News

Microsoft To Launch New Cloud and Server Licensing Plan in Q4

• By Kurt Mackie
• August 13, 2013

For organizations heavily focused on its cloud, server and management technologies, Microsoft is planning to roll out a new Enterprise Agreement license option called "Server and Cloud Enrollment" (SCE).

SCE will be a new three-year licensing commitment under Enterprise Agreements. The SCE option can be ordered today, but the plan formally becomes available in the fourth quarter of this year, according to a whitepaper posted here. The whitepaper's appearance was noted late last week by Microsoft MVP Aidan Finn in a blog post.

SCE Components and Benefits
The SCE option isn't for every organization. Microsoft's whitepaper depicts it as being designed for "highly committed customers." It's likely to be expensive, although pricing isn't listed in the whitepaper. Microsoft is requiring an enterprise-wide commitment to one or more of its four components under SCE licensing. The four components include "core infrastructure" (Windows Server and System Center), "application platform" (SQL Server), "platform developer" (Visual Studio Ultimate and Premium) and "Windows Azure" (all Azure-based cloud services).

In addition, SCE licensing requires having Software Assurance (SA) coverage for the application platform component and developer platform component. For those organizations opting for the core infrastructure component, that requires a commitment to licensing the Core Infrastructure Suites (CIS) "for all Windows Servers," and that CIS commitment, in turn, requires having SA coverage, too.

The benefits of SCE licensing include a "15 percent discount for new license and Software Assurance purchases." There's also a five percent discount on SA renewals.

Microsoft is also throwing in the ability to manage Windows Azure virtual machines using System Center if organizations commit to CIS, although the details are scant in the whitepaper. There's also a promise of a new subscription option for SCE licensees, which is not described. Organizations that subscribe to the Microsoft Premier Service, a technical support resource offered by Microsoft, could get "unlimited problem resolution support for SQL Server, Windows Server and System Center, BizTalk Server and SharePoint Server," according to the whitepaper. The details associated with getting that unlimited support aren't described in the whitepaper.

SCE will replace two existing Microsoft licensing programs, Enrollment for Application Platform (EAP) and Enrollment for Core Infrastructure (ECI). It's not exactly clear from the whitepaper when those programs will disappear, but customers will see some pricing changes as a consequence.

"The EAP is morphing into the SCE, and the ECI essentially dies out, but the Windows Server/System Center bundle [that] ECI allowed you to buy (the SKUs are called Core Infrastructure Server, or CIS SKUs) gets added to the list of products offered in SCE," explained Rob Horwitz, research chair and co-founder of independent consultancy Directions on Microsoft, in an e-mail.

Paul DeGroot, founder of Pica Communications and a Microsoft licensing expert, said that SCE is "very new."

"I haven't seen it before and haven't seen it in any proposals that my customers are getting from Microsoft," DeGroot stated via e-mail. "Microsoft sales teams are still pitching the EAP (Enrollment for Application Platform) and ECI (Enrollment for Core Infrastructure), which SCE will replace."

Discounts and Price Increases
DeGroot said that the new SCE licensing appears to combine elements from the EAP and ECI programs. For instance, while EAP licensing offers a 15 percent to 40 percent discount on some Microsoft products, there's no discount on SA. Still, he noted that Microsoft has raised prices on its server products this year, so he remained a bit skeptical about the 15 percent discount under the SCE plan.

"It's ironic for Microsoft to talk about giving customers a price break after it has raised prices dramatically on almost everything in in the SCE, and it appears that they're even reducing some discounts from 40% to 15%," DeGroot wrote.

He noted that System Center components now can't be bought singly, which increases the EA renewal costs for those organizations that only use just a few components of that management suite. Also, Microsoft hiked the price of Windows Server 2012 R2 Datacenter edition by 28 percent. He offered two other examples.

• "SQL Server CALs went up about 25% and core pricing has blown the lid off pricing for customers who have procs with more than four cores, plus live migration of your VMs now requires SA, which adds another 75%.
  
  
• "SharePoint Server costs are up 38%," DeGroot noted. 

Horwitz sees Microsoft's plan changes as being more expensive or somewhat of a mixed bag at best.

"My quick first pass analysis regarding effects -- for CIS SKUs, the ECI was a better deal (than SCE), both from a pricing as well as minimum purchase requirement perspective," Horwitz said. "Regarding pricing for EAP vs. SCE, the answer appears to be, 'It depends based on scenario.'"

DeGroot suggested that Microsoft's SCE plan appears to be a way to deal with Amazon's price cuts while moving customers to the cloud.

"The Microsoft strategy is to dramatically bump up prices on customers' perpetual, on-premises server licenses and then market 15% discounts on them and throw in the cloud, which most customers aren't using yet in any significant way (based on what I'm seeing with my customers)," DeGroot stated. "Then, when the conversation gets around to the cloud and Azure pitch, it's not a 'Why don't you buy it?' conversation, but a 'You already bought it, so why don't you use it?' conversation."