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I’m a Software Asset Management Analyst who specializes in Microsoft software licensing and audits, with the focus on protecting my clients from unscrupulous Microsoft software sales tactics. I’ve been doing this for over 12 years with over half of those years working at the behest of Microsoft and in that time I feel like I can honestly say I have seen all kinds of ineptness, either purposeful fraud or general incompetence. As an auditor working for customers at Software Licensing Advisors, I am happy to say I have empowered companies with the truth and saved clients millions of dollars. Here’s one of my recent stories. This story is true but I’ve changed the names to protect the innocent…the Microsoft abused.
Over the course of the last few weeks I have been working with a client, an IT Director for a mid-sized manufacturing organization, who was facing a Microsoft Enterprise Agreement renewal. We will refer to the IT Director as John. John was in somewhat of a panic, when his Software Reseller contacted him regarding his impending agreement True-Up and Renewal. The Reseller presented John with a Microsoft Customer Price Sheet (CPS), and something didn’t look right.
The CPS showed a marked increases in pricing more significant than John and his superiors were anticipating. With tightening budgets, John knew that his CFO would be upset when he saw these numbers. John decided that he needed to determine if there was a way he could either not renew the Software Assurance or restructure the Enterprise Agreement to reduce the cost without impacting the business but he didn’t know exactly how. He needed to contact an organization that understood Microsoft licensing and Microsoft agreements, so he contacted Software Licensing Advisors for help.
John’s organization like so many others, are starting to experience the after-effects of entering into a subscription/cloud based software agreement. Microsoft began selling these Office365 cloud agreements in earnest about 3 years ago and continue to push them in new and varying forms today. The expiration/renewal periods for these agreements are now starting to come due and the IT decision makers responsible for managing these agreements are witnessing dramatic cost increases.
Cloud Enterprise Agreements were proposed trades as a way to settle unrelated software licensing deficits. This is leverage applied by Microsoft to lock companies in and does little to solve the underlying weak or vacant software asset management practice in that company.
If the agreement wasn’t offered in settlement for a compliance issue then it may have been touted as a way to reduce CAPEX and administrative overhead. These types of Office365 Enterprise Agreements are initially offered with deep discounting and the promise of improving productivity and off-loading commodity IT services like email, but the reality is these agreements are not appropriate for many organization and the time, resources and money necessary to migrate equates to results that are much less than anticipated or promised by Microsoft.
At the end of the agreement many IT Directors like John are realizing they aren’t getting the benefits out of the agreement commensurate with the increased agreement costs. They have not adopted all of the Microsoft cloud services and perhaps their deployment has stalled for whatever reason. The return is not as expected.
In John’s specific case, his organization had chosen to add Office 365 to their Enterprise Agreement and move everyone to hosted Exchange/email. Typically in this agreement configuration you move from having your email on premise to the cloud and go from owning a perpetual license of Office Professional Plus to a subscription based version of Office. Unlike a perpetual license acquired through SA upgrade rights or an outright license purchase in Volume Licensing programs, a subscription provides license ownership. If you wish to continue to use the product, you must continue to pay the subscription.
FDR was profound when he stated “The only thing we have to fear is fear itself”, and he was right especially when it comes to the prospect of restructuring or even canceling your organizations Enterprise Agreement. You don’t have to fear anything about canceling your EA as long as you have all the facts and understand your options. That’s where someone who has the Microsoft knowledge and experience can help.
With John the first step was to review all the agreement documentation and license entitlement information to see what the terms of the agreement were and to find out what the organization owned for software licensing. The next step was to conduct and inventory of the environment to see what the organization had deployed and was utilizing for Microsoft technology. We provided John with the necessary inventory tools to quickly and accurately capture their hardware and software deployed. We worked together to vet the inventory data and to define the licensable footprint of technology captured.
Once all the documentation was reviewed and all the inventory data was collected and clarified the task of identifying all the cost saving options could begin.
In John’s organizations case we determined the following, this is a brief high level summation. John’s Microsoft Enterprise Agreement Line Items of importance are…
- Office 365 E3 & E1
- Office Pro Plus Line Item on EA CPS
- Windows E3 Per Device (Windows OS License)
- Windows Server Datacenter (Virtual Servers and Physical Hosts)
- Windows Server Standard (Standalone Physical Servers)
- SQL Standard Core (SQL Servers)
- Annual Price Per Year on CPS before True Up… $434K
- Agreement Cost over 5 years…$2M
Our best option based on John’s software deployment/usage, and comfort level for environment modification was the following…
- True Up Windows E3 Per Device where short
- This covered the Operating Systems in John’s Environment
- True Up SQL Standard Cores where short
- This covered John’s SQL deployment
- We also helped John with a SQL deployment strategy that eliminated the need for software assurance
- True Up Windows Server Datacenter Processors where short
- This covered John’s virtual server environment and assured they could deploy Windows Server up to 2016 (they were slow to adopt new Windows Server technology)
- Then let the EA Expire
- Move Exchange Server/Email on Premise
- Purchase an Exchange Server and Exchange CALs off of MPSA Agreement
- Purchase Windows Server CALs off of MPSA Agreement
- Office Usage Analysis
- Our analysis determined a large majority of John’s user population didn’t need access to Office Pro Plus or the most current version of Office so when the agreement expires John was ok to revert most of the users back to the Office Pro Plus 2013 from the previous Enterprise Agreement and buy Office Standard for any user who still needed Office
- Microsoft allows access to Office 365 for 30 days after agreement expiration giving John time to migrate Exchange back to On premise
- Note that if you know you will allow the EA to expire 30 days prior to agreement expiration you can save the cost of one month of Office 365
- We helped John identify a lower cost alternative to One Drive, and Unified Communications
In the end our analysis calculated a Microsoft True Up and additional purchases on the MPSA as a final onetime payment of approximately $300K but John determined he wanted to make some additional purchases of equipment and add some annual maintenance costs, all told John’s onetime payment came to approximately $600K with a minimal annual payment saving them over roughly $1.3M over the next 5 years!
John’s story was not atypical or unusual. We have seen many clients in the same boat as John’s organization. Don’t let the fear of the unknown keep you from at least exploring your options. The cost of our service can pay for itself a 100 times over in the cost savings and peace of mine we can help you achieve. Microsoft exploits the overworked, stretched thin IT decisions makers because they know they have little time to research product use rights let alone find the time to figure out what’s really going on in their own environment. Don’t let it happen to you, take charge, get the knowledge and let Software Licensing Advisors help you and your organization take back the control by having an impartial and independent advisor!
