Managing Microsoft Licenses: It’s No Longer Just a Once-Every-Three-Year Thing

Not so long ago, perpetual licensing was the norm. You bought the software. You either added a Software Assurance (SA) or didn’t. And you owned the asset. About 12 years ago, Microsoft began offering new software licensing as “subscription only” – this meant you were only leasing the software. A trend that began with products like MDOP and BPOS has continued through all O365 and M365 software releases, becoming unavoidable for nearly every Microsoft licensing customer. However, the rules, rights, and privileges governing subscription licensing are different from perpetual licensing, opening up new opportunities for cost efficiency. 

In almost all cases with subscription licensing, you can true-up or true-down at each anniversary date—that’s on an annual basis throughout the life of an enterprise agreement (EA). Waiting until the three-year renewal date means that you’re not taking advantage of the flexibility and cost savings that the subscription model brings. Here’s an example to illustrate the point.

Let’s say that you have 100 users of Microsoft Power BI Pro. When you look at how many licenses are assigned and how many are being used today, you discover that only 80 of the 100 licenses are actually assigned. Maybe 20 people left the company.

Why would you want to keep those licenses and pay month over month if they’re not being used?

In the past, you would have to keep them because you had to protect your investment—you had an asset. The old mantra was, “you can go up, but you can never go down.”

Now, it’s either on, or it's off.

You can just add them back whenever you want to—say six months down the road when you hire 20 people that need it. Just add them then, and you saved six months.

While there could be certain situations where you want to keep a buffer, that point is that there’s more and more opportunity to optimize at anniversary and save money.

While you can add licenses whenever you need them, shedding unused licenses is only possible at the anniversary. So let’s be clear on when you need to think about it so that it doesn’t pass you by.

If your EA began in March, for example, your anniversary date falls in March of each year, and therein lies your opportunity. Thirty days prior, you will want to declare the number of licenses you have—basically reconciling what you’re using.

Maybe you added some licenses throughout the year (true-up), or you want to drop those you’re not using (true-down).

One of the benefits of having the EA in place is that you don't have to buy things in real-time, meaning that if you stand up a new cluster in month two and then in month nine you stand up a couple of other servers, you can “account for” those at anniversary.

You're not cutting purchase orders (POs) all throughout the year. That's why the anniversary date is so important.

Thinking about your own organization, is the ongoing optimization of Microsoft subscriptions on your radar screen beyond the renewal process itself?

Given all of the other demands on your time, you may be missing out on cost-saving opportunities year over year.

Consider asking yourself the following questions:

• Have you deployed what you purchased?
• Are you tracking the adoption of the technology?
• Do you have a consistent self-audit process in place?
• Are you using an inventory tool?
• Do you consistently assess opportunities to true-down on an annual basis?
• Are you conducting licensing optimization every year to manage costs?

The value of ongoing advisory services, or managed services, comes into play throughout the life of the EA—in the form of on-demand support, continuous optimization, software asset management (SAM) compliance, and annual true-ups/true-downs to make sure companies are optimizing spend.

Not to mention staying on top of cloud spend, which is a topic for another day.

If your organization is heavily involved in mergers, acquisitions, and divestitures—because these compelling events don’t necessarily align with licensing renewals—having that ready resource to evaluate how Microsoft licensing will be impacted by such events is a bonus.

The very nature of licensing now is that to optimize spend, you have to be paying attention to it throughout the life of the agreement, not just at renewal. 

Built on 30 years of commercial and technical Microsoft experience, SoftwareONE helps organizations maximize the value of their Microsoft investments.