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Category Archives: Exchange

Do you have SA? Why this question really matters.

20 Oct

Brett’s Hosting’s sales director is consistently looking on the web to see what competition is advertising.  It drives him nuts to see other “hoster’s” advertise SharePoint for less than what he can get directly from his reseller.  He’s upset..big time.   How can this be?  Then he stumbles upon the Microsoft Office 365 website.  He blew a gasket.  “There is no way I can compete!  I am going to go out of business!”

So the sales director decided to get creative.  “I will forgo SPLA and just have my customers purchase SharePoint.  They bring it into my datacenter, I won’t report SPLA anymore.”  So that’s what he did.  He started selling SharePoint by the truckload.  Their reseller kept placing orders for him as they’d joyfully ask  “how many CAL’s do you need?” and they would order it; never once asking what it was for.

Brett’s Hosting did a tremendous job marketing their SharePoint offering.  “No SharePoint…No Problem!” It was marvelous.  The CEO of Brett’s Hosting vociferously announced at the World Partner Conference “We are hosting over 10,000 SharePoint sites!”  The celebration continued.  Then one foggy October morning, the office manager for Brett’s Hosting received a letter from Microsoft.  She excitedly opened it thinking they were being promoted as ‘SharePoint Partner of the Year’ but was severely disappointed.  It was an audit letter.  The story turns.

Brett’s Hosting CEO reviewed the letter and then called in their sales director (now sales VP).  The CEO threatened him with his job unless he fixed this mess.  The sales director/VP was at a loss.  “Where did I go wrong.”

To be continued….

Where do you think he went wrong?  Have you ever been given wrong licensing advice?  You don’t need to answer that, I already know.

Hosting industry has changed.  Competition has changed.  End users have changed.  In my experience, the conversation has changed from “how do I license Windows” to “what are ways I can optimize my licensing spend?”  I’ve written about license mobility; I also reviewed SAL for SA.  Those two programs have a common theme – Software Assurance (SA).  In the above fictitious story, the sales person should’ve asked his customer “do you have SA on these licenses”  That question is important because if they do not have SA, the entire environment (hardware/VM) must be dedicated.

I can’t stress this enough.  The hosting game is getting brutal.  Every service provider is looking for a way to cut/reduce costs.  Getting in compliance hot water is not a good way to do that.  If the customer does not have SA, you can certainly use SPLA in its place.  If you go this route, be sure to make it a bundled solution.  Telling customers they must pay for something they already own is not an easy conversation.

The customer can also purchase SA.  You just have to be ready to clearly explain their options. That’s why it’s important to work with a reseller that understand SA benefits to help educate and coach you through the process; not all products are eligible.  Be prepared.

Story continued…

The sales vp went back to his customers and asked them to purchase Software Assurance.  When the customer asked “why?” all the sales vp could say is “because Microsoft told me you needed it.” (he clearly couldn’t explain why…it only made the customer more upset).  The customer simultaneously yelled and slammed the door –  “I’m going to Joe’s Hosting! They advertise VDI too!”

The sales vp went back to his CEO and was forced to resign.  The customer went to Joe’s Hosting and was very happy for over a year. When out of the blue he received a call from his sale rep from Joe’s Hosting.  The sales rep frantically told him they could no longer offer VDI; it apparently is not available under SPLA.  The sales rep also asked him to buy SA for his SharePoint…”Microsoft told me you needed it!” The customer loses again!

Moral of the story – read the SPUR, read the PUR, and don’t be afraid to ask “Do you want SA with that?”

Thanks for reading

SPLA Man

 

 

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Posted by on October 20, 2014 in Compliance, Data Center Outsourcing, In My Opinion

 

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Datacenter Outsourcing

07 Aug

I’ve written before on how partnering with an established provider can save you money, especially as a short term solution to get your hosting business started.  What I haven’t really addressed is the licensing.

Data Center Outsourcing is essentially what the name applies.  “Data Center” and “Outsourcing”; you outsource your data center. Amazing how that works.  Microsoft definition is a bit more confusing – amazing how that works too. From the outsourcing guide:

  1. “A Data Center Provider is a Service Provider that provides Software Services, usually IaaS, to another Service Provider using Products licensed from Microsoft through its own SPLA..”

Microsoft Azure is a good example of a data center outsourcing company.  When you sign up for Azure, Windows will be included in the service.  They are essentially providing the infrastructure (Windows and/or SQL cores) and you provide the application licenses via your own SPLA.  When you leverage another service provider who provides the infrastructure, they must be providing the Windows licenses. Hmmm…here’s why.

