The Hidden Surprise in Microsoft Software Assurance

 I have a confession to make...I am revisiting one of my old blog posts. But, when you've been blogging on a topic for over 14 years you would be amazed at how "everything old...is new again" and that applies particularly to Microsoft Software Assurance (SA).

Software Assurance (SA) is known by many as an upgrade and added benefits plan that gets added to a license when it is purchased (if you purchase SA or for any software license purchases made on an Enterprise Agreement). It includes a number of benefits but of particular interest is License Mobility on application servers (such as Microsoft SQL Server) which is the benefit that can help control the number of licenses required in a virtualized setting.

But what you may not know is that Software Assurance (SA) essentially refreshes your underlying license every time you renew. So, the license you bought in 2005 for Microsoft SQL Server (and maintained with SA) will get renewed yet again at your next renewal - to the most current Microsoft Product Terms.

Why is that important?  Typically the licensing rules that apply to software is dependent upon the version you have installed.  However; even if you have an old version installed (like Microsoft SQL Server Enterprise 2005) if you renewed SA on that server in 2020 then you need to apply SQL Server 2019 licensing rules to that install.

This may lead you to want to not have SA on an older server - that is fine if it is a standalone server (physical server or a virtual server that is not allowed to move between hosts) but if not, chances are you require the benefits of SA to be appropriately licensed.

Questions on your licensing and SA - let us know and we'll be happy to help.

Software Contracts - in a Pandemic led Recession

OK, so I am not a financial expert - but if our current world-wide pandemic (COVID-19) does not put us officially into a recession then I will be extremely surprised.

Frankly, I think we are already there - experts are debating.  I'll leave it to them to figure out and in the meantime speak to you about your software contracts and what to think about them in a recession.

As we all know, the US was in a recession just a few short years ago and it was a doozy!  But at that time many companies still had not made the transition to subscription based licensing for most of their business productivity software.

Think about your companies software contracts today - Adobe, Microsoft, Autodesk, Oracle and others on your productivity software are probably all heavily subscription based today.  On your infrastructure/platform software they are also probably heavily "hosted" or subscription based.

Why is this point important in a recession?  Old licensing models were perpetual licenses with maintenance. In most circumstances you could continue using the software regardless of whether or not you maintained the maintenance. So in a recession, if you could get out of the maintenance contract you were arguably still in business. If you are tasked with saving money on software costs your options are more limited in a subscription world.

Subscription licensing models is a pay as you go model.  While that is useful in moving costs to the expense line rather than amortizing it also means you must continue paying or you can no longer use the software.  Your software vendors are now in the drivers seat (although here is a very interesting read on the financial impact of this for software companies by Gavin Baker which I thoroughly enjoyed and you might,too).

So, here are some keys to consider:

• Are your subscription users going to be reduced?
• Inventory your existing contracts to know specific clauses and dates:
• Many multi-year software contracts have an option to reduce subscriptions on an annual basis as long as you do it by the prescribed deadline. 
• Some also have an option for reduction based upon a reduction in force.
• When are your contract expiring for those that do not have a built in reduction option?
• How will this impact your hosted infrastructure/platform needs? Make sure you are aware of those contract terms and dates as well.
• If your user base is not expected to be reduced, will you be asked to cut costs regardless?
• Look for the fat in your current contracts.
• Identify critical vs nice to have suites
• Ensure you are leveraging your legacy licensing benefits when available in your hosted environments.
• Those software audits that have slowed down over the past 2-3 years, expect them to gear back up in different fashions:
• Microsoft - do not be surprised for a server focused "assessment"
• Adobe and Autodesk - I expect to see them come back around to see who still has old on-premise software that is not covered under the existing subscriptions.
• Micro Focus - remember all that software they picked up in the deal with HP Enterprises? They have already been an active auditor, expect that to continue or pickup.

We know the pandemic is hitting us hard, but we cannot afford to be so distracted by life or death news (she says, sadly and somewhat sarcastically) that we get caught by surprise by the longer term economic impact we will all be facing.  If you need a refresher just go back to my blogs from 2007-2010 such as this one.

