Malta: New Microsoft Licensing Models Bring New Software Bundles To Enterprises

Last Updated: 22 September 2016

This article was authored by Debra Littlejohn Shinder.

Microsoft has announced several new software licensing bundles, with a focus on productivity and security, along with many new models for large companies and different verticals.

Most long-time IT professionals will tell you that Microsoft's software licensing schemes for business customers are like so many Facebook users' relationship status: It's complicated. We had enough difficulty untangling the intricacies of server, client, and applications licenses, CALs, per-user, per-device, and per-processor licensing models. And came along the cloud, to add subscription-based licensing to the mix.

To make matters worse, it's a moving target; just about the time you think you finally have it figured out, they change things on you, and they have done it again a few months ago, with the introduction of the new subscription plans for Windows desktop operating systems. The good news is that customers, at least in some cases, have benefitted from ongoing efforts to simplify the licensing process, although whether this will actually save you money depends on your use case scenarios.

Bundled licensing for a secure and productive enterprise

The most recent change announced in July provides a bundle with both client operating system and cloud productivity services, as well as the Enterprise Mobility + Security (EMS) pack, formerly known as the Enterprise Mobility Suite. "Bundling" is a popular sales model that combines products and services into one often attractively-priced package, so Microsoft's new bundle includes Windows 10 Enterprise edition, Office 365 and EMS. They're calling it the Secure Productive Enterprise bundle, and this is a way to simplify licensing for businesses that need these three products/services, all of which work together in today's security-conscious, highly mobile, collaboration-focused work environment.

Secure Productive Enterprise (SPE) builds on Microsoft's Enterprise Cloud Suite (ECS), that was introduced in December 2014 as a per-user licensing option through the Microsoft Enterprise Agreement (EA). The SPE bundle will come in two flavors: E3 and E5. The E3 model brings the three products listed above, and the change that is causing much confusion is the name of the Windows version, which is now officially Windows 10 Enterprise E3. This forced many people to think that this is now some sort of subscription-based version of Windows, but essentially this is just a regular Windows 10 Enterprise bundled with Office 365 E3 plan and EMS.

The Secure Productive Enterprise E5 version adds to the equation Microsoft's new service, Windows Defender Advanced Threat Protection, which uses machine intelligence and the Azure based "intelligent security graph" to increase security levels; we're preparing a blog post dedicated to this new service, so if you don't want to miss it, use the form below to subscribe to our blog.

Other upcoming Microsoft licensing changes

These are only the latest in a series of licensing changes we've seen over the last twelve months. We began the year with the news that Windows Server 2016, scheduled for release in late September, would be moving to a per-processor-core licensing model. Many customers weren't happy with the decision, calling it a "revenue grab" – Microsoft explained it as part of the evolution of Windows Server to support the hybrid cloud.

Enterprises have seen some more licensing changes this summer, and Microsoft has announced additional modifications to enterprise licensing terms coming up in 2017. The first set of changes to Enterprise Agreement (EA) contracts took effect on July 1, and will affect small/mid-sized companies most, as it increased the number of seats qualifying for an EA to 500, up from the previous minimum 250 seats.

Those who no longer fit into the EA parameters aren't the only ones who'll be looking for alternatives. There's more bad news for those companies that currently use a Select Plus agreement: Microsoft has announced that they're retiring that program, which is a form of "a la carte" software purchasing. The good news is that the Open License program is expected to continue.

Other agreement options are available

Another option is to switch to a Microsoft Products and Services Agreement (MPSA), a program that represents Microsoft's effort to offer a simpler form of licensing agreement. Microsoft appears to be pushing the MPSA, which does work for those customers who fall into the 250-499 seat range. The MSPA is going to start offering something called Enterprise Advantage, and you might notice that its initials are also EA, so how's that for confusion? It also has something else in common with the Enterprise Agreement, in that both are contracts of three years' duration.

Once it becomes available, Microsoft says Enterprise Advantage will provide comparable benefits to the Enterprise Agreement. It will allow organizations to purchase across their entire org under the same agreement, and you'll have the choice to either purchase company-wide or on a transactional basis. You can purchase whatever you need, whenever you want, without any additional enrollments. You can mix perpetual and subscription software with cloud services, and you can "true up or "true down" your subscriptions and services when necessary as your business changes. Here is Microsoft's announcement of the impending availability and features of Enterprise Advantage from the Microsoft Volume Licensing Blog on the TechNet web site.

Combine the best from all models

Later in 2017, there will be two more, specialized offerings for public sector and educational institutions, called Government Advantage and Education Advantage. There are currently volume licensing plans for small, mid-size and large businesses, and there are specialized programs for government, education, health-related and non-profit verticals. Small business licensing includes open licensing programs with the ability to add online services to the agreement, for those who are transitioning to the cloud.

Online services such as Office 365 can be covered by the MPSA, and it provides more flexibility than the more traditional licensing plans. Then there is the Cloud Solution Provider (CSP) agreement, which is for Microsoft partners who sell Microsoft cloud services to customers. Of course, if you're IT is based mostly on-premises and your organization is large enough to have 500 or more seats, you can stick with the traditional Enterprise Agreement. However, if your contract is up for renewal, you should compare the cost and benefits of the EA vs. the MPSA to determine which best fits your needs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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