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Since the Cloud offering of Office 365 the inconsistency of licensing purchase methods is increasing. Enterprise clients have extensive agreements with Microsoft and have maintained them for decades, however the subscription licensing has been obtained in a very confusing and additive way instead of substituting the volume licensing agreements.
First it was the Cloud addition and “bridge” licenses within the same document contracts that increased the cost, not equal or save costs to customers.
Flexibility offered by the Cloud subscription model was compromised because these old agreements had to be maintained. Microsoft could have adopted a better transition just by allowing flexibility in the licenses within the agreements when clients deployed Cloud services, it could have provided an incentive to Microsoft clients not only to license but to deploy the Cloud technologies. Instead Microsoft added costs, and pushed clients to move to the cloud within a difficult transition that will eventually fulfill the promise of being flexible.
Currently the increase to 500 users to have a large agreement, the introduction of the MPSA agreement, the discontinuation of enrolments that were sold as ultimate solutions in the last 3 to 4 years have become not only a product licensing complexity but also a management chaos for organizations in the enterprise with multiple offices, affiliates and moving numbers of workforce.
Google has offer consistency as a cloud subscription model for working tools, and has allow other vendors interacting with Google Apps for work. It is in a collaborative way that Google and other vendor partners can offer security, data jurisdiction, access to robust data servers and integration with multiple ERP and CRM systems. Google has understood of the opportunity to gain market share in the Enterprise and has started offering new interesting approaches.
The dichotomy I see is the following: Microsoft offers an All-in approach to technology buyers through complex agreements while Google offers “buy what you like” with Google and “friends” subscription models, independent to each other, including Microsoft products and Azure services.
To manage compliance and mitigate risk is better for enterprise organizations to pay for what they truly use, measure its performance and use and adapt budgets accordingly.
I am observing companies deciding on their Cloud services consumption based on flexibility and less management burden on compliance risk. The Cloud is standardizing security, integration, multiple levels of vendor to vendor development and common market approaches… it will be difficult to justify complex licensing contracts the more collaborative are the services offered in the Cloud.
Microsoft could invite more vendors to sell collaboratively on flexible plans, otherwise Google may win the presence in the Enterprise.
To know more :
With so many IT providers becoming CSPs it is obvious that more than ever the value proposition is key and extremely important.
A Value proposition has to go beyond a line of products and concentrate on your business philosophy, your culture and offer clear arguments for differentiation. You can do this as well by adding great services to the portfolio defining you as a CSP with great difference from your competitors.
One of the suggestions I can provide is the addition of Security services on the CSP portfolio.
What you are selling is not a product any more… but “trust”. Your clients need to trust you will drive them to the Cloud securely.
CSPs come from multiple backgrounds, from development to integration services and everything in between, however not many are specialized on offering Cloud Security options to the clients. And what a complementary offering security is!, as it is not an option any more but a requirement in more and more industries and job functions.
One great example is the addition of Secure Messaging, email encryption and tracking to your clients technology and productivity tools. Cirius Messaging is, in my view, the best solution you can add to email that keeps being the most used communication form these days. It is a Cloud based solution so it moves a CSP rapidly to add security offering that aligns with any email platform provided to the client.
What you gain providing Security to your clients is not only the perception of trust you are looking for, also provides an answer to the threats all businesses are concern about with regards to their sensitive data in communications. Even more, clients have more confidence in the Cloud as you help them to adopt a user friendly and simple security enhancements.
Think about you as a CSP having the ability to extend your markets to regulated industries. This could result on new clients from new opportunities, and obviously a new revenue stream that could allow you to grow beyond the usual productivity tools sales.
Be different, be smart, care about Security and win the trust of your clients.. it is my strong recommendation.
A few years ago I had the opportunity to start a full LSP (licensing service provider) licensing business from the very beginning of licensing activities and growing the business with a licensing business model. Later on I repeated the process in MSP and VARs especially for those who had the desire to grow their Volume licensing business. And now the change towards Cloud licensing especially with the CSP program has given me the chance again to work on licensing business models transformation, for this reason I thought was relevant to comment on the CSP licensing model concepts that all CSPs should assess.
Adapting to a Cloud revenue business model is not an easy transition and sales teams, business owners and many others are reluctant to change the traditional transactional model to a subscription based model, but obviously signing to the CSP program is already a commitment towards applying the necessary changes on the business model required.
CSPs must be “licensing ready” and should assess the business to successfully plan activities: knowing about licensing is not enough, controlling subscriptions, transitions from volume licensing to subscription licensing, client ROI impact and SAM maturity, between other topics,… all is essential to all CSPs…
Some questions to resolve: has the CSP a volume licensing or hosted licensing business in place? What is the CSP licensing selling strategy? Is the CSP reactive to renewals? How successful it has been to capture net new Cloud clients? Is the CSP in a position to sell Office 365 or Azure Services? Is there sales team members knowledgeable enough to offer Cloud subscription models? Can you transition from SPLA to other cloud licensing? Is the sales team incentive align with the achievement of new monthly recurrent revenue? Has the CSP SAM services at all? Is the CSP SAM service aligned with client expectations or works just as a necessary exercise due to partnership obligations for audits? How many current clients versus net new are required to obtain to keep CSPs revenue expectations?