While each turn is unique, there are aspects that are the same...with over 21 years in the Software Asset Management business Cynthia Farren Consulting can help. Reach out to schedule a conversation with me to discuss a game plan for your organization.

Stay safe and stay well...

Software Asset Management in the Cloud World

Eons ago I was a panel speaker at the SAM Summit and the question came up about the future of Software Asset Management in a SaaS (Cloud) world.  One of the other panel members scoffed and said we'd all be out of jobs...my answer was the opposite - that the role would be just as important the only thing that would change is the data that we needed to review.  I'm guessing that was easily 8-10 years ago.

Well, we're in a heavily Cloud (SaaS, IaaS, PaaS, etc) world and I'm happy to see I was fairly accurate but with some different nuances that I had not necessarily anticipated. While I have always joked that I am the accountant of the IT world, in many ways today it is reality (fortunately for me I like numbers in all their forms).

For example, think of your Microsoft environment (always one of my favorites as it is so pervasive).  If you have an Microsoft Enterprise Agreement and are actively using Microsoft Office 365 then you have probably seen the impact of un-managed Active Directory accounts.  In the old world of on premise usage, User accounts were determined by the number of humans using your Microsoft infrastructure (although far too many organizations incorrectly thought this was just the number of employees at the company) but in the online subscription world you realize that it is every account needing to function as a human (not resource accounts, but in this world you can easily find your smart conference rooms suddenly requiring User licenses).  Likewise users who are on Leave of Absence (LOA) are typically now consuming licenses so that their data and settings are preserved for when they can return to work - something that was not required to consume a license in the on-premise environment. Typically in our clients we see this to be about a 10% uptick over old on-premise days.

Now, that is in a closely managed environment where we are appropriately identifying types of accounts and auditing to ensure that numbers correctly correspond to headcount and contractors and that discrepancies can be explained based upon business need.  In an loosely managed environment we have seen over 30% of overages when we audit their accounts. 

The effect of loosely managed usage can destroy IT budgets. Unlike the old on-premise model, it is easy for Cloud solutions to grow unchecked as Brian Kirsch notes in his article "Avoid runaway costs to keep a cloud budget in check".

In a 10,000 user organization we recently found 3,784 accounts that should have been Resource accounts but were incorrectly identified as User accounts. Since their User Account monthly fee was $39.73/user/month that was a $1.8m/year waste of money.  You cannot go back and get that money back as it is not Microsoft's fault, and if you are mid-year (and assuming you correct it and report it in the appropriate time window so that it does not carry forward to the following year) you still need to pay for it through the end of that anniversary year (although in this case we are still in discussions with Microsoft to see if we can change that since there was some Microsoft involvement in the setup of the environment, I am hopeful).

Microsoft is just one of the many vendors where we have gone to subscription based licensing - the same applies to Adobe, Autodesk, JetBrains, the list goes on and on.  The need to re-harvest licenses and manage entitlements through proper processes, tools and people has not changed in the over 20 years I have had my business - all that has changed is where we go to get the data and that the licensing rules that apply will continually evolve.  But the need for a proper Software Asset Management program remains - we just may need to come up with a new title...

Microsoft Licensing and Software Assurance - When Do You Need It

I am a strong advocate of only paying for what you need when it comes to software licensing (and maintenance).  However; when considering whether to drop Software Assurance (SA) from your Microsoft licensing (or not buy it in the first place) it is important to make sure you have fully considered the implications.

While SA was originally a glorified upgrade program, Microsoft has evolved it over the years to try and make it critical for organizations. In doing so they have moved some key functionality to SA, the following are some common mistakes I encounter at organizations when it comes to Software Assurance and their Microsoft licensing.

1. License Mobility - this is one of the most compelling reasons to keep Software Assurance on your Microsoft applications servers (Microsoft Exchange Server, Microsoft SharePoint Server, Microsoft Skype for Business Server (fka Microsoft Lync Server) and Microsoft SQL Server).

