Is the Cloud Solving Your Microsoft License Compliance Headaches?
In 2016, I delivered a presentation at Microsoft’s Worldwide Partner Conference in Toronto entitled ‘Is cloud solving your license compliance headaches?’ That year was another breakthrough period for Microsoft’s cloud ambitions with 50% year-on-year growth in cloud, 70 million Office 365 users, and triple-digit growth in Azure. It was also a year when customer’s perception of ‘cloud equals license compliance’ began to gain momentum.
In that presentation back in 2016, I outlined several concepts that could result in financial exposure due to a lack of investment in cloud asset management. Five years on and with the prevalence of cloud it is now evident that many of these risks and newly emerging threats are becoming a reality.
Adopting a posture of ‘cloud equals license compliance’ will create unforeseen financial, operational, and legal exposure. Cloud has not ended the need for Software Asset Management, it has simply evolved the way in which organisations should manage software assets. In this post, I will explore some of the more common license compliance risks that can impact organisations within the Microsoft Cloud at the time of writing this blog.
License Compliance Is Not Always Built-In
Business and operational demands are a common driver for software mis-licensing where organisations fail to verify the licensing implications of how they are using Microsoft technology. Cloud Vendors also need to be careful that they don’t fall into the same trap due to what appears to be the frequency of new features that don’t always have license compliance built-in. Where there is a lack of license compliance built into products this can have serious implications for organisations. This is especially true where there are, what could be described as ‘feature bleeds’ between products or where features are enabled by default at a tenant level.
With this trend, the business case for licensing specialists working in tandem with technical teams has never been more important. Examples of this type of risk can be seen within multiple Microsoft Cloud services like Azure, Dynamics 365 and where there is a mix of Microsoft 365 tiers.
Cloud License Pathway Management
Azure Hybrid Benefit provides organisations with active Software Assurance, an opportunity to remove or reduce Windows Server and SQL Server software fees. Many organisations are simply not aware of this benefit and are effectively leaving money on the table. There are also organisations that have failed to implement sufficient governance to manage this benefit which if left unchecked could create a licensing exposure.
Azure Hybrid Benefit is a trust-based system which creates a heightened risk where there is a lack of SAM policy and procedure to control its allocation. In the future, Microsoft could look to implement controls that limit the use of invalid Azure Hybrid Benefit or track misuse leading to possible audit. Regardless of the motion chosen by Microsoft to manage this compliance risk, many organisations could face significant Azure cost increases and/or retrospective charges if mismanaged.
Product Terms Perception vs Reality
Many organisations fail to realise that on-premise software and their nearest cloud equivalents are governed by different use rights. A common assumption is that Microsoft Enterprise Applications (formally Office 365 Pro Plus) and Office Pro Plus provide the same use rights regardless of the licensing model. Assuming this can create a licensing trap where Microsoft Enterprise Applications don’t include rights to install Office Pro Plus on a licensed user’s PC or provide access to the software via server-based desktops.
Similar risks also exist when it comes to Project and Visio Plans that lack the right to install current and legacy versions of on-premise Professional editions. Failure to understand client-side licensing limitations could create a license compliance exposure or waste where online service plans don’t provide sufficient use rights.
On-premise server-side deployment rights is another entitlement grant that is misunderstood where time is not taken to review Microsoft’s product terms.
Per-User Licensing Terms Breach.
A common breach of licensing is the sharing of a single SaaS user license amongst a group of users. This decision can be driven by a lack of awareness regarding licensing terms, the need to reduce cost or to enable smoother operations. A common example of this can be seen within first-line workers that don’t have the same computing needs as a knowledge worker. In this scenario, it’s not uncommon for organisations to inadvertently assign a single SaaS subscription to a warehouse or distribution centre where multiple users are logging into the same user account.
The Microsoft Online Services universal terms state that each user that accesses the Online Service must be assigned a user subscription license. Having one user license assigned to multiple users is therefore a breach of licensing terms. Having a premium Microsoft 365 Enterprise plan assigned in this way could create a significant licensing overhead that could be avoided with more appropriate licensing metrics that maintain compliance.
Bring Your Own License
‘Bring your own license’ (BYOL) is a process that allows organisations to bring their on-premise software license entitlement to the cloud. Before deciding to bring your own Microsoft licenses to the cloud it’s important that you understand if this is a valid licensing pathway by cross referencing Microsoft product terms.
The validity of BYOL is dependent on a range of factors that need to be closely examined as you may not have sufficient use rights. It’s also unlikely that your cloud vendor will warn you about any breach of license as you are the licensee and will be responsible for maintaining compliance. Examples of where BYOL can post a risk include deployment of software without mobility rights or simply deploying software where there is no underlying license entitlement.
In Summary
Investing in SAM or by adapting your approach to asset management in the cloud can enable significant cost saving opportunities.
This article has touched on some of the key Microsoft licensing compliance headaches in the cloud - there are other licensing considerations such as ‘capacity based licensing’ risks, among others. I would also like to call out that cloud can also eliminate many traditional license management headaches and modern licensing models from Microsoft can enable significant cost savings.
As a licensing consultant I see significant opportunity for organisations in the cloud to harvest software to enable enhanced cost control. Software Asset Management should be the key to unlocking cost optimisation opportunities and proactively managing risks.
Cloud Asset Management is a moving target and understanding your cloud license position should not be viewed as a ‘one and done’ exercise. Successful validation of cloud licensing requires a blend of licensing and technical skills combined with effective discovery data that might not always be visible via traditional inventory and license management tools.
Begin your cloud license management journey by asking yourself some of the following simple questions such as, do I have the following:
· Visibility of what Microsoft Cloud services are running and what is actually required?
· The right blend of licensing and technical expertise in-house to allow for the development of a cloud license position?
· Sufficient technical expertise required to proactively manage risks through right-sizing of my cloud estate?
· Data driven insights regarding my actual use of Microsoft online services at a feature level?
· The correct level of governance in place to enable effective ongoing management of my cloud license position?
Trying to accurately understand your cloud licensing posture can be complicated. Version 1 has considerable experience in helping organisations assess their license position and effectively license Microsoft technology in the cloud. So, whether you are trying to right-size your current estate or planning for future requirements, contact us for advice and guidance.
About the Author
Karl is a Principal Licensing Consultant at Version 1, providing Microsoft license expertise to organisations globally and ensuring customers get the best value from their Microsoft assets. If you would like more information about mitigating against the cost and risk of License Audits, get in touch with the independent licensing experts at Version 1 today.
