When it comes to getting your software licensing right, the road ahead is fraught with challenges. It can be hard to know if you’ve taken the most fuel-efficient route, and are using the most recent maps. And stopping to get directions, asking Google, or paying for a guide are not fail-safe ways to get where you want to go.
Over the last 25 years, I’ve spent a lot of time deep diving into the small print of licensing, developing strategies to help you maximise license values and right size your Azure environment — so you don’t have to. As a result, my team and I have helped some of our customers save a staggering amount of money.
But before I explain the how and why, let’s take a quick look at the most common license agreements out there.
1. Old school Open License agreement (OL) or Open Value agreement (OV) from a Microsoft partner. You generally need 5-499 users to qualify for these options. Both options are known for their rigidity and lack of flexibility with a pay upfront model or yearly spread payment offer.
2. Microsoft Select or Enterprise Agreement (EA) from a licensed service provider (LSP). To achieve the volume discounts offered by these models, you need to be a large enterprise, adhere to minimum user quantities (500+), pay annually, and sign a three-year agreement.
3. Direct licensing model, (generally considered the DIY approach to license buying). Typically used by small businesses, this model requires you to engage directly with Microsoft, who bill your credit card (often resulting in several payments a month for different bundles). Support is provided through Microsoft’s support desk (you can join the queue or talk to a bot).
4. Volume Licensing from a Cloud Service Provider. This model is available to any size business — you can be a SMB, an enterprise, or anything in between. You can opt for flexible monthly or annual billing, and local support is provided by your CSP partner and through the Microsoft Premier Support program.
Based on 25 years of experience in the technology industry, I see few businesses who don’t at some stage need to grow, retrench, or weather a (hopefully short-term) financial storm like COVID-19. In these times, being locked into a fixed term contract with no wriggle room isn’t ideal.
One of the most significant cashflow benefits to a business (and I’m talking any size here) of engaging with a CSP for Microsoft licensing is flexibility in the billing cadence. You can choose to pay monthly instead of annually. Even better, you can add on or remove license numbers daily at will and your invoicing is adjusted to reflect this automatically. And in a terrible year like 2020, that’s been a game-changer for some of our customers.
Here’s an example of the difference that our customers experience: Let’s say you have five hundred people in your subscription. Then COVID happens. You have 150 call centre agents that you can’t accommodate in your technology stack, and you need to temporarily off-board them. Well, if you’re locked into a long-term agreement, open agreement, open license, or an enterprise agreement with Microsoft, then sorry, but you have no room to move. You’ve paid for those 500 licenses, and you are going to keep paying for them for the full term.
Whereas when you purchase your licenses with Fusion5, you can pick up the phone (or log into the Fusion5 Marketplace) and remove 150 licenses — just like that. If you are partway through the monthly billing cycle, you get an up-to-the-day credit for those 150 licenses you’ve cancelled. And when you reinstate your call centre service, you can add them — and more — back on to your licenses without penalty.
The reverse to the above also holds true. If you have an increase in demand for 3 months, you can increase your CSP licensing for the period, without a delay or long-term commitment to the increased license count.
And then there’s our secret-squirrel knowledge which can save you even more than expected.
You might not have considered the value of locking in your ‘terms of use’ and ‘pricing’. But we have. For example, in October 2019, Microsoft introduced a complete overhaul of the D365 CE (Customer Engagement) and D365 F&O (Finance and Operations) terms of use and pricing structure. In these we saw a granular Base + Attach pricing model. For most of our customers, this had a major effect on their monthly running costs. However, if they had a 36-month term contract in place, they didn’t have to pay a cent more until their next agreement term’s renewal time.
To put this in context, if we hadn’t advised one customer to lock in their terms and optimise their licensing, their current $7,000 monthly invoice would have gone up to $12,000. That’s a staggering $60,000 more a year, which only goes to prove that it pays to seek and take expert advice!
Plus, you still have the flexibility to increase or decrease your number of licenses, at the term contract price!
One of the biggest differences in managing your licensing through Fusion5 vs directly with Microsoft is how you will experience support. Fusion5 has invested in the Microsoft Premier Support program, from which our CSP customers directly benefit.
Our Premier Support Agreement gives us, in effect, a red telephone which connects us directly with our Microsoft Technical Account Manager (an actual human, not just a generic support email or AI bot). So, if we log a support ticket, and it needs to be escalated into a higher service level category, we can resolve your issue more quickly.
Now I want to talk about licensing optimisation. We seriously don’t want you to pay a cent more than you must.
