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New Licensing Changes Brings New Challenges for Service Providers

SPLA Man took a vacation and the world turned upside down for SPLA partners! As most of you are aware, there’s been a lot of changes with hosting and more specifically how end customers deploy technology from your datacenter environment. In this post, let’s review these changes and discuss the challenges that accompany them. Have a question? Email info@splalicensing.com to learn more!

The Announcement

In October, Microsoft announced a new strategy for end customers (not SPLA) to deploy workloads on shared infrastructure from a third-party datacenter environment. This includes software subscriptions, software assurance benefits, etc. There was also a change to how Listed Providers deploy workloads. The article can be found here in case you missed it. https://www.microsoft.com/en-us/licensing/news/options-for-hosted-cloud

So what does all this mean? What’s the catch? There’s no catch. Microsoft made these changes in response to service providers long ago when QMTH came to fruition. Maybe there’s no catch, but there are specific things to consider.

For example, if you are an end customer, you can buy licenses from whoever you want (even Microsoft directly in some instances), but they can’t deploy it wherever they want. Your customer wants to deploy licenses they already purchased in AWS; well, they can’t for certain workloads. But guess what? They CAN in your datacenter! Think of Windows Server with Software Assurance. Your end customer wants to leverage their existing Windows licenses and not buy SPLA Windows licenses. They can deploy Windows Server with SA in your shared cloud environment but not in a Listed Provider. This is a GREAT time for service providers to help end customers with the options available. The challenge for service providers is that most are not educated on the different deployment options, nor do they know what software their customers own or how they bought them.

I think another challenge service providers face competition. Every service provider can offer the same solution as mentioned above. If you do not stay on top of your customers, someone else will. And finally, just because Microsoft allows something to happen doesn’t always mean you should license that way. Given the Windows Server example above, it might be cheaper for your customer to buy Windows Server from you rather than buy Windows Server with Software Assurance. You can offer a more affordable price for running Windows Datacenter than if they were to purchase it outright. Secondly, is it more profitable to have your end customers bring their licenses? As much as we sigh about SPLA, it is also a great revenue stream.

Maybe as this year comes to a close, we can plan for next year. If you have questions on any of this, or perhaps you want to get a good grasp on your licensing now, let’s have a discussion. Email info@splalicensing.com, and we can help.

Thanks for reading,

SPLA Man

Why Windows 10 in CSP stinks now but could be GREAT later

29 Sep

Microsoft made a pretty big announcement around Windows 10 and CSP. Here’s a breakdown for those that are interested:

Software Assurance is not included
Windows 10 is available E3 and in CSP only
Customers need a qualified OS license. In other words, this is an upgrade license only.
Not available under SPLA
Not available in the shared computer activation model.
Per user licensing with the ability to license on up to 5 devices per license.
No minimum and surprise…no maximum either.
Subscription is 1 year
Pricing varies
New use rights highlighted in the Product Terms

So why does this stink now but could be great later? Pay attention to number 1, 4, and 5 in the list above. That’s what stinks. Think this will allow VDI? Think again.

So why not? Why the mystery around VDI and SPLA? If I was Microsoft, I would go ahead and allow it but for only a select few SPLA providers. Those providers are:

Report on time. Not one late payment/report during their agreement no matter what the excuse – “My reseller sucks” is not an excuse. It’s a good reason to work with me though 🙂
Deployed Hyper V (they must have some incentive to do this)
Joined CSP program.

There you have it. Microsoft wins big time – all that missed revenue from non reporters will get reported. Now you, the compliant service provider, will be allowed VDI in SPLA.

The likelihood of this happening is slim to none. I do think Microsoft is missing out with the Windows 10/VDI restriction. Ever since I started in SPLA, I’ve been asked about VDI (or the lack thereof). That was 11 years ago.

Thanks for reading,

SPLA Man

“I want VDI!!!!!”

01 Feb

You probably have said that a thousand times as a service provider. The truth is it’s still not available in SPLA. If I was a betting man (big if by the way for those that work for the IRS) I would wager they would allow VDI in SPLA. Why not…right? Everything else is changing why not this? Before you get too carried away as to why Microsoft will not allow VDI in shared environments, let me ask…do you REALLY want VDI? Just as SQL is complex in SPLA (and VL for that matter) so is VDI. In this article I will review the licensing rules with VDI/VDA and what exactly needs to happen if you were to host this from your datacenter.

