Mergers & Acquisitions: Microsoft Licensing Considerations Part 2
As I outlined in part 1 of this blog series, taking a proactive approach to understanding what your Microsoft software contract means and contains concerning definitions, terms and conditions, and obligations is important to review in advance of any merger & acquisition activity.
Continuing, part 2 will look at some of the additional licensing considerations with the migration of Microsoft 365 services, user identities, data and environments.
Past — Before the advent and adoption of 365 and cloud services; merger, acquisition & divestiture events dealt with on-premises organisational assets. How licenses were treated was discussed and agreed upon with Microsoft through Right to Use and Transitional Services Agreements (TSAs), which outlined who could use or access software and server licenses during the transition phase.
Present — with over a million companies worldwide (source Statistica) using Microsoft 365 it is probable that M&A events will involve decisions about integration between user 365 data and (Azure Active Directory now known as Entra) identities. While it is an option not to integrate, it would negate the business and operational benefits behind the acquisition of an organisation in the first place. At some point, integration will happen.
Compared to on-premises assets, e.g., online services licenses may be needed if a user requires licensable access or is benefiting from a licensable service during the transition phase if the license impact and alternative solutions have been overlooked.
Depending on the size of the company acquired and various online services and cloud assets to be migrated, this will inform your integration plan, and point to whether additional resources, actions and licenses are required.
Migration Planning
‘Fail to plan, plan to fail’ — an adage for good reason.
Consider the following migration planning areas that tackle obvious and less obvious elements to think about;
· Migration of 365 User Data Exchange, OneDrive, Teams — e.g., choosing to migrate users in stages or one go.
· Migration of AAD/Entra User Identities — internal accounts are obvious, guest accounts federated, external access etc may be less obvious.
· Microsoft Portals access & licenses linked to former AAD identities — e.g., Visual Studio admins should check if transferred Visual Studio licenses and licensees have former AAD identities linked to their Visual Studio subscription. Where this is the case, former identities should be updated to limit disruption and access to license software.
· Transition Phase access to AAD applications — if acquiring a divested company which requires access to SSO applications/systems for a period during a transition phase, consider that there may be license implications & additional costs such as Azure Active Directory Premium plans for every user during that transition period.
· Like the previous example — has the migration solution ensured there are no triggered Exchange Online licensing implications if you want to use email auto-forwarding for a transition period from the acquired company’s former 365 tenant?
· Microsoft Cloud Environments — such as Azure DevOps & Power Platform environments; e.g., for Power Platform environments you need to submit a support request to Microsoft
· Decisions regarding the migration of an acquiree’s data held in a different SaaS solution e.g., if your organisation uses Microsoft Teams but the acquiree used Slack.
Execution Migration Solutions
Your solution will be dependent on your requirement for the level of expertise, time and resources for planning and executing a successful migration, including if anything goes wrong along the way. The options to carry out migrations include using the following resources:
· Internal capabilities
· 3rd Party specialist
· 3rd party tools
· Microsoft cross-tenant migration licenses (Enterprise Agreement customers)
Past migrations of 365 user data often required exporting the tenant to on-premises and then importing it to the target tenant. Aimed at Enterprise customers, Microsoft has generally released a license since November ’22 called Microsoft 365 Cross Tenant Data Migration Licenses for Exchange mailboxes and OneDrives which is available as a ‘one-time’ purchase via an Enterprise Agreement enrolment. Estimated costs suggest $15 per user USD.
Conclusion
With the adoption of 365, online and cloud services by most companies today, means greater scrutiny is required when planning and executing migrations in the event of mergers, acquisitions and divestitures. Assumptions or oversight could lead to unforeseen license costs and impact your business if you cannot access applications and assets even temporarily. The right expertise and resources will help avoid traps.
Engaging with Version 1’s SAM Team facilitates access to independent license and software asset management experts. We are deeply familiar with enterprise vendor license contracts and terms and can support your business through your M&A stages to avoid unbudgeted costs and business risk.
For more information go to our website or contact us.
About the author
Niamh Ni Shuilleabhain is a Principal Consultant here at Version 1.