We provide CSP licensing to educational institutions, registered not-for-profits and commercial organisations. If you’re currently on the direct model, we can change this to a CSP billing method to provide you with licensing optimisation, flexible billing, and of course, local support.
When we consult with you, we take the actual attributes and assets of your Microsoft environment and match it to licensing. I work with our technical team to optimise it based on what you have vs what you need. We model several different scenarios and typically end up with minimal increases, but more often than not, can reduce your costs - sometimes by $1,000+ a month.
When we organise your CSP licensing, it’s not unusual for us to find that some of your licensing is sub-optimal, so it’s an excellent opportunity for us to sort out and reduce your costs. For example, you may use Office 365 E3 + EMS. But there is a more cost-effective way to get the same functionality, plus more — so you could be getting more product for the same price or less.
It’s also worth noting that buying elements that you need separately is more expensive than buying them in a bundle. It’s a bit tricky, but we do this every day, so can help you make the right choices.
So how do you get started with your licensing optimisation journey? Well, when you’re ready to move (and if you are on the direct billing model, you don’t have to wait until the end of your term to transition to a CSP billing type), you simply cancel all your old agreements, and Microsoft credits back the balance of the unused agreement costs. We then onboard your newly optimised Azure consumption and licenses onto the CSP programme and arrange for you to receive one consolidated invoice per month (or annually if you prefer), and have one partner to provide support for Azure, Licensing and optimisation.
While we use our big red phone to escalate major issues directly to Microsoft on your behalf, Fusion5 also has an in-house team of over 50 dedicated support people (and they’re all based in our New Zealand and Australian offices, not outsourced to an offshore call centre).
We have a professional sales team and an experienced, highly trained team of implementation consultants who focus entirely on Microsoft solutions. Once your project is delivered, you deal on a day-to-day basis with your service delivery manager and the service delivery team. One of the things that makes us such a strong partner is that we take support very seriously. We don’t want you waiting around for an otherwise committed implementation consultant to come back to you — we know you need to return to BAU as soon as possible. You’re in control; we’re just here for the advice and support!
One of the biggest misconceptions I’ve come across is the perception that by moving to a CSP partner, you lose control of your ownership of your Dynamics 365 and Azure tenancy. That is absolutely not the case.
As your CSP partner, we usually become what’s called a ‘delegated admin’ for administration purposes only, or you can choose a tenancy with limited partner admin rights. We provide you support, but all your content, data and elements belong to you, not us. Ever.
If you decide to change partners, you can log into the administrative platform and simply disassociate the relevant CSP partner association.
A little bit of ‘need to know’ stuff first. Let’s say you’ve purchased an Azure subscription on a direct model on your credit card. When your Azure consumption reaches a certain threshold, Microsoft electronically reaches out and offers to move your payment from a direct charge to your credit card to an invoice. You pay this invoice by bank transfer. And you can buy credits in anticipation of how much Azure you think you’ll use.
If you do this on the DIY Direct Licensing model, we can move you over to the CSP programme in just 10 minutes - and there’s zero interruption to service. But if we’re moving you from an EA subscription model, your CSP tenancy is a blank space and we need to move your elements over manually. To ensure minimal loss of service, we review your environment to identify areas that will not easily move, for example, backup values and express route – and discuss options for transitioning them. Once agreed, we then schedule engineering time to move you to the new CSP subscription. And it’s all done. Note: Microsoft will credit back unused credits.
Changing partners is as simple as logging into your current administrative platform and disassociating from your current CSP. Of course, the Fusion5 team can provide guidance on how to do this if you need it.
Now there’s some good news - and some bad news - about moving your Azure from the EA subscription model to the CSP programme.
Bad news: As we have to start with a blank canvas, we need to rebuild your entire Azure infrastructure. So there’s a one-off migration cost for that.
Good news: Since we are in effect starting again from scratch, we can optimise your licensing to make sure you’re only using the resources in Azure that you need. If you’re a sizeable Azure customer, we can apply for funding from Microsoft to do the license optimisation spend within your tenancy. We can also do a partially to fully funded resource optimisation exercise.
Now get this: A recent Azure licensing and resource optimisation project we did for an Australian customer has saved them $150,000 a year. In perpetuity! So over the next ten years alone, we’ve saved them $1.5M.
By comparison, the one-off cost to rebuild their Azure infrastructure was a tiny drop in the bucket. And that’s a feel-good moment that I find hard to beat.
Warren O’Reilly
Microsoft & Azure Optimisation Specialist
