News

Microsoft Plans To Raise Cloud Licensing, Software Assurance Benefits

• By Kurt Mackie
• March 31, 2011

Microsoft is planning some licensing changes that it says would benefit its Software Assurance (SA) customers and service provider partners.

For volume licensing customers with the SA option in place, the changes would make it easier to move to the cloud and retain those SA benefits. The company calls this benefit "license mobility." Additionally, Microsoft is planning to implement changes to the Service Provider Licensing Agreement (SPLA) that are designed to reduce costs for Microsoft's hosting partners.

The changes were announced on Thursday at the Microsoft Hosting Summit, taking place in Bellevue, Wash. this week. The changes for both programs will take effect worldwide on July 1, 2011, according to Microsoft's announcement.

Software Assurance 'License Mobility'
The license mobility option for volume licensing customers with SA will be extended to the following Microsoft application server products: Microsoft Exchange Server, Microsoft Dynamics CRM, Microsoft Lync Server, Microsoft SharePoint Server, Microsoft SQL Server and Microsoft System Center.

Notably missing from this list is license mobility for Windows Server or Windows client operating systems. Microsoft explains in its Q&A that Windows is excluded, along with desktop applications and developer tools. A Microsoft spokesperson indicated via e-mail that the license mobility concept just applies to Infrastructure as a Service (IaaS) for hosted application server workloads. Hosted Windows is part of the service purchased from Microsoft or its hosting partners and is covered under the SPLA.

"The 'license fee' for Windows Server should be a part of the service offered by the service provider. And as the application server moves to the IaaS cloud, License Mobility would allow that license to move over," the spokesperson explained.

Windows Server is licensed and assigned to a hardware device. Consequently, Microsoft doesn't allow the license to move to other hardware.

"Customers should continue to license Windows Server for their on-premises hardware as before, and service providers should use SPLA to license Windows Server for their infrastructure," the spokesperson added. "With License Mobility, service providers can now have a shared hardware infrastructure upon which they run a variety of services, for example: hosting (SPLA), outsourcing, mobility, their own internal use workloads, without having to segment the datacenter in hardware or licensing silos, all of which are a key benefit for partners."

The SA option provides educational benefits for organizations to learn Microsoft's software, but it's of principal interest for providing guaranteed software upgrades if the upgrade release by Microsoft falls within the specific SA contractual period. Consequently, estimating the benefits of SA agreements is often a tricky proposition for many organizations.

"Software Assurance is Microsoft's annuity relationship with the customer -- their maintenance program," explained Christopher Voce, a senior analyst at Forrester Research and the author of two studies on cloud-based e-mail that were released by Forrester this month. "The challenge with Software Assurance is that the core benefit has really been upgrade rights since Microsoft introduced it in 2001. The challenge is what value a customer might be able to obtain from the upgrade rights, even in conjunction with some of the other Software Assurance benefits."

SA customers have to consider coordinating with Microsoft's refresh cycles, capital costs and economic cycles, Voce indicated. It's all about trying to narrow down the predictable value, he explained. Microsoft has tried to keep its customers focused on renewing SA agreements of late by requiring SA for the use of the Microsoft Desktop Optimization Pack, which enables desktop virtualization and application virtualization, as well as requiring SA to use the Windows 7 Enterprise edition, Voce noted.

In any case, subscribers to Microsoft's services typically already get automatic upgrade rights to the latest version. Those upgrade rights have been deemed to be part of the service, and not associated with SA rights. In some cases, it's not clear how application server SA rights would transfer over to Microsoft various cloud-based services, such as Microsoft's Office 365, which will include a bundle of services.

"I do think that this [announcement by Microsoft] does answer at least some questions for enterprises about the viability of the licenses they buy today in a cloud-based world," Voce said in a phone interview. "It doesn't answer all of the questions, certainly...but for some products, at least there are some answers."

Microsoft's Q&A explained that the SA licensing change would help ease the transition for customers looking to move to the cloud.

"Not only will License Mobility make the transition easier for existing SA customers, it provides customers who prefer to purchase perpetual licenses the ability to continue doing so while still taking advantage of the efficiencies that the cloud offers," the Q&A states.

SPLA Changes
Microsoft also announced that it has reduced Windows Server costs under its SPLA program for its hosting partners. The cost reductions come from "retiring all Outsourcing SKUs, eliminating use restrictions for Non-Outsourcing SKUs and adding the Core Infrastructure Suite to the SPLA program."

The Core Infrastructure Suite is a new addition to the SPLA. It will include Windows Server Datacenter, System Center Server Management Suite Datacenter and Forefront Endpoint protection.

Hosting partners will obtain the following benefits from the Core Infrastructure Suite, according to the Microsoft spokesperson.

• "Affordability -- It will have a discount on the product suite compared to the sum of the individual elements; and the Windows Server component will be priced at the equivalent non-outsourcing price level.
  
  
• "Simplicity -- Rather than licensing the three components each on a different basis (per proc[cessor], per SAL [Subscriber Access License] and per device), it is all now licensed per-proc; the service provider just counts the number of procs in their datacenter and that's what they report for the core infra[structure], receiving license rights to the operating system, the management server and the security tools for the workloads running on that shared hardware infrastructure."

Microsoft claims that its hosting partners will see cost reductions after it eliminates all Windows Server Outsourcing SKUs in July. A single Non-Outsourcing SKU "will cover all scenarios currently covered by both SKUs," the spokesperson explained.

"Windows Server Outsourcing SKUs are required in the Service Provider Licensing Agreement (SPLA) when a workload complies with the definitions outlined in the Services Provider Use Rights (SPUR)," the spokesperson explained. "Previously, you had to use Windows Server Standard, Enterprise, Datacenter and for Itanium Based Systems for Outsourcing to provide outsourcing services."