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Don’t be Jimbo

Jimbo had a small IT firm for which he provided backup, security, and hosting for two clients.  He also purchased Office 365 licenses for a handful of users directly from the Microsoft Office 365 website and would bill them accordingly.  Jimbo also had an application he tried to develop to help end users better communicate with one another. It was similar to SharePoint, but more seamless and had better integration with third-party applications.  He had a SPLA, and had one person who submitted their usage report to their reseller.  Unfortunately, that person got sick and passed away.  Jimbo was sad and so was the rest of the staff.

To put his mind at ease, he spent every waking hour improving his application.  He thought it was going to be the next best thing.  I experienced the application firsthand myself, and found it to be a powerful tool.  I even asked to invest in it, but without any money, (Mrs. SPLA Man spent it all at Target), I had nothing to invest with.

Fast forward a year later.  Jimbo is still working on improving the application, and he's still hosting.  One day, Jimbo received an email from Microsoft.  It was titled “Self-Audit”, Jimbo was getting audited.  One thing left unmentioned, Jimbo is the nicest guy on the planet. He replied to Microsoft and in the end, provided them with everything.  All his server information, customer name, and reporting history.  It was an auditor’s dream.

Several weeks later, Microsoft provided Jimbo with the findings.  He owed $450,000 in unreported licensing fees.  Why so high?  No usage was being reported since the lady who reported SPLA passed away.  When she was reporting, she reported the wrong thing.  Instead of licensing Windows Datacenter, she reported Standard.  Instead of reporting physical processors and/or cores, she reported per VM.  Everything was a mess.  Jimbo, who neglected his hosting practice for months to focus on his application, was left feeling very uncertain about his future.  He did not have the funds to pay for licenses.

It’s unfortunate, but Jimbo had to shut down his hosting business.  The application he built?  Stopped.  He tried to sell it, and last I heard very few were interested.

Why such a depressing story and was it true?  Yes, the story is true (although slightly embellished).  Why share it?  I am telling you the story because there are too many organizations doing the same thing.  They have one person who manages the licenses, one person who was in contact with the reseller, and one person who knew what they were reporting.  What happens if that person leaves?  Too many organizations are also buying Office 365, but not getting the best discount.

Licensing is challenging, and in the case of Jimbo, his love wasn’t reporting usage, it was developing an application.  He should have had allocated resources to help manage his SPLA, so he could focus on what he knows best, the technology.

I am always asked why I created splalicensing.com and what's so different about SPLA Man than other blogs.  I think the main difference is honesty.  I am your licensing Siri or Alexa.  I am SPLAlexa. (that was bad).  Don’t be Jimbo.

Thanks for reading,

SPLA Man/SPLAlexa

 

 

 

 

 

 

 

 
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Posted by on July 24, 2017 in Compliance

 

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Breaking down Microsoft’s Q4 and what it means for your business.

Microsoft reported earnings last night that surpassed expectations and gave us insight into their cloud business. I am not a stock analysts, but I thought I would spend some time reviewing some of the highlights and my opinion for what’s next for the software (I mean cloud, actually, no -I meant Intelligent Cloud) giant.

Azure – Microsoft did not provide specific revenue numbers for Azure, but did say revenue grew 97% y/y.  Although exact numbers for Azure revenue is not specified, Azure is part of the all-important commercial space, which includes Dynamics 365, Azure, and a little program called Office 365.  That revenue number combined was over 18B which more than doubled last year’s number.

Office/Dynamics and Competition – Office 365 subscription business just surpassed the traditional Office model with revenue up 43%.  When was the last time you went to a box retailer and purchased software?  That’s a telling sign that more and more organizations prefer subscription pricing over box products.   Dynamics 365 was up 74%, probably because Dynamics in SPLA is about as complex as it can possibly get.  Need help with a Dynamics licensing question?  Ask your reseller.  The reseller will ask Microsoft – and then it goes into a big, dark, black hole until someone loses their mind.  Nothing happens.  Microsoft also revamped Dynamics in SPLA to make it very difficult to compete.  The same can be said for Office.  Where I see concern for Microsoft is with Google, who is just getting their foot in the door in the enterprise space.  If they make traction (and they will) it will be interesting to see the two giants go at it.  Google’s cloud platform is growing exponentially as well.

Surface Sales – I guess you can say is one of the low points of the conference call.  Surface revenue dropped 2%.  Xbox sales also dropped and became less profitable with price drops and competition.  That’s the bad news – the good news?  Maybe with the new CSP Windows 10 thing Microsoft will include Surface as part of the program to those not already a Surface Authorized Distributor, or make Surface authorization available to every CSP Direct partner.

