Licensing Microsoft software for contractors and Non Employees is confusing. Mike Austin from MetrixData360 explains how Microsoft licensing works in these situations. This is a very detailed session which digs into these complex licensing scenarios.
Virtual Desktop Infrastructure licensing can be convoluted and confusing! Often organizations believe they are licensed correctly only to discover that they are out of compliance.
Join Mike Austin as he shares his insights and cuts through the confusing jargon with straight talk! Mike Austin has been involved in countless Microsoft negotiations and audits and has negotiated over $1B in software cost reductions.
Trusted globally by some of the world’s most well-known enterprise companies, MetrixData360 is the leading provider of expertise and negotiation services around Enterprise software contracts. Combining an unparalleled knowledge of the DNA that make up software agreements with the ability to understand company’s individual requirements, MetrixData360 is able to drive out significant costs and align agreements to business priorities NOT to those of software vendors and their programmatic objectives. Using technology, process and knowledge derived from the analysis and negotiation of more than a thousand contracts, we help put explanation around the unknowns that create compliance gaps and control spiraling costs associated with Enterprise software agreements.
Our Sean McIntosh was recently interviewed as he is a presenter at the upcoming Compliance Manager Summit where he will discuss how to challenge your audit findings.
Out of every $1 million in noncompliance found in a Microsoft audit, about 50 percent will be wrong, says Sean McIntosh of MetrixData360, a consulting firm specializing helping organizations with license compliance and audits.
And the worst part is that a lot of companies won’t even argue effectively.
“Some people, when they get a call from a vendor, assume they have basically no rights,” says McIntosh, a featured presenter at the 2017 Compliance Manager Summit (March 13-14 in San Francisco). “Often, when software auditors throw a lot of legal terms and conditions around, companies will just cave in, turn over their data, and pay up.”
But this is changing. More companies are challenging their audit findings, negotiating better settlements, and pushing back.
McIntosh is an expert on the tactics and grey areas that software vendors of all kinds (and their auditors) use today to drive up the cost of compliance settlements. Although he’ll go into detail at his Compliance Manager Summit session, here are a few key points.
Know the rules
“It really doesn’t matter what software vendor your dealing with because they all follow a very similar approach to audits,” says McIntosh. “They put a data request in and compare that data against their entitlement data and find the gap—the largest gap possible by applying the most conservative rules possible.” However, the first thing you should do, says McIntosh, is go back and read the contract that you signed to confirm what your rights actually are. Know exactly what data you have to turn over, how many licenses you purchased, and a host of other terms you agreed to that may enable you to lessen some of those gaps.
For example, in one audit that McIntosh worked on with a client, he found that Microsoft was applying the most current product rights and conditions, but the actual application in use was a few versions older. “When the current product use rights were applied to their SQL Server licenses the initial gap was upwards of $2 million. But when we applied the correct usage rights—the ones assigned at the time of the license agreement—their gap was really around $500K.”
Microsoft auditors will always try to impose the most current usage rights because they are almost always the strictest. “The company was within their legal rights to follow an older version of usage specifications, but it still took a lot of arguing with the auditors,” McIntosh says.
Know your own data
Although companies often will just turn over usage data (or access to usage data) to software compliance auditors, McIntosh says, not so fast!
“When you get involved with one of the boutique auditors hired by Microsoft, make sure you get an nondisclosure agreement in place that allows you to review any and all data the auditor plans to send on to Microsoft,” McIntosh cautions.
The reasons you want a data review are many, but generally you want a chance to explain any abnormalities and offer proof to the contrary, says McIntosh. “There can be a lot of technical errors in the first pull of your data, that, if Microsoft gets a stab at it they will forecast an audit finding base on it. So it’s important to work with the auditor to find simple and easily explained anomalies, supply the data to back up your story, and remove these from the final data submitted on to Microsoft.”