Let’s take scenario 1. Bill has a PC that can run a qualified operating system but the PC itself has been running slow recently. He get’s his email from Joe’s Hosting so logically he asked good ole’ Joe if he could host a virtual desktop as well. Joe tells him “Sure” but it MUST be dedicated and his cost will go up. Bill tells him that’s not issue, his wife won the lottery recently. You would think the last thing Bill would be worried about is a virtual desktop. Just buy a new computer Billy and head to the beach! Nonetheless, Bill wants VDI and wants it now. Joe’s Hosting tells him to go to the store, buy a Windows 10 license, and bring that disc over to their datacenter. Joe will host it on a server solely dedicated to Bill. Problem solved. Joe is happy he just won over a customer, Bill is happy he gets his virtual desktop. The compliance police call, Joe is in trouble. Why?

In order to host VDI 3 things must happen.

The PC must have VDI use rights. This means the desktop license itself (Windows 10 as an example) must be Enterprise and have active Software Assurance (SA). Think of VDI as a Software Assurance benefit. Without SA, no chance of having VDI. In order to buy Software Assurance, I would need a volume licensing agreement; not a retail version.
The service provider must indeed host it in a dedicated infrastructure. This means the hardware, not just the VM.
If the PC is incapable of running a full version of Windows 10 (such as a tablet) the customer must purchase a VDA license. VDA is a use right that allows the end user the right to access a virtual desktop from a server environment.

The 3 items mentioned above is really just the beginning of the licensing roller coaster. You must also license Windows Server, RDS, and any other applications by your SPLA or be purchased by your end customer. If they are purchased by the end customer, they would transfer that license into your datacenter, which means they can no longer run it on premise.

Now I ask you this question – is VDI worth it? Some say “yes” as this is what the customer wants and mean old Microsoft licensing rules just keep getting in the way. Most complain about dedicated environments, but as mentioned earlier, dedicated environments is just the beginning. Last, you may say the licensing of the VDI environment is not your problem, it’s your customers. You have it hosted in a dedicated environment. As far as SPLA is concerned, you are covered. Or are you?

Maybe I’ve been doing this too long and I am just an old fogey. But if I was a customer and my service provider (you) told me I could receive my VDI dedicated infrastructure and all I need was a desktop OS license, I would be all in. Fast forward a couple years and you tell me you are going through an audit and apparently I (not you) had licensed VDI incorrectly and it’s my fault; I think I would be a little upset. Yeah I would ditch you faster than that girl in 9th grade who ditched me at the dance (apparently when I told her my future involved SPLA licensing it turned her off…what a fool) but I would also make sure if any other organizations were looking at you as a service provider, I would tell them to stay away. As any marketing organization would tell you, recommendations and word of mouth is the best way to advertise.

Moral of this story? Like all the rest, know the licensing first, sell it second. Stay tuned for scenario 2. Your customers will thank you.

Thanks for reading,

SPLA Man

6 Comments

Posted by MS Licensing on February 1, 2016 in VDI

Tags: Azure, Cloud Solution Program, CSP, Microsoft Cloud, Microsoft SPLA, Microsoft VDI, Service Provider License Agreement, spla, VDI, Virtual Desktop Infrastructure, Virtualization, Windows 10, Windows Licensing, Windows Server

Predicting the future…

08 Sep

Not an easy task. When my kindergartener teacher asked “what do you want to be when you grow up?” I can promise you SPLA was not part of my vision. (I should’ve worked harder to be a firefighter)

This post is 100% opinion based and would love the opportunity to hear/read yours. So here’s my take on SPLA and what’s next for the hosting industry.

Who will win the Amazon/Azure War?

Contrary to popular opinion, I think Microsoft has already won this battle. The reason might surprise you too as it has nothing to do with the service offerings or pricing; it has everything to do with who controls the licensing. I think we can all agree that Microsoft can make up their own rules to their own software. What happens if Amazon spins up a Windows VM in their datacenter? Amazon has to report it via SPLA. Who ultimately get’s the SPLA revenue? Microsoft. What happens if Microsoft decides to offer fully hosted Windows 8 desktops using Azure or Office 365 but NOT authorize if for other service providers? Yikes!!! What happens if Microsoft authorizes MSDN mobility rights but not offer it for other service providers? Oops…already happened. What happens if they allow Office to be installed on 5 devices? Oh man.

Will SPLA be replaced?

No. Too much revenue being generated for SPLA to just disappear. SPLA produces recurring revenue for both Microsoft and the partner community. Secondly, using SPLA does not mean that volume licensing is going away; Microsoft get’s the best of both worlds. I do foresee volume licensing changing more rapidly than it already has. I think that’s a good thing too.

