenter)
  • Managing deployment counts is so complicated that it is easier to over-buy then to try and purchase only what you need – “Audit Insurance”

We often see enterprises spend more than they need to on licenses, only to find out during an audit or SAM Engagement that they have purchased the wrong licenses.

A good example is the client that was purchasing SQL Processor Licenses (allows unlimited users) based licenses, however when we analyzed the environment we found that CAL based licensing (Users that have access) was approximately 1/3 the cost.  To complicate matters when we reviewed their entire Microsoft product install base, we found that they were overspending (by about 40%) but that they were non-compliant on a number of products.

This is very common, over-licensed on many products, but under licensed on others (and don’t think the vendor cares that you paid more – but bought the wrong licenses).  This happens because of the complexity and number of purchase of options.

Another client, who thought they had the best deal from Microsoft for their EA Negotiation, we showed them a very simple way to get the same products but remove 25% of the cost from the proposal.  When asked how, we explained that what they were buying could be purchased 5 different ways.  Each of those 5 options had a different cost but also had different rights (Perpetual, non-perpetual, subscription).  We showed the client what the benefit of each option was, what they gained (or lost) and what was best for them.

Key to doing this is understanding the Product Use Rights (or PUR).  The PUR identify what you can and cannot do with Software.  The various Microsoft licensing programs (EA, Select, etc) add or take away from the PUR.  A great example of this is secondary use rights.  As stated in the PUR for desktop applications (think Office) from January 2013:

“You have the rights below for each license you acquire.

1.  You must assign each license to a single device.

2.  You may install the software on the Licensed Device and a network Server.

3.  Unless you license the software as an Enterprise Product or on a company-wide basis, you may also install the software on a single portable device.”

What this means is if you purchase Software transactionally (Select) if a user has a laptop and a desktop you only need to purchase one license however if you are in an EA and license via that you have to purchase two licenses for that same user.  Many companies know about these secondary use rights but very few read the PUR (January’s PUR is 217 pages long) and do not realize that they lose those rights within the EA itself.

So yes it is very easy for organizations to over pay for their software from Microsoft (and other vendors), yet still be non-compliant.  The programs are built to provide many purchasing options (Server/CAL, Core, Processor, etc) and have a lot of complexity (some programs have secondary use rights others do not) on purpose.  It gives your Account Rep the opportunity to seem like the “good guy” and engage you in a SAM process (think self audit – controlled by Microsoft) and then use all these confusing licensing terms to force you to purchase even more software that you do not need (and the cycle continues).



Give Your Microsoft 365 Licensing a Health Check

Book a meeting with MetrixData 360 today and see how much you could be saving on your Microsoft 365.