Let’s say you have a signed SPLA agreement to offer Exchange to your clients and you decide to use Brett’s Hosting to provide the infrastructure.  Brett’s Hosting offers a public cloud environment (multiple customers sharing same resources).  Under this model, you will report Exchange licenses for each user that HAS access to the software and NOT report Windows under your own SPLA; Brett’s Hosting would report Windows via their own SPLA.  Why?  If it is a shared environment, there is no way Brett’s Hosting can allocate processors for you to report it.  SQL cores works the same way.  Still don’t believe me?  Check out the FAQ guide from Azure here. Notice under SQL it states you can purchase a VM or use SAL licenses.  Notice under Windows it states Windows is included with your agreement.

Here’s the bottom line, if you decide to outsource your data center to a public cloud provider, ask them how they manage the Windows OS.  If they say it is not included in the cost of the service and you should be providing the licenses, they are out of compliant.

Want more proof?  Download the outsourcing guide here

That being said, if you provide data center outsourcing services, I think you are in the right business. This is the fastest growing area within the hosting industry.  Windows is relatively inexpensive from a licensing perspective, especially as you add more VM’s and can capitalize on the Data Center edition.  (remember…unlimited VM’s).  SQL can get a bit more complex, but if you understand it I think that could be an added value over your competition.  Last, because you report Windows and SQL only and let the service provider control the user based licensing; it limits your compliance exposure.  (processors/cores are easier to track).

So are you a data center outsource or a service provider?  Do you work with someone to resell your solution or do it alone?  Would love to learn more about your offerings. If you need guidance or best practices or just want a second opinion from a licensing perspective you can email me at blaforge@splalicensing.com.

Thanks for reading,

SPLA Man

 
1 Comment

Posted by on August 7, 2014 in Data Center Outsourcing

 

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How the other guys do it

18 Jun

So you want to get in the hosting business.  You start looking around the web and notice that other service providers seem to charge less than what you can charge your customers.  You notice other’s advertising solutions that seem to conflict with the licensing rights.  You are at a loss.  You ask yourself, “how do they do it?”  You ask your reseller who seems just as confused.  So what do you do?  How do THEY do it?

Since this blog is about licensing, I’ll educate you on how other’s save costs based off licensing alone.  I’ll break this down into three parts – Exchange, Mobility, and VDI.  Those are probably the big 3 and more often than not, can make you scratch your head.   I will also add one more, and that’s your reseller.

Exchange Licensing

Exchange is your best friend and enemy. I say that only because it is so important and one of the reasons organization’s move towards the cloud.  They don’t want to babysit an Exchange server anymore, but it’s a must have.  Licensing aside, to deploy Exchange you must have redundancy (God forbid it goes down) you must have infrastructure (they have to receive email as fast as their eyes can focus) and finally administration (dedicate an employee(s) to make sure the former happens).  That’s pricey.  Now the licensing.

Exchange is licensed by user, which means all users who have access to the software needs a license.  To deploy Exchange, you also need Windows.  Windows is licensed by processor.  So let’s say you have 10 users and you provide those users access to your Exchange server. Exchange cost’s $5 per user (hypothetical).  Windows costs $20 for Standard edition or $100 for Datacenter edition.  Because Windows is licensed only by processor (not user) the more users, the less expensive Windows licenses become. See below. (example purposes only)

Hoster with 10 Exchange users on a two processor box

Exchange: $5 per user

Windows: 2*20= 40.  But if we do a per user cost it would equate to $40 divided by 10 ($4 per user for Windows).

The entire Exchange solution is $9 per user.  ($5 for Exchange + $4 for Windows)

Hoster with 1,000 Exchange users on a two processor box with multiple VM’s

Exchange: $5 per user

Windows: $100 per processor or $200 (using Datacenter, 2 processor box – multiple VM’s).  So $200 divided by 1000 users equals $.20 per user.

The entire Exchange solution is $5.20 per user.

So what do you do?  You either fight the good fight – offer something the bigger guys cannot offer – customer service, deployment services, kiss your server good night, etc. or if you can’t beat them…join them.  A lot of big providers offer partnerships in which they will provide the Windows server (think Amazon/Azure) but you provide the Exchange license via your own SPLA.  This is called Datacenter Outsourcing.  Perfectly legal, and part of your signed SPLA agreement.

