Microsoft licensing enhancements aid service model approach

Microsoft continues to tweak its licensing in support of customers considering a move to the service model now or down the road.

Microsoft has tweaked its licensing program again. This time the changes give IT shops with Software Assurance more flexibility whether they install application servers on premises or they are hosted by service providers. These changes go into effect on July 1 of this year.

The new license mobility will cover SQL Server, Exchange Server, SharePoint Server, Lync Server, System Center servers, and Dynamics CRM.

Andrew Wolfe, Microsoft’s senior product manager of worldwide licensing and pricing met with Ed Scannell, executive editor of at TechEd this week to discuss what the enhancements mean for enterprises and why Microsoft's licensing rules are so hard to decipher.

SearchWindowsServer: How will the new licensing enhancements help IT managers?

Andrew Wolfe: Larger companies are looking to move to cloud computing but don't know when. We want to give them a way to make that choice when they are ready. They have applications, like Exchange and SharePoint on premise today, but want the flexibility down the road to put it into a partner-hosted, public or private cloud. To be able to reassign that license to a virtual machine in the cloud is a great benefit for them.

So what is driving these latest changes?

Wolfe: The market. We evaluate what our customers are evaluating in order to get the most benefit out of their applications, and what flexibilities they are asking for. For example -- they buy Software Assurance (SA) using their application licenses, and are taking a long-term view of us. So we will take a long-term view of them and help them to be more flexible. We also want to make sure we engage with our hosting partners in that process and have a value process for them.

So it is about flexibility. How much of that is being driven purely by the cloud?

Wolfe: We see the changes coming from how users want to deploy and use applications differently, but they want to get the same value out of them. We had some mechanisms in the past that were not as flexible as they could have been. But we see several things coming together. One is that customers now feel more comfortable saying, ‘I want someone else to host this for me or someone else to manage this infrastructure for me’. Virtualization is also taking on a greater role in some of these scenarios. So we have to look at all this and (ask) ‘how can we continue to support them’, and do it in a logical way.

How can IT shops moving to the cloud better leverage their existing licenses through these new enhancements?

Wolfe: Two pieces to that. One is the license mobility they are talking about and that is just clear cut -- they have an existing investment in their licenses and they are taking the long-term view of covering that with Software Assurance. I can take this existing investment in an application server and with no additional cost, I can reassign it out to the cloud, and so that is where they are using IaaS -- someone else is providing that infrastructure and they are moving the application. Another one we haven't talked about as much, but it is a very similar concept, is the updated Enterprise Agreement (EA). We always have this dilemma of providing flexibility without it becoming too complex.

We have more customers saying to us, ‘I want to take some of my people and move them to the cloud -- not just IaaS, but the whole Software-as-a-Service (SaaS)’. So we looked at the EA and updated it to make it more cloud-ready. Most of our customers want a transition, they want the ability to say, ‘I want this small group or department to move to the cloud and then see how it goes, and then move the next group and then the next’. So we made sure we made it very cost effective for them to do that.

What is the advantage for IT shops if they use SaaS licenses from their service providers?

Wolfe: (IT shops) can get a discount with their hosting provider if they already have an on-premises license covered by SA. A common scenario might be if you have a SharePoint site on premise, but they also have some lower value stuff they want a hoster to run. They now have the ability to notify the hoster and say, ‘yes I have these people covered by this’, so they can get a little lower price for that hosting service. But that deal is completely negotiated between the customer and the hoster. What we do is provide a mechanism to discount what we are charging to the hoster, and then the hoster can pass that discount on to the customer.

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Let us know what you think about this story; email Ed Scannell at

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