LinkedIN – Only Microsoft can spend over 26B for an acquisition and investors are still wondering what it is they bought; and more importantly, not hurt their quarterly earnings.  Yeah, they can tie it in for Dynamics and Yammer/Teams with all those users.   They also have a pretty impressive data list of users to sell additional collaboration products and services to.  I guess the jury is still out on this.

Opinion – Microsoft recently announced a major change in their sales organization. Their sales teams that were focused on the enterprise need to focus more on solution type selling.  A lot of organizations in the industry are going through the same transformation.  It’s also not an easy thing to do.  Time will tell.

I wrote an entire article without mentioning Amazon, they report earnings next week.  It will be interesting to see how they compare to Microsoft and how much they grew year of year in comparison.  Lots of analysis say Microsoft will surpass AWS as the king of the cloud.  I still think Google is lurking in the background and might surprise some people as well.

What does all this mean for SPLA?  In my humble opinion, I think Microsoft better be careful with the way they are handling their third-party hosters.  Those numbers they threw out yesterday were great, but they can get even better.

Microsoft built a program for partners who have their own datacenters, relationships, and sales resources to promote Microsoft products and technology.   There are close to 30,000 SPLA partners (rough estimate) that have datacenters spread throughout the globe.  Nobody, can have the reach like your SPLA partners.  Google and Amazon do not have 30,000 datacenters, why disrupt it?  Don’t audit them, partner with them and help grow this business to build a true hybrid cloud ecosystem.  The strategy should be their cloud – our cloud, and customers will thank you.  Teaming with Walmart makes sense too.  Say what!

Thanks for reading,

SPLA Man

 
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Posted by on July 21, 2017 in In My Opinion, Uncategorized

 

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Opinion – Microsoft audits will skyrocket in 2018

Microsoft compliance programs are not going away and will increase significantly in the coming years.  Why such a doom and gloom outlook?  In this article, I will highlight some of the reasons but more importantly the ways to stay ahead of the game before Mr. Audit comes knocking on your door.

This past week, most of my articles had to do with CSP, Azure, and more CSP.   To no surprise, CSP is the direction Microsoft is moving towards for the partner community.  Check out my friend www.csplicensing.com 🙂 Licensing is not getting easier, in fact it’s getting harder.  Check out my Azure Stack article if you don’t believe me.  That article will either put you to sleep or give you a headache.

In today’s world, a service provider is not just licensing SPLA, they are combining on premise licenses, different cloud vendors, and hybrid licenses.   Unless you focus full-time on licensing, one misstep can ruin an organization.  In the coming weeks and months, I will focus heavily on all the cloud transitions and as the title of this blog site states ‘uncover the complexities of SPLA licensing.”

So why will audits rise?   There’s two reasons: 1) Licensing is confusing.  Publishers know there’s no “one-size fits all” solution to solving all licensing complexities and scenarios.  2).  With the push towards the public cloud (such as Azure), CFO’s and owners will start to wonder why they mess with the licensing at all, especially after a large compliance settlement  from an audit.  The goal will be to move to AWS or move to Azure and let them deal with the complexities licensing.

What do you do?   Throw in the towel and say, “they win” or develop a strategy to maintain compliance and create a solution to help your customers?  My advice? Don’t throw in the towel.

  1. Develop a license management practice.  Licensing is a full-time commitment (Full-time job).
  2. Don’t cave in.  I get it, that’s easier said than done – even for SPLA Man.  I HATE confrontation in all areas of my life but compliance.  I always like to see the underdog win the audit battles.  When SPLA started, I felt it was the rest of the world v. the SPLA community.  ABS – Anything But SPLA.  I still feel that way today (even stronger).  When was the last time you talked to a representative or were offered advice to help grow your business?  I am an advocate for the hosting community and the primary reason I started this blog in the first place.  Checkout my “About” section written over 4 years ago.  Don’t get bullied into the tricks of the audit.  If you need help, ask.
  3. Eliminate risk before it becomes a risk during the audit.  Going back to point #1, create a practice, understand the areas of concern, and correct it before the auditors force you to.  The time is now.
  4. I promote 3rd party advocacy for support.  I like to say, “there’s the publisher’s way and then there’s the real way” both are compliant, but one will cost you a lot more than the other.

