26/11/2024
Microsoft Licensing in a Nutshell
Microsoft licensing is complex. If you don't know enough about it, you run the risk of paying more than is actually necessary. We have therefore tried to explain and classify some important terms from the Microsoft licensing world in this blog post. In addition, you will find a number of optimization approaches for the respective aspects of Microsoft licensing.
Volume license agreements (selection)
- Enterprise Agreement (EA): Company-wide contract for on-premises licenses and cloud services from 500 devices or users with fixed prices and annual true up / true down.
- Microsoft Purchase and Services Agreement (MPSA): Transactional contract for on-premises licenses and cloud services with a pricing system based on annual revenue and without purchase commitments.
- Microsoft Customer Agreement (MCA): Transactional contract for cloud services (monthly, one- and three-year subscription terms) without fixed prices apart from the term of the individual subscription. Product availability varies depending on whether the contract was concluded directly with Microsoft (cloud services only) or via a cloud solution provider (also on-premises licenses, but without Software Assurance or subscriptions).
Approaches to optimization:
- Careful selection of suitable contract model(s) (combination may be useful)
- Integration of all/additional requirements preferably as part of contract negotiation/extension
On-Premises Software
- Are offered as permanent usage rights or subscriptions
- Can be purchased with Software Assurance (always included with subscriptions). This is an upgrade entitlement and other services such as licence mobility and the Flexible Virtualization Benefit, which allows the licences to be used in virtual environments or with cloud providers, for example. Software Assurance is mandatory in the Enterprise Agreement.
Approaches to optimization:
- Regular review of actual license requirements and license quantities within the scope of contractual possibilities
- Product-specific evaluation including upgrade planning for which products Software Assurance makes economic sense
Microsoft Online Services
- Are offered as individual plans (e.g. Exchange Online) or combined in suites (e.g. M365 E3).
- Are time-limited rights of use (subscriptions).
- Must be activated or the subscriptions assigned in the tenant before use.
Approaches to optimization:
- Determining the need for and use of functionalities from the suites
- Possible standardization of user profiles
- Exploiting contractual opportunities to reduce license volumes
Azure Cloud Services
- Are Infrastructure (IaaS) and Platform as a Service (PaaS) services from the Microsoft Cloud.
- Are billed based on usage (pay-as-you-go (PAYGO)).
- Can be provided with a contractual purchase commitment, the so-called Microsoft Azure Consumption Commitment (MACC), for which the customer receives a discount on his Azure consumption in return.
- Can be combined with existing on-premises licenses (with active Software Assurance or subscriptions) for Windows Server and SQL Server (Azure Hybrid Benefits) to benefit from discounted conditions compared to cloud services with included usage rights.
Approaches to optimization:
- Use of saving plans and reserved instances for plannable workloads
- Use of existing on-premises licenses via Azure Hybrid Benefits
- Switch off services that are no longer required
- Rightsizing of services to the capacity requirements actually needed
- Redesign of applications to better utilize the technical scaling mechanisms of the cloud
Unified Support
- Is the support directly from Microsoft and successor to Premier Support
- Offered in three service packages (Advanced, Performance and Enterprise).
- The fee is calculated on the basis of product expenditure (fees for licenses & Software Assurance, Microsoft Online Services and Azure).
- Can be supplemented, for example, with Mission Critical Support for selected services or Enhanced Designated Engineering (EDE, formerly DSE) services and workshop packages.
Approaches to optimization:
- Adaptation of unified support services to actual support requirements
- Inclusion of third-party support in the contract decision
- Communication of the contractually agreed services within the company for better utilization of the services included
Note: This article does not claim to be absolutely complete, but is rather intended to provide a compact overview and introduction to Microsoft licensing.
We are happy to provide you with our expert advice on your individual questions. We can draw on many years of experience and a large number of Microsoft licensing projects. Please feel free to contact us.
Author: Felix Baran