In today's technology environment server virtualization is commonplace and many organizations use automated tools to move virtual guests between hosts for load balancing and other functionality. The problem with this is that Microsoft licenses get assigned to a physical host, not a virtual guest and typically licensing does not allow for a license to be reassigned from one host to another in under 90 days.  So, if you are running your Microsoft Exchange Server on a virtual machine in a cluster that has 5 hosts and you are moving those virtual machines between hosts you would have to license each host where that virtual machine might move to within a 90 day window.

This is also the benefit that allows a hosting company to leverage your licenses should you choose to outsource your workload.

Note, Microsoft Windows Server and Microsoft System Center Server do not come with License Mobility.

2.  Office Roaming Use Rights - particularly important for organizations licensing Microsoft Office per device (any licensing other than Microsoft Office 365 ProPlus) that also allow users to access Microsoft Office applications remotely (via Citrix or other). 

Office Roaming Use Rights allows the primary user of a device licensed for Microsoft Office with active Software Assurance to remotely (off company site) access Microsoft Office from a device not licensed for Microsoft Office.  Without this right companies need to account for every device accessing Microsoft Office remotely and ensure that it has a company provided license.

Note, while this is called "Office" Roaming Use Rights, the same applies to Microsoft Visio or Microsoft Project with active Software Assurance.

3.  Office Multi-Language Pack - for all of the geographically diverse organizations this can be key.

This allows a company to deploy a single image of Microsoft Office with support for 40 user interface languages.

4. Windows Roaming Use Rights - this allows the primary user of a device licensed with Microsoft Windows with Software Assurance to access a company desktop remotely through VDI for a non-company device such as a home computer.

5.  Windows Software Assurance Per-User Add-On - allows organizations with active Software Assurance on their Microsoft Windows OS (or Virtual Desktop Access - VDA subscription) licenses to add-on per user licensing rights.

While there are many potential benefits to this one of the key benefits in my perspective is in organizations with full platform Microsoft Enterprise agreements where the total number of devices exceed the total number of users. The cost of this add-on per user could be less than the cost of having to license all of the devices for the OS.

This also has the benefit for those organizations under a full platform Microsoft Enterprise agreement with per user licensing through Microsoft Office 365 and user CAL's to be able to transition the OS also to per user licensing avoiding the requirement of calculating both "Qualified Users" and "Qualified Devices" streamlining the license compliance and True-Up processes.

While Software Assurance benefits change and some are based on product (such as the Microsoft SQL Enterprise server virtualization rights) the above are some of the current key benefits in my opinion but I would recommend fully reviewing all current Software Assurance benefits prior to making a determination as to whether or not to buy (or allow to lapse) Software Assurance. 

Deploying Microsoft Office 365 ProPlus - Important Licensing Information Before You Start

Several of my clients are starting their implementation of Microsoft Office 365 ProPlus and I'm seeing a key misperception that could lead to expensive license compliance issues down the road.

Microsoft Office 365 ProPlus is licensed per user (Yeah! Something many of us have wanted for years) but Microsoft Office Professional Plus 2016 (or 2013, 2010, 2007, etc) is licensed per device. 

The change to "per user" licensing is one of the key reasons many organizations have licensed the Microsoft Office 365 ProPlus, but by using the incorrect installation bits a company can quickly become out of compliance.

These are two different products - they may contain the same feature set but just like you cannot install Microsoft Office Standard when what you own is Microsoft Office Professional, you also cannot install Microsoft Office Professional Plus 2016 when what you own is Microsoft Office 365 ProPlus!

In order to maintain compliance (and benefit from the "per user" licensing) you need to make sure that any deployments of Microsoft Office 365 ProPlus are done with the Office 365 bits, not the volume (or otherwise provided) licensing bits for Microsoft Office Professional Plus.  While years ago there was a short-term exemption to this requirement that exemption has since expired and if you install with Microsoft Office Professional Plus bits then you are installing a device based license.

This information used to be spelled out in the Microsoft licensing briefs but in my latest search I could no longer find reference to it, however; the thing to remember about Microsoft licensing is that they only tell you what you can do - not what you cannot do so the absence of this clarification does not mean they've changed the requirement. This Microsoft TechNet article on "Getting started guide for deploying Office 365 ProPlus" provides some guidance to consider.