Will audits be on the rise in 2018?  Yes. And 2019, 2020, and 2021.  After that who knows, we might be flying around the moon and vacationing on Mars.  Licensing is a dangerous game but everyone can win – if they have the right strategy in place.

Thanks for reading,

SPLA Man

 
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Posted by on July 19, 2017 in Compliance, Uncategorized

 

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How service providers can use Azure Stack in their datacenter environment

Azure stack is what Microsoft describes as an “extension of Microsoft Azure…”  to on premise (or partner hosted) datacenter environments.  In this article, we will review what it takes to deploy Azure Stack and best practices for partner hosted scenarios.

How a Service Provider Acquires Azure Stack

Azure Stack is available through the Cloud Solution Program (CSP) for service providers. Just like any other CSP relationship, the service provider will ultimately own the billing, the support (if Direct/Tier 1) or through your authorized distributor who will manage the support (Indirect/Tier 2).  Usage can be purchased through CSP or through the Azure hosting exception leveraging your existing Enterprise Agreement.  One thing to note is the actual Windows license.  In my humble opinion Windows Server in SPLA is less expensive and has the flexibility of month/month licensing.  Let’s use a couple examples to illustrate this further:

Scenario 1:  Bill sells Jennifer Azure Stack services through CSP.  Bill is Direct authorized and has a SPLA agreement in place.

  • Bill will purchase Azure Stack from an authorized hardware vendor.
  • Bill licenses Windows Server via his own SPLA agreement.
  • Jennifer will pay Bill for her consumption through CSP at a lower rate because Bill is already providing the Windows Licenses.
  • Bill is responsible for all the support and billing because he is CSP Direct authorized.

Scenario 2 – Bill sells Jennifer Azure Stack services through CSP.  Jennifer decides to transfer her Windows Server licenses through her own Enterprise Agreement.  

  • Bill will purchase Azure Stack from an authorized hardware vendor.
  • Bill would have to completely isolate the hardware for Jennifer if she wants to transfer her existing licenses to Bill’s datacenter environment.  As with other hosting scenarios, Windows is not license mobility eligible and therefore the Windows licenses must be deployed in a 100% dedicated cloud environment.
  • Bill will sell the consumption via his CSP Direct agreement.  Since she is using Windows licenses that were already purchased, he will only pay the base consumption rate.
  • Bill will provide the support since he is providing this as a service to Jennifer as part of the CSP program.

Scenario 3 – Bill deployed Azure Stack in his datacenter.  He’s running Jennifer’s SQL Server she purchased with SA from her Open agreement.  She will also pay Bill for the Azure Stack consumption through Bill’s indirect CSP agreement.

  • Bill will purchase Azure Stack from an authorized hardware vendor.
  • Bill will have an agreement with his authorized Indirect distributor to resell Azure Stack through CSP.  (Bill is not Direct authorized, he must use a distributor to enable him to resell CSP to his end customers.  The distributor will provide all the support and billing platform).
  • Jennifer will transfer her SQL Server licenses and CAL’s she purchased with Software Assurance over to Bill’s shared cloud environment through license mobility.

Conclusion

These are all hypothetical scenarios used to illustrate the different licensing options available to SPLA partners.  As you can see, the licensing can be complex as you are crossing multiple licensing programs – CSP, Enterprise Agreement, and SPLA.  I am always interested in different scenarios.  Have one?  Email me at info@splalicensing.com

Thanks for reading,

SPLA Man

 
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Posted by on July 18, 2017 in Azure, Uncategorized

 

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How to Report SPLA Usage to be Compliant

The biggest benefit to SPLA is the month-month licensing rules.   The biggest downfall to SPLA (and CSP for that matter)  is its month-month licensing rules.  What’s a benefit to some is a nightmare for others.  In this article, we will review the tips and tricks to properly report Microsoft SPLA usage on a monthly basis and break it down using a fictitious scenario using my friend Joe Hosting.

Scenario  – The under licensing but also over paying SPLA reporter.

Joe’s Hosting  reports to his Reseller SharePoint Standard, Exchange Standard, Windows Standard, and SQL Standard every month.  They installed Exchange Enterprise and Windows Standard.    For simplicity, let’s say he has 8 VM’s on a host, and licenses SQL per instance on a VM, they also have 100 mailboxes he supports.

The Problem

Each month Joe had (key word) his employee Julie place their SPLA order each month to the Reseller.  One day, Joe accidentally backed his Porsche 911 into Julie’s car.  Furious, Joe yelled at Julie for parking near his precious Porsche and blamed her for the damage.  Julie got upset, and quit on the spot.