Will VDI be allowed under SPLA in the foreseeable future?

No way. This will never happen in my opinion. Let’s throw in the towel on this one.

Will the cloud industry expand or contract over the next decade?

Expand. I think organizations will not only have hybrid/cloud environments but multi-cloud environments. As an example, I have multiple software vendors (such as Adobe for PDF’s, Symantec for Security, Microsoft for Office, etc) I believe organizations will use several vendors in “cloud” paving way for those service providers that have specialization and unique offerings to gain market share. Yeah, they might not be the next Amazon, but they will be critical to the next phase of cloud. Specialization = Profitability.

Are all service providers going to be audited?

Yes.

Do I need to have a SAM practice?

Not if you don’t believe me in the previous question. Just don’t cry and say I didn’t warn you!

What will be the biggest driver to the cloud?

On premise compliance audits. Once they get audited, they would rather have someone else worry about it; that someone else is you.

Will License Mobility be allowed for Windows?

No. I don’t think there is a reason why it would. Windows is cheap. For those that have hosted for a while, remember the Windows Outsourcer/Non Outsourcer SKU’s? Datacenter was over $200 a processor. Standard was over $75 (US).

Will Microsoft raise rates?

Yes.

Will my hosting business succeed since I can’t compete against larger providers?

Yes. You need to change the way you promote your offering. Think about this (and be honest with yourself) – what separates you from your competition? If you were a customer looking for a hosted solution…why would “they”… choose “you”? How can YOU… help ME (customer). Is it to keep compliance? Is it costs? Do your employees bring you new ideas or are they collecting pay checks? Do you worry about being the lowest price or quality/uniqueness of your service? Is it because you have an “in” and listen to SPLA Man? If it’s the latter, you will win for sure.

Who’s the biggest threat to cloud providers present/future?

Governments

Will VDI be allowed under SPLA?

NOOOOO!!!!! You asked this twice! Come on! 🙂

Who will win the World Series in baseball?

Why…the St. Louis Cardinals of course!

Who will NOT win the Super Bowl this year?

St. Louis Rams – Ugh.

Thanks for reading,

SPLA Man

1 Comment

Posted by MS Licensing on September 8, 2014 in In My Opinion

Tags: Azure, compliance, License Mobility, Microsoft SPLA, Office 365, VDI, Virtualization

It’s a bird…it’s a plane…it’s VDI and SPLA!!!

13 Aug

We have all been there. You see an email come across in the subject line that you’ve seen before. You release a loud sigh, because you already know the response to the email before you even open it. How? Well you’ve been asked the same question before on numerous occcassions and give the same response. For me in particular, the subject in the email is “SPLA and VDI” It’s not frustrating, it’s just I hate saying “no” (just ask my son – a bit spoiled I admit)

I try to write about different topics, but I also like to give updates and understanding to various topics that really hit home; VDI is one of them. You can read my previous article here In this post, I will break VDI into two parts: defining VDI and moving forward.

Definition –

What is a virtual desktop in the licensing world? You should think about virtual desktop as a software assurance benefit. Like license mobility, software assurance is required. Unlike license mobility, there is no option to install in shared infrastructure. Let me repeat – no option to install in shared infrastructure. One more time…no option to install in shared infrastructure. What are the options?

Since VDI/VDA is a software assurance benefit, your customer must purchase their desktop OS with software assurance to have VDI rights. That means if they did not purchase with software assurance, there is no option for them to use virtual desktops from a true licensing perspective. What if the machine is a dummy terminal with no software assurance option available? The end-user would be required to purchase a VDA license for each device. VDA license is kind of like a device CAL, it just provides the user access to a virtual instance. If your customer has not purchased VDA or software assurance on the OS, they need to reconsider if they want a virtual desktop.

Some service providers are under the impression that they can sell a desktop OS perpetually to the customer and host it for them in a dedicated environment. They have the dedicated environment part right, but an OS sold to an end-user does not grant that end-user access to a virtual desktop without software assurance (SA). Secondly, you have to be an authorized reseller to sell perpetual licenses (non SPLA) to consumers. Third, you cannot buy a Windows desktop license yourself and host it to third parties. Anything you buy outside of SPLA is for your internal employees only. Last, not only should you not buy licenses and host, but do not install on servers that is also used for your internal use. That is a big compliance headache. Where is it written that you cannot host on servers internal employees are also accessing? It’s not. That’s what makes it a headache. Just don’t shoot the messenger!