The end goal of any assessment exercise towards licensing sales business is to create a strategy for sales and operations that can capture clients and operate efficiently to create revenue. Some CSPs plans have not contemplated all risks, for example:
Many CSPs are finding that some sales efforts are futile with clients that transact with Enterprise Agreements via qualified resellers or LSPs (Licensing Solutions Partners), it is necessary to know how to pick the battles and be ready to fight the arguments of licensing agreements, making sure that clients don’t get involved between the subscription margin fight from the different resellers and see the services value as the true differentiator. As it is today between CSPs and LSPs with CSP expectations (all of them) the battle for the Cloud is on…
Assess, plan and get the right licensing trusted partners and distributors. Get the right SAM independent partner (you can always ask me for their names), be familiar with distributors CSPs advantages and get yourself ready to get into the wonderful world of software licensing in the Cloud era.
Let me know if you require more information for your CSP plans.
It has been a long time since my last post. Finally I decided to change the route of the blog as per this critical time in the IT industry…
Cloud is to stay, we know that, as well as in the most mature markets its consolidation is a growing. For the last few months I have observed merges, acquisitions and business owners on IT either changing pace or getting out… And as the maturity of the Cloud progresses and the barriers of Enterprise clients towards Cloud are demolished Software Asset Management (SAM) and licensing have adapted to the new models. However we are now looking at even another big game changer, the CSP program.
The CSP program (Cloud Solutions Provider) launched by Microsoft will define those Microsoft partners investing into the Cloud to those that aren’t. And like any other critical program it comes with requirements, licensing achievement requirements, in other words… sales.
More than ever a level of licensing and SAM understanding is going to be critical for the CSP program. And for this reason the blog will change to reflect that level of help for CSPs required for any company that becomes either a Tier 1 or Tier 2 CSP a successful Cloud engine that brings more opportunities and is able to compete versus the Goliath, create more value to their customers and evolve as a company to the so desired MRR (monthly recurrent revenue) MRR achievement.
As an example, Cloud licensing models offer more flexibility to chose resellers and CSPs will fight for clients with Enterprise Agreements to consider the options beyond the Licensing Service Provider (LSP) resellers. As customer chose trust versus transactional administration for the Cloud significant changes are in place and more coming to open the battle for the subscription licensing offerings. And all players are involved, as distribution channels also look to reinforce the CSP program across the world.
Past posts keep their value as reference of licensing times and seasons, rules and changes and first impact of Cloud computing reflected on them. It is time for the Licensing Guru to add more content as we walk together to a brilliant Mobile first and Cloud first era.
Josef Hans Lara
The Licensng Guru.
First of all, it has been an interesting journey during my SAM career to get to write this post…because I have spent so much time helping companies and organizations “clean up the house” and get compliant, manage their applications and protecting them in the way of being always ready for software audits. But like the best things in life the journey does not have an end and is the ride that makes it great.
In the SAM World the ultimate efficiency is to manage applications from the deployment of images to usage control with compliance in between. It is precisely on this SAM ultimate efficiency that allow us to be more proactive in order to not only be ready for software audits but also to advance the reporting to a vendor before reaches to audit… I know, I know, sounds sacrilegious.
Let us put together this scenario: one organization uses a SAM governance management for all applications, policies and procedures are well-defined, smooth and there is compliance control. To “cleaning up the house” is easy and give it a year to achieve the optimal position. It is now a matter of maintaining, adapting and advising. It is then that risks are fully controlled towards software audits. And the services are rendered by a certified and recognized independent SAM consulting firm, not by a reseller. Imagine then that the organization reports voluntarily their compliance that includes deployment information.
- Vendor does not have to list the organization on the black list
- The organization tracks reports delivered to provide “good faith” to auditors and avoid their time-consuming engagements
- The organization is motivated and keeps SAM governance live, active and constant maintaining compliance to optimal levels
- Vendors provide funding for voluntary reporting, services by the SAM consultant may be partially covered if not paid in full.
- SAM consultants can focus on the upcoming projects, working with IT architects and other to prepare for changes and ensure healthy delivery and compliance as per the established road map.
What we need is an alignment between the vendors, the SAM consultants and the customers. It has to be driven by the Vendors primarily, creating clear programs of audit protection by voluntarily reporting, enabling independent SAM consultants to provide a level of trust and optimal reporting acceptance. And this is out of the scope of the True Ups and Renewal typical reporting,,, Cloud subscriptions actually fit well on this model as usage can be controlled by the access to the applications from the vendor, but more than ever, the reality of Hybrid Cloud could benefit this approach tremendously, increasing the trust between all parties involved.