Julie was a dedicated employee.  Each month she would report to the Reseller almost the exact same thing (with minor fluctuations) – 100 Exchange Standard licenses, 16 Windows Standard processor licenses, 100 SharePoint Standard licenses, and 40 cores of SQL Standard.  Sometimes, she would change the counts based on customer’s coming and going but for the most part the report was stagnant.  The Reseller, happily placed the order without ever asking about their business.   Now that she left, what will Joe do?

Joe is a busy man.  He would never make time or the effort to learn how to submit SPLA usage or understand the licensing rules.   Once Julie left, his workload increased ten fold because not only did Julie report SPLA, but she was responsible for HR, scheduling, customer satisfaction, and making sure the annual company picnic went on without a glitch.  Joe was busy to say the least.  To make matters worse, Julie was the only person in the company to interact with their SPLA Reseller.

Several months went by and no usage was being submitted.  Sure the Reseller would send reminder emails to Julie, but there was no response.  Finally, Microsoft took notice, and started digging into Joe’s reporting.  Now Joe’s problems suddenly took a turn for the worse.

The Audit

It was a cold, rainy Monday, and Joe was really upset – not only did he have a ton of email to go through from the weekend, but his Porsche was getting wet.  He kept staring out his office window at his precious fire engine red baby; soaking wet, with streaks down the windshield.  The site made him sick,  he couldn’t bare to watch anymore.  He took to his email and noticed immediately – Microsoft Self-Audit Review in the subject line.  Joe opened it without hesitation.

The email thanked Joe for his partnership, but informed him that from time to time Microsoft will provide a self-audit compliance check to ensure accurate reporting.  From the email, Joe was to download the MAP toolkit (Check it out here) and provide the data back to Microsoft within 10 business days.  Joe surprisingly cancelled all his meetings that day and proceeded to download the tool.   Once the data was collected, he was to send the data to Microsoft and set up a call to review.  What happened next shocked even the Microsoft compliance guy.

Conference Call with Microsoft

Microsoft:  Good Morning Joe, after some analysis I have a few questions about the data you sent over.

Joe:  Absolutely Mr. Softy.  

Microsoft:  Umm…Say again?

Joe: C’mon man.  Mr. Softy…Microsoft???

Microsoft:  Whatever.  Let’s get to the data, ok?  In my analysis, I noticed you haven’t reported usage in 3 months.  Why?  Are you not providing commercial hosted services?  Your website indicates you are.  Just wondering why you haven’t reported?

Joe:  We had an employee leave the company who was responsible for reporting.  We did everything we can to retain her but she was simply out of control.  

Microsoft:  I don’t really care about why she left, but more concerned about why you didn’t report after she left. 

Joe: Sorry.  I don’t have an answer for that.  I was busy and forgot.

Microsoft:  I noticed you reported essentially the same thing every month which tells me you did not grow or shrink your business.  I did see on your website a press release that mentioned how excited you were to host email for Oil Tankers Inc, one of the largest Oil transportation services company’s in the US.  

Joe:  Yes. It was one of my finest sales calls.  

Microsoft:  I’m sure it was.  That being said, I noticed in the data you sent that over 5,000 users have access to Exchange Server but you were only reporting 100.  Why?

Joe:  I wish I knew.  That darn admin had no idea what she was doing.  I am sorry.  

Microsoft:  Apology accepted.  Now, back to Exchange.  You have 5,000 active users but you only report 100.  There is a license gap of 4,900 licenses.  It looks like they were active six months ago.  That total comes to roughly $50,000 in underreporting.

Joe:  Chuckles.  Yes, but I just sold them the licenses last month.  So really, I only have 1 month of underreporting.  Besides, Exchange is licensed per mailbox. 

Microsoft:  Try again. I just said they were active six months ago.  In addition, I find it hard to believe you just sold the licenses last month when your very own press release matches this date as well.  Last, Exchange is licensed per user, not per mailbox.  Even if it was, the mailbox number and actual users are almost the same.  

Joe:  Ok.  Well sorry.  I will correct it moving forward.

Microsoft:  (Ignores Joes’ comment).  Let’s move on to Windows Server.  You have an ESX host with two processors each.  You are running 8 VM’s on that host.  You are actually over reporting here sir.  Why are you not reporting Datacenter?

Joe:  Because Standard is installed. 

Microsoft:  Actually, you can report the higher edition.  What you cannot do is install Datacenter and report Standard.  Datacenter allows unlimited virtualization.  You could of saved money here.