While I have not seen Microsoft actively auditing on this yet, you should expect that in the not too distant future it will probably become a compliance item so if you are planning your rollout now, it will pay to do it under the correct installation media.  Also,  your Microsoft Account team is presently financially interested in your Office 365 usage, something that cannot be measured if you are using the Microsoft Office Professional Plus bits.

Example of impact: A user has 3 dedicated devices with Microsoft Office installed (workstation, home, laptop).

• If all of these are installed using the Office 365 ProPlus bits then the company only needs to license the user for some form of Office 365 ProPlus. 
• However; if each of these is installed with the Microsoft Office Professional Plus bits then each install would have to have it's own license requiring the procurement of 2-3 licenses (2 if the laptop could be covered under Portable Use Rights but that is dependent upon how the license for the workstation was acquired).

So, in summary - do not use your Microsoft volume licensing MSI's for Office Professional Plus to deploy you Office 365 ProPlus.  It could end up costing your organization unnecessarily!

As a side note, for those organizations getting ready to deploy Microsoft Office 365 ProPlus 2016 please be aware that there is currently an issue with volume licensed versions of Microsoft Visio 2016 or Microsoft Project 2016 installed on the same computer (as well as 2013 versions of Visio Pro for Office 365 or Project Pro 365). For more details please refer to this Microsoft TechNet article (scroll down to the topic "Visio and Project versions that can be installed on the same computer with Office 365 ProPlus").

Update January 27, 2016 - I have been informed by Microsoft that there is a resolution planned in February 2016 for the above point about volume licensed versions of Visio 2016 and Project 2016. It is planned to come in the form of a "Click to Run Compatible Bits" (C2R-P) for the volume licensed Visio and Project. Keep your eyes open for these updated bits.

Microsoft Next Generation Licensing Agreement (NGVL and MPSA)

A light buzz is going around the Microsoft licensing world about the NGVL (Microsoft Next Generation Volume Licensing) and a new agreement called MPSA (Microsoft Product and Services Agreement). I mention both terms because many of the resellers I've talked to have often known that NGVL was available but thought the MPSA wasn't or vice versa.  This confusion should rapidly diminish but for now, find that it helps for clarification.

The NGVL and MPSA has been available for some time and the beauty of it has been that unlike the Microsoft Select Plus Agreement it allows for online subscriptions.  The bad part was that it didn't allow for Software Assurance purchases.

As of September 2, 2014 Microsoft now allows for purchases of Software Assurance under the MPSA.

It has been a long time since Microsoft has really created a new licensing agreement (the Microsoft Select Plus was in my opinion more of a re-write of the Microsoft Select Agreement) and frankly their offerings have changed substantially during that time so the old agreements were having to be "massaged" to work with current offerings.

Basically the MPSA has many pluses, but the contract language also leaves me very uncomfortable around certain areas - so if you're looking to update your Microsoft agreements take a good look at this agreement but be sure to read the contract carefully and negotiate terms you can actually live with.

The MPSA is designed to cover all products you buy from Microsoft; perpetual licenses, software assurance, subscriptions and services.  That's great and can really provide you with streamlined management but the problem is whenever you lump disparate products together the contract language can get messy.

For example, if you think of your classic "services agreement" and compare that to your "software licensing agreement" there are many things you will accept for packaged software (such as warranty) that doesn't fit what you would require from your consulting services agreement.  However; in this contract they are the same (but they did provide a way around it...you just have to make sure you're aware of it and follow through on it when you're executing the work orders).

Audit clauses have also been updated - this is a subtle change that has happened over the years in the Microsoft Master (Business or Services) Agreement taking out the wording that required them to use a major auditing firm in performing an audit...in my opinion this lays the ground for them to be able to use any Microsoft Partner to perform audits, I don't necessarily feel that change is advantageous to companies.

I'll be going into further details in a later posting but wanted to give an initial "heads up" for anyone thinking of either signing an MPSA or who's in the middle of determining their Microsoft licensing strategy and were unaware that there is a new player on the field that might offer them substantial benefits.

As always, if you are looking at your Microsoft licensing strategy or are considering signing a new agreement with Microsoft (or are being audited under an existing one) it's a good time to get some expert help from an independent third party. I live and breathe Microsoft licensing (I know...but what can I say - we love puzzles!) and am happy to help - contact me to find out how we can help you.