For example, another MetrixData360 client owned the rights to 500 copies of Microsoft Office Professional that they were not using. The client had installed 500 copies of Office Standard that they did not have entitlements for. “In a situation like this the auditor will demand that the company buy 500 copies of Office Standard, which is technically correct, but that’s not the way it really works in most cases,” says McIntosh. “In a negotiation, you can fairly quickly get that auditor to accept the licenses for Pro in place of Standard.”
Escalate above the auditors
Another tip McIntosh has for companies as a last resort to challenge their audit findings is to go over the auditor directly to the software vendor.
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Okay, did I catch your attention with that title? Let me set the record straight. No, I don’t think Microsoft will fail anytime soon. Sometimes, as I’m thinking about the business or deals that I am working on, I often wonder what is going on behind the scenes at Microsoft and why they make certain decisions? In this post I’m going to try and answer some of the top questions that people ask me around why Microsoft makes some of the decisions that they do.
On the surface the answer to this question seems simple. Microsoft wants to control your infrastructure; they want to make sure you are hooked… but I really don’t think it was this simple internally at Microsoft. My guess is, there was a massive amount of real debate about a push to Office 365 (and I’m guessing it was not always a polite conversation).
Office 365 to me, was an answer to a problem Microsoft has had since the invention of Software Assurance, it was a way to force customers to upgrade. The biggest threat Microsoft has to its traditional recurring (ie. Software Assurance) revenue stream, is clients that do not renew (all or part) of the Enterprise Agreement (EA).
If you really think about it, Exchange as an online service – makes sense. SharePoint as an online service – only sort of make sense (think of all the customization that may not be easily achieved in a multi-tenant type deployment), Skype in the cloud – not sure it makes sense (ok I will give IM and presence, but Voice? I’m still not sure VOIP quality comes close to the landline) but Office in the cloud – huh? Yes they have the Office Apps but are they really much more than a glorified viewer (which were free?).
I think just looking at Office pretty much provides the full picture here. People were dropping the SA on Office, as they only deploy the product every 6 or so years. Microsoft realized this and the natural answer – push people to Office365 and make it dependent on a new version of Office. Now at this point I can see someone in the product team in Seattle going AND OH if we make a new version of Office we can force those updates on people.
Upgrades have always been the nemesis of Microsoft. It started with Windows XP (no I don’t want to get into arguments about how bad Vista really was). No one wanted to move. Microsoft of course never understood this. I always love the comments you hear from sales reps, this customer moved in 90 days why can’t you?
Taking the clients view on this, I truly see it. Honestly, what value can they add into Windows or Office for that matter to provide business value to do the upgrade. I sometimes wonder how many people would still be running Windows XP if it was still supported, which by the way is the number one reason people upgrade these two products – end of life support! Not a good reason in my opinion (completely off topic but, if anyone from Rimini or Spinnaker reads this, please, please, PLEASE!! take on Microsoft support).
I think Microsoft’s issue has always been that, they do not see the clients’ world. Their view is so myopic of their own desires they can’t see it. The reason people can’t move (beyond finding business value) is the cost to do all the application compatibility is so cost prohibitive. End of story. Microsoft’s first attempt at address this – App-V. Virtualize guys, contain the old apps in an image and your good to go. When that didn’t work, they came up with plan B. Force it on them with Office 365.
Not a bad plan if you are a shareholder of Microsoft’s. Get them and keep them forever. The problem is, I don’t believe this plan will work. As much as Microsoft technology is important to people, I do think some unforeseen force will catch them (maybe it’s Google or Amazon or someone we haven’t seen yet) The problem for Microsoft and why I think they will fail is….. They are upsetting all their clients. Organizations are tired of the Microsoft games (Pushing products that aren’t needed into bundles and increasing prices, not negotiating in good faith, auditing and pushing unfair findings on them, etc). Eventually when someone catches them, I think the exodus could be fast. Just ask Novell (remember Netware), IBM (bye, bye Lotus Notes), Corel (WordPerfect) Perhaps someone should ask the crew from Netscape or Blackberry what happens when you take clients and your dominance for granted.
