Microsoft has announced licensing and program updates effective as of 1st October 2022. And the outright winners are customers and hosting partners! As an ardent advocate of the hosting partner community, I feel this couldn’t have come at a better time especially with the latter starting to wonder what their future looks like. We are referring to a partner community that built its own version of a “public cloud” for their clients using Microsoft and other technologies and have, in my opinion, rightfully started feeling a bit “left out” amongst the tug-of-war between the hyperscale cloud providers such as AWS, Microsoft, Google, etc. So, what’s all the hype about? According to me, this is the new heights of “hybrid licensing” – easy and flexible ways to license Microsoft products regardless of where it is running. Well, with the exception of hyperscale providers! For the hosting partners, this will not only help them to stay relevant to their clients but also bring in net new revenue opportunities by being able to deliver services in ways they couldn’t do before.
Context: Historically, Microsoft licensing rules depended on whether the software was deployed in an environment where the underlying physical server hardware was dedicated to the customer or not. This made licensing rather complex, not to mention rigid for customers and hosting partners.
Here is a summary of the key changes:
- Windows Server will also have the options to be licensed per virtual core (similar to SQL Server). This one was long overdue given the only option to date was to pay based on all the physical cores of the physical server hardware. If you have a 32-core physical box running a Windows Server VM with say 8 vCPUs, now you can pay based on the 8vCPUs instead of the 32 physical cores of the hardware.
- Customers with active Software Assurance or subscription licenses for Windows Server or SQL Server may use them on dedicated servers (e.g. on-premises, co-lo) or on hosting partner’s shared (e.g. IaaS) environments. Previous licensing rules limited customers from bringing their own fully paid Windows Server licenses to shared server environments.
- As of October 1, 2022, any partner can run M365 Apps and Windows/11 on dedicated/shared servers for their clients. This will be a massive game changer in helping partners deliver modern and cost-effective “hosted desktops and apps”. Previously, this was allowed only for a small set of partners, referred to as QMTH (Qualified Multitenant Hoster) partners, who had to meet a high threshold in terms of their CSP annual revenue spend amongst other criteria. All other partners had to pay additional Office and RDS licenses despite their customers already owning eligible M365 licenses.
- Microsoft is introducing a new CSP-Hoster program to let partners provide CSP licenses for all products while delivering their solutions in a shared/dedicated environment to customers. Also, it allows customers to BYO their own eligible licenses to run on these platforms. You might wonder why then the new program when the traditional SPLA program has a similar model. How the CSP-Hoster program differs from SPLA is that the latter includes traditional licenses such as Windows Server, SQL server, etc but does not include products such as M365 and Windows 10/11 in their product stack making hosted desktops/apps more feasible to deliver under the new model. Also, the new program has a 3-yr commitment option with significant discounts.
Do the new updates fix every single concern around Microsoft licensing? No! And while there could be further changes ahead, one thing is for sure – hosting and hybrid cloud models are here to stay! All the more reason for hosting partners to up their game now and tighten screws in areas that require improvement. Given the variety of licensing programs that a hoster will now come across – SPLA, CSP, volume licenses, etc. an ideal place to start, in my opinion, is license management & optimisation to mitigate business risks, reduce costs and identify new revenue opportunities. Also, be future-ready and think of hybrid and multi-cloud to diversify your services portfolio. Hosting partners, they have heard your feedback. The ball is now in your court!
This post was originally published on LinkedIn.