Renewing Microsoft Software Assurance - Know the Implications

Upgrade rights are included but so are updated rule requirements

 A frequently misunderstood area of Microsoft licensing is knowing what rules apply when you are utilizing downgrade rights (the right to install an earlier version of the product under a newer license).

The version purchased determines the use rights regardless of what version is installed.

However; this gets a little more confusing for companies who maintain Software Assurance on their products.  For example if a customer bought a license for Microsoft SQL Server Enterprise in July of 2011 with Software Assurance (we’ll assume 3 full years of Software Assurance) they would have bought the rights to Microsoft SQL Server 2008R2 Enterprise (either per server or per processor) and enjoyed upgrade rights to later versions of that product. If they choose to run 2008R2 (or an older edition), then the 2008R2 rules would apply. If they choose to upgrade to 2012 then the 2012 rules would apply.

In July 2014 that customer will need to decide if they are going to renew Software Assurance.  As soon as they renew Software Assurance they are in essence refreshing the license version of all products with Software Assurance to the current edition.  Therefore, they would no longer get to leverage the rules from 2008R2 they would now have to follow the rules for Microsoft SQL Server 2014.

There are both advantages and disadvantages for customers but the important thing for customers to remember is that renewing Software Assurance has a licensing impact which should be considered so that you are not accidentally put in a position of being non-compliant.

Just one more thing to consider in your due diligence when determining what products to renew Software Assurance on at your next renewal.  Let us know if we can help!

Software Audits - Be Afraid...Be Very Afraid!

OK, so I know the title is a bit "doom and gloom" - but frankly I've seen too many companies over the years get seriously bitten during software audits because they didn't have a healthy respect for the risk when they first accepted the audit (and for the sake of this article...I'm calling it an audit any time you share your installation data with a publisher or anyone representing the publisher).

First, I do not recommend going through one alone. That would be like going to an IRS audit alone - there are far too many obscure rules that can come back to haunt you. Get professional help before it starts and keep that help around through completion...very few rules are "black and white" and you need an advocate on your side who fully understands the rules and can balance the publisher's interpretation of use.

Here are a couple of things to know before heading into an audit:

1. Not all audits are the same - know when you have the right to refuse or limit and when you've already waived those rights.
2. Make sure the scope is clearly defined - is it all subsidiaries, all geographies, etc.
3. Require a project specific non-disclosure agreement (NDA) be in place with any third-party gaining access to your information and follow up at the end of the audit to require disposal of the records.
4. Understand under what circumstances you'll be billed for the cost of the audit.
5. Ensure that the audit is being conducted under the rules of your active agreement with the publisher and the pertinent product use rights for the products in use.

There are many more, but this is a start.  The ITAM Review has a number of useful articles on this topic that you should consider reading as well.

Pitfalls to be aware of to avoid audit problems:

The best possible situation is to avoid an audit altogether.  While this is becoming more and more difficult as publishers have realized that audits are a profitable activity that helps them meet revenue goals (most of the heads of software publisher compliance groups have revenue goals much the same as a sales group), there are steps you can take to reduce your chances of an audit.