Just a thought…
Software Products require maturity and time, and what looked indifferent before may now be the “way”, maybe the most optimal way to get the best results of a technology.
I think it the Windows Intune moment, however in a different perspective than what the general marketing of Intune shows, Microsoft is just starting to show the full potential.
Intune is more than mobile device management services. It is a new way to control soft assets and Cloud usage. Intune is the future of IT management and Application delivery, only that is here already.
As a Microsoft partner I recognize that relevance comes from trust in the branding presented to our clients, doing a good job, and always improve in innovation. When we portray an image of the future of IT and the enablement capabilities of the Cloud, is obvious that the Hybrid Server Cloud Infrastructure, the total mobility of devices and the total freedom of OS usage is the “way”.
Intune is different from other Microsoft products as it is born in the Cloud, observes the best of on premise practices and innovates on application delivery management. Allows for more “freedom” and choice.
I have found many potential services through Intune from the features that it provides. It even includes an OS subscription being a disruptive entry to the traditional Volume Licensing models. As a Software Asset Management expert, it is exciting to see how licensing evolution is driven by the way we consume IT instead of the non-related influences that make licensing so complicated.
In my opinion, it is the time of Windows Intune…
To subscribe to the Cloud directly is easy, is a simple transaction based on consumption, however the co-existence of old traditional Volume licensing, or Service Provider licensing programs with the new Cloud subscriptions is not that easy. In fact to make sure that new benefits for the Cloud enablement like the Software Assurance Mobility Rights are properly used requires attention to the licenses allocated to the servers on Windows Azure, for example. Understanding the real rights and possibilities is another variable to contemplate when measuring compliance.
Hosted providers do not offer much guidance with respect of what their clients can allocate on licensing into the Cloud environments, and is often a conflict of responsibilities when the vendor audits the hosted provider or the end-user client.
In the Microsoft Product Use Rights for example we can observe the limitations of the licenses covered by SA with respect to their Cloud options with the Mobility Rights: (see table below)
Understanding the right coverage of the license is important in order to maintain not only compliance but also to predict Cloud budgets.
Clients with an Azure consumption negotiated on their Enterprise Agreement can use any of the services and increase without difficulty, and as they evolve using the Cloud services will be important to understand the ROI of the existing licenses versus the newly consume and fully subscribed licenses. In a way Cloud has enable transitions of existing licensing investments however at the same time is creating a conflict:
Is the Cloud subscription directly on Microsoft Azure a better option than the SA Mobility Rights?
As prices vary, the Cloud footprint extends and upgrade cycles arrive, the SA renewal will be confronted by the commitment to Azure subscriptions in a way that customers will choose one or the other.
For Microsoft clients using other third-party hosted providers the question is:
Have I allocated the compliant rights of use on the Cloud? and if I consume SPLA, is my hosted provider compliant? Am I compliant? Or am I at risk due to hosted provider error?
I can confidently say that Software Asset Management has become more relevant in the Cloud era.
(SAM Mobility Rights table as per PUR July 2014)
|PRODUCT LICENSINGMODEL||PRODUCT OR PRODUCT TYPE||LICENSE||PERMITTED NUMBER OF OSES PERLICENSE/PERMITTED NUMBER OF
CORES PER LICENSE
|Server/CAL||External Connector Licenses||Each External Connector license with active Software Assurance coverage||1 OSE per license|
|Server/CAL||SQL Server||Each Server license with active Software Assurance coverage||1 OSE per license|
|Per-Processor||All eligible Products||Each Processor license with active Software Assurance coverage||1 OSE with up to 4 virtual processors per license|
|Per-Core||All eligible Products||Each Core license with active Software Assurance coverage||One virtual core (subject to the Product Use Rights including the requirement of a minimum of 4 cores per OSE)|
|Management Servers||System Center ServerManagement Licenses
(versions prior to System
|Each Server Management license with active Software Assurance coverage||1 Managed OSE per license|
|Management Servers||System Center Server Management Suites||Each SMSE or SMSDlicense with active Software Assurance coverage||4 Managed OSEs per License|
|Management Servers||System Center 2012 R2 Standard||Each System Center 2012R2 Standard Server Management license with active Software Assurance coverage||2 Managed OSEs per license|
|Management Servers||System Center 2012 R2 Datacenter||Each System Center 2012R2 Datacenter Server Management license with active Software Assurance coverage||8 Managed OSEs per license|
|Management Servers||Visual Studio Deployment 2013 Standard||Each Visual StudioDeployment 2013
Management license with active Software Assurance coverage
|2 Managed OSEs per license|
|Management Servers||Visual Studio Deployment 2013 Datacenter||Each Visual StudioDeployment 2013
Datacenter Server Management license with active Software Assurance coverage
|8 Managed OSEs per license|
|Specialty Servers||HPC Pack Enterprise||Each Server license with active Software Assurance coverage||1 OSE per license|