On July 1st 2016 Microsoft announced a new licensing program called Enterprise Advantage and Richard Smith who is the General Manager, Microsoft Worldwide Licensing & Pricing had this to say:
“In 2017, we will introduce Enterprise Advantage as a new way for commercial customers to buy organization-wide on the Microsoft Products and Services Agreement (MPSA). Enterprise Advantage brings traditional Enterprise Agreement benefits to the MPSA and provides the best value for a three-year, organization-wide and optional platform-wide purchase:
More easily manage your assets, including true-up and true-down of subscriptions and services, to meet ever-changing businessneeds. https://blogs.technet.microsoft.com/volume-licensing/2016/07/01/introducing-enterprise-advantage-on-mpsa/
Microsoft’s Mark Nowlan added that:
“With MPSA, Microsoft’s goal is to streamline its multiple licensing/purchase agreements down to a single agreement and two options to buy (transactional/buy as you need or organizational-wide), Nowlan said. As part of this consolidation, the Perpetual Desktop Enrollment, Subscription Desktop Enrollment, and Server and Cloud Enrollments will go away.” http://www.zdnet.com/article/microsoft-to-add-enterprise-advantage-to-mpsa-licensing-in-early-2017/
But Why is Microsoft Suddenly Making these licensing changes?
With the new Enterprise Advantage program Microsoft is making licensing much more programmatic for these smaller to mid-sized organizations. This means there will be less room for negotiation. Our sense is that with the new agreement the MPSA price is the price and there is little to no room for negotiation.
With the elimination of the traditional contract stack and its “simplification” there will be less room to negotiate specific terms and conditions which are important to the client’s business. With the MPSA program the terms and conditions are basically a take it or leave it proposition.
There are administrative costs associated with these licensing programs. Over the last decade Microsoft has become more and more hands on with all their enterprise class agreements and there are costs associated with this. Organizations with less than 500 users will find themselves pushed to a Cloud Solution Provider (CSP). The Microsoft Cloud Agreement (MCA) program’s lack of complexity in terms of customization will help Microsoft push the workload to their CPS Partners. These partners will wind up assuming more and more of the support and administration costs is our guess.
At first glance it looks like an organization in the 500 to 2,400 user space retains a lot of the options they always have enjoyed with the MSP, EA or CSP. The problem is that the only space in which there will likely be any customization is in the EA.
We’re not sure this makes Microsoft licensing any less complex. In fact, it potentially adds to the complexity. What it does is make it easier for Microsoft to make clients in the 250 to 2400 user space very programmatic and removes any ability to negotiate T&C’s and pricing. Microsoft will then use the CSP program to drive these clients to the cloud.
If you have questions or concerns about the impact of this change, we encourage you to contact one of our unbiased licensing experts for a free initial consultation.
Software audits consume your resources and in many cases result in large unexpected costs. We have have assembled a panel of Industry thought leaders to discuss and share their insights on Software Audits. Our webinar panel includes former Microsoft and Oracle executives, procurement experts and software asset management tool experts. Our Panel of Industry Experts will Discuss and Share…
Properly licensing your Microsoft environment is difficult enough but when you have a hybrid cloud environment it adds several levels of complexity. Most enterprise organizations today run both cloud and and on premise environments. Microsoft’s licensing rules can make it challenging to understand if you are licensed correctly and can increase your risk of non-compliance or over licensing. This is a recording of a live webinar which was presented on April 27, 2016 which covers licensing in the Hybrid Cloud.
Mike Austin, Vice President of Service Delivery at MetrixData360 will share his knowledge and insights from over 15 years of Microsoft licensing including over 8 years of employment by Microsoft in a variety of licensing related roles.
Our overall analysis of more than 17,000 Windows servers is that the actual price increase in Windows Server Licensing Changes is in excess of 24%
Microsoft Windows Server 2016 will be moving to a core licensing model. MetrixData360’s Mike Austin presented via webinar on the impact this will have for organizations. This event was well attended and we have had numerous requests for the content to be made available for on demand viewing. Click below to watch the presentation.
Our overall analysis of more than 17,000 Windows servers is that the actual price increase in Windows Server Licensing Changes is in excess of 24%
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