Mobility

If you really want to get into Exchange hosting – this is the best way to do it.  (in my opinion).  You should offer license mobility.  For a complete definition of license mobility, check out my previous blog post here.  In short, this allows your customer who purchased Exchange with Software Assurance to transfer that license into your datacenter.  All you need to do is dedicate a VM for that customer but install it on shared hardware.  One caveat – you must report Windows via SPLA.  Windows is relatively inexpensive so it could be a win-win.  Just make sure you sign the mobility addendum to legally offer this solution and check with your reseller for eligibility

I also think you should consider SAL for SA.  This allows you (the service provider) to host the solution in a shared environment (VM and Hardware) using the Exchange license your customer purchased with SA.  You still report Windows and SAL for SA SKU via SPLA.  (way cheap by the way).  Difference between SAL for SA and License Mobility is under license mobility they are transferring the license to your datacenter.  Under SAL for SA, nothing is transferred, the original licenses can still be deployed on premise and in your cloud!  Great hybrid situation or ability to provide disaster recovery.  Reach out to me at blaforge@splalciensing.com to learn more

VDI

“I see they advertise VDI!!!”  You look online and see other providers offering VDI as a service.  Well, they are either out of compliant (more probable) or they are using Windows Server and RDS to emulate a desktop via SPLA.  Last option is to have the end customer bring their desktop OS licenses to a datacenter provider.  This is not likely since desktop OS does NOT have mobility rights.  This means the service provider would need to dedicate (server and vm) to one customer.  This is the least likely scenario, since dedicating an environment just for a desktop license makes little sense.

Moral of the story with VDI- there is NO way a service provider can offer a desktop license in a shared environment.
Conclusion

Do you ever wonder why you report licenses to your current reseller?  Is it just out of convenience or do they provide you strategic value?  My advice -don’t work with a reseller out of convenience.    Do they have their own cloud services that directly competes with you?  Hmmm…

Reach out to me at blaforge@splalicensing.com or linkedin.  Would love to review your options or simply offer a second opinion.

Thanks

SPLA Man

 

 

 

 
2 Comments

Posted by on June 18, 2014 in Disaster Recovery, Exchange, License Mobility

 

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How to License Exchange

04 May

Article update: We created a new website called MSCloudlicensing to help SPLA and CSP partners understand the different program options and use rights available to them. The site is designed to be a collaborative platform,  which includes a forum to ask and answer licensing questions, document library, and licensing articles.  It’s more in depth than a simple blog. Check it out, it’s free!  www.mscloudlicensing.com 

 

 

 

In my years of managing the SPLA program, I came to the conclusion that no one likes to babysit an Exchange server.  Organizations do not have the resources or the time to constantly monitor a server, and hosters (if that’s a word) feel the pressure of managing a mission critical application such as email.  If it goes down, not only can you lose a customer, but the customer might lose business as well!

For those hosters that feel up to the challenge, Exchange can be a very profitable opportunity.  Whenever there is complexity, along comes value…which every hoster needs to run a business. What’s the downside? As always, there’s a concern over licensing.

Exchange for SPLA partners (hosters) comes in five flavors: Exchange Basic, Standard, Standard Plus, Enterprise, and Enterprise Plus. Each comes with different functionality as well as price. From experience, 90% of what is being reported is the Exchange Standard SKU. The breakdown of each SKU is as follows:

Exchange Basic – Think of OWA/POP Mail only
Exchange Standard – Features of Exchange Basic as well as shared calendaring and mobile device synchronization
Exchange Standard Plus – Features of Exchange Standard plus the full Outlook client
Exchange Enterprise – Includes all the features of Exchange Standard as well as unified messaging and anti virus/spam features
Exchange Enterprise Plus – All the features listed above plus the full Outlook client

The list above is just an overview, for a full feature list check out the SPUR (user section). The way you license Exchange is by user. Every user that HAS access to the software will need a license; not who does access. Think of your cable company, they will charge you regardless if you turn your TV on or not. User licenses works the same way.

In my opinion, the key to a successful Exchange launch is to offer a multi-tenant (shared) environment. If you license Windows by processor (Exchange runs on a Windows OS) and Exchange by user, the more users you have on that particular server the less expensive it is for the user. Eventually all you are charging is the cost of the Exchange license. That’s how large service providers are able to seemingly charge less. They have thousands of users accessing a limited number of servers in a shared environment.

If a customer wants a dedicated environment (one server hosting one client) the end customer can bring their licenses to you and you host it for them, or provide the licenses via SPLA, but the cost per user is going to be higher (unless it’s a large enterprise).

Once you offer Exchange, it makes it easier to offer other collaboration applications as well; such as SharePoint, CRM, and Lync. Who knows, you might become the next Amazon or Rackspace.

Thanks for reading!

SPLA Man

 
14 Comments

Posted by on May 4, 2013 in Exchange

 

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