Joe:  Wow. I had no idea.  I can run Standard but report Datacenter?

Microsoft:  Sighs.  That is exactly what I just said.  Let’s move on to SQL.  You are reporting 40 cores but only have one VM of SQL Server running.  Why so many cores?

Joe:  Because we have over 10 instances running on that VM.  We report 4 cores per instance running on that VM.  

Microsoft:  Yes, but you can run unlimited instances on a VM.  You should really be reporting 4 cores, not 40.

Joe: What!  I am looking at a BIG pay day from Microsoft.

Microsoft:  (Again, ignores the comment).  Let’s move on to SharePoint.  SharePoint, it looks like you have Enterprise installed.  From the data you sent over, it also looks like you provide only Standard features to your clients.  Is that accurate?

Joe:  Yep. Only Standard.

Microsoft:  I can’t believe it.  You are actually reporting SharePoint correct.  Did you know SharePoint and Exchange is licensed by the features accessed not what is actually installed?  

Joe:  No I did not.  The darn admin should’ve told me that.  When can I expect my check from Microsoft for the over reporting of SQL and Windows?

Microsoft:  Well.  Let me think about that.  Never.  

Joe:  Fine!

Conclusion

Throughout my twelve years of managing SPLA, I have had similar conversations and heard scenarios similar to the fictitious story mentioned.  In a lot of compliance situations, a SPLA customer has one person who reports usage.  If that person leaves the company without telling anybody how to report usage or what data is used to collect it, the organization can quickly get of compliance.

In reading the above, you might think that ole Joe came out ahead.  Yes, he did not report accurately or in the most cost effective manner, but he did come out of the audit unscathed.  I would argue that he wasted more money, should have invested in the right resources, and ultimately could have saved his customers money by licensing in the right  manner.  I highlighted below some of the ways Joe could’ve licensed to reduce his exposure and reduce his monthly spend.

  1. Report Windows Datacenter.  If you have more than 7 VM’s on a host, it is more economical to license Datacenter than Standard.
  2. Report the Productivity Suite which bundles Exchange Standard and SharePoint Standard.
  3. SQL Instances – you can run unlimited instances on a VM as long as the VM is properly licensed.
  4. Report USERS not mailboxes when it comes to Exchange
  5. Remember with Exchange and SharePoint, you report the features they have access to not what is technically installed.  Most hosters install Exchange Enterprise (Standard only supports a small number of mailboxes) but report Standard because users only have access to the Standard features.
  6. Reporting usage and stopping will get flagged for compliance.
  7. Stagnant reporting will get you flagged for compliance.
  8. Not reporting what you are advertising.  “I don’t host anymore” when your website says your are is difficult fact to overcome.
  9. Self-audits are exactly what it means “Self”  and “Audit”  The vendor is dependent on the data you provide them.
  10. If you report usage, build a team to make sure it gets reported correctly.  Most compliance gaps happen when an employee leaves the company.  Don’t be dependent on one employee.  If you are dependent on one employee, treat them right!  Poor Julie!
  11. Report on time.  The SPLA agreement says you must report by the 10th for the previous months usage.

Have a question?  Contact info@splalicensing.com

Thanks for reading,

SPLA Man

 

 

 

 

 

 

 

 

 
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Posted by on July 16, 2017 in Compliance

 

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More Dynamics 365 Fun

Quick update for those interested in Dynamics 365 for SPLA and what you should remember when selling to your customers.

  1. No Enterprise Plans in SPLA
  2. No PowerApps in SPLA
  3. Transitions SKU’s are available in SPLA
  4. More differences found here

Not all bad news but not all good either.  You can read more about my opinion here

Thanks for reading,

SPLA Man

 
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Posted by on June 1, 2017 in Dynamics 365

 

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Transition SKU’s for CRM Hoster’s Available Thru October, 2019

For Dynamics hosters worried about all the changes with CRM have until October 31, 2019 to license the transition SKU’s in SPLA.

Although good news and provides some flexibility, the transition pricing is still higher than current CRM licenses.  As an example, Basic CRM SKU transition pricing for Customer Service is almost double!

Transition pricing is available to ease transition to the new Dynamics 365 pricing model.  It is also designed for current CRM customers, not new customers.  To learn more about Dynamics 365, please check out Dynamics 365 Licensing for SPLA

Thanks for reading,

SPLA Man

PS- Dont forget to license SQL and Windows with CRM!

 

 
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Posted by on May 15, 2017 in CRM, Dynamics 365

 

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