So why can’t the end-user just go to Best Buy or some other retailer, purchase a retail copy, have you (the service provider) host it for them? That not only is a compliance risk, it is also not very economical. Download the FAQ guide here

Moving Forward

What are your options? The good news is Azure, AWS, and all the others have the same rules. They cannot offer desktop OS in the public cloud. This is probably the best FAQ guide I’ve read around Azure and it applies really to all IaaS providers. Check it out here

What you can do is offer Windows Server to emulate a desktop using RDS. I get it, not the same thing but I think it is a more of a compelling solution from a cost perspective (and be compliant). Dedicating a physical server and virtual server is not always the most profitable solution. I’ve said this before, I think the bigger issue is Office. RDS now has mobility rights, I think Office should too.

My Opinion

If I was a service provider, I would work with someone who is an expert in SPLA based licensing and an expert in software assurance benefits. As you can see from my previous posts and with VDI, software assurance is a requirement for most cloud based licensing solutions. In years past, SA (Software Assurance) was only leveraged for organizations that wanted the latest version on software and pay annually for the licenses under their agreement. The “cloud” has changed that. Fast forward to today and customers want to move to the cloud but leverage their existing licenses. Have you been asked that before? How do they accomplish that? The answer is Software Assurance. They need SA to use license mobility, they need SA for VDI, they need SA for hybrid scenarios such as the SAL for SA SKU’s, and they still need SA for latest version rights and pay annually. If I was a Microsoft shareholder, I would applaud that move. It’s a way to add additional revenue on top of the licenses they purchased all the while giving customers the benefits they are after.

So if you ask, “why does Microsoft not allow VDI in a shared environment?” My answer is “why would they?”

Thanks for reading,

SPLA Man

2 Comments

Posted by MS Licensing on August 13, 2014 in VDI

Tags: AWS, Azure, Hosted Desktop, Hosting, IaaS, Mobility, RDS, SAL for SA, Software Assurance, spla, VDA, VDI

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 MS Licensing on June 18, 2014 in Disaster Recovery, Exchange, License Mobility

Tags: Exchange, License Mobility, SAL for SA, spla, VDI

VDI for SPLA?

26 Mar

If I received a dollar for every time I’m asked this question you and I can both retire! Things are changing in the world of data center outsourcing, but for some reason this is still stuck in the mud. Why no VDI today?

1) I have no idea

2) See answer 1

I wrote about this topic earlier, but my hunch is it has something to do with the OEM manufactures. OEM is a big piece of Microsoft business, and they protect it. (Although Surface kind of muddies that theory). As an example of this, if you were to “lease” a desktop to an end customer, you would first need a OEM license pre-installed and use SPLA and/or volume licensing as an upgrade license. So even under a rented desktop model, OEM is still a requirement. If everyone used VDI and dummy terminals – OEM manufactures would be left out of the game. (at least in volume)

The only thing that would change this model is if they received a very high number of requests to offer this through Azure. Look at what happened with Remote Desktop Services (RDS). RDS was never part of license mobility. Azure comes along and before you know it- RDS has mobility rights! Check it out here

That being said, Microsoft can make the rules of their own game, and even know Microsoft can do it does not mean the service provider/partner community can do it. Office 365 is a prime example of this. Under O365, you can take Office and install it on up to 5 PCs. Try that under SPLA and you have to license every PC with a separate Office license, use Windows 7/8 upgrade license, have a OEM on the machine that you own, and sign a rental addendum. That’s why I wrote “office needs mobility rights”

One new capability in the latest SPLA agreement is you can install software on customer owned hardware. BUT guess what? That does not apply to PCs.

I’m not sure if this will ever change. Every conference that I’ve attended the past 10 years partners ask the same question – “Can I provide VDI under SPLA?” I don’t like the word “no” but unfortunately, the answer is “no.”

Would love to hear about your thoughts on the topic. Have you tried Windows server and RDS as an alternative? What about dedicated environments for VDI?

Thanks for reading,

SPLA Man

7 Comments

Posted by MS Licensing on March 26, 2014 in VDI

Tags: Azure, Microsoft, Microsoft SPLA, OEM, Office, Office 365, RDS, Rental Desktop, spla, VDI

SPLA Licensing

Tag Archives: VDI

New Licensing Changes Brings New Challenges for Service Providers

Top 5 Questions…Answered

Predicting the future…

It’s a bird…it’s a plane…it’s VDI and SPLA!!!

How the other guys do it

VDI for SPLA?

Licensing Help?

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