1. Regularly conduct your own audit. Know what you own, what and how you are using it. If contacted for an audit, be sure that your executive handling the conversation can speak knowingly and authoratatively on current usage by product and the timeliness of that data.  Software publishers don't want to throw their money away on an audit that is going to produce no licensing revenue. The more they feel that you already have things under control the less likely they are to require a full onsite audit.
2. Watch your external access, make sure you are appropriately licensing clients, vendors and partners for their access to your computing resources.
• If your customers are using your computing resources, make sure that you are covering that usage under the appropriate licensing agreement.  Most publishers have service provider agreements (Microsoft's SPLA or VMWare's VSPP program being two of the most common) allowing for you to host their products for use by others - there is a lot of gray area in determining when you need to license under these versus when you can use perpetual licenses so make sure you have a professional help you make this determination.
• Licensing is typically entity specific. While everyone in my organization is licensed to use a Microsoft Windows 2012 server within my organization that licensing does not cover us for when we access a client's organization.
• There are expensive ways of handling this and less expensive ways - having licensing advice when you're setting up access can help you avoid unnecessary costs.
3. Minimize OEM and non-volume purchases. Frankly, publishers regularly mine their entitlements data on clients to determine inconsistencies for compliance issues.  If a publisher can't see a full picture of your purchases it can increase the chances of an audit.
4. Keep your purchasing records. If you are still using the software (or it's successor if that successors licensing is based upon the original purchase), then you need to have ready access to your proof of purchase. Consider for example Attachmate the owners of some (current and) legacy emulation software.  They audit on a regular basis - can you demonstrate that you purchased the 50 copies of KEA or myEXTRA! that you still have running in your organization?  If not, the cost to buy new licenses can include interest based upon when the software was originally released.
5. Pay attention to country of usage rules. Most publishers have some restriction on using software in a  country other than the one purchased.  Autodesk, VMWare and Microsoft (under the Open licensing program) all restrict usage across geographical boundaries.
6. Understand transferability rules of licenses during mergers, acquisitions and divestitures. For example, Autodesk states that their licenses are typically not transferable and have the right to refuse a request for transfer, if they do accept the transfer they can require that subscription costs be added to the license.

Already in an audit:
Regardless of what stage the audit is in, get help.  Make sure you have someone working as your advocate that has experience in software audits, strong knowledge of the publishers current and historical agreements and product use rights and the frankness to give you an accurate picture of where you stand (this is not the time your management team wants anything sugar coated...they need to know the reality so they can prepare).

Double check everything the auditors present to you - math errors and mis-interpretation of product use rights and licensing terms are frighteningly common.

Microsoft Windows Server 2012 - Licensing Changes

While much of the focus this year has been on Microsoft's planned release of Windows 8, Microsoft Windows Server also has a planned release this year.  Microsoft Windows Server 2012 is slated for general availability in September and has some significant licensing changes planned to accompany the release.

Even though you may have no plans to move to Windows Server 2012 at release, this will impact all Windows Server purchases made after General Release.

 

Summary of planned changes:

1. All server licensing is changing to the per Processor model (no more “per server” licensing)
2. They are eliminating the “Enterprise” edition (the only difference between the remaining editions of Standard or Datacenter will be how they license virtual OSEs…functionality between editions will be exactly the same).
3. Each license will cover 2 processors on the same device. Existing licenses with Software Assurance will convert as follows:
• Microsoft Windows Server Datacenter – 2 licenses will convert to a single Datacenter license
• Microsoft Windows Server Enterprise – 1 license will convert to two Standard licenses
• Microsoft Windows Server Standard – 1 license will convert to one Standard license
4. Standard will now include the right for 1 physical or 2 virtual OSE’s per 2 processor box

Timing of release has not yet been disclosed (I’m betting September) – I recommend you analyze your environment and determine if you want to execute a purchase prior to general release so as to minimize the impact by maximizing the conversion ratios.

 

As always, if you need help or simply want to discuss this further let me know – I know Microsoft licensing (particularly when it changes) can be confusing…I’m happy to help explain it.

 

Please note, these changes are “planned” – by the time General Release occurs there could be more changes as the licensing terms are not set until release.

Software Audits - Beware of the Unknown!

While most of our business is focused on helping companies optimize their licensing and avoid compliance risks there are times a company comes to us when they are in some stage of being audited (whether it's called an audit or not for purposes of this posting I will refer to it as an audit anytime a third party is reviewing your licensing not at your behest).  We come across a number of areas that "surprise" customers to find out it's a compliance issue.

Take a look at the following - if any of them apply to your company, take steps to resolve these:

• Own one edition but a different edition is installed.  Do you own Microsoft Office Professional but have Microsoft Office Standard installed?  If so, you are out of compliance (and no, don't count on them to look the other way). 
• Changing the hardware that you run your Oracle database on without checking to see what it does to your core factor in determining processor licenses required. Did you move to a Sparc 4 from a Sparc 3? You just doubled your core factor...Oracle US License Agreements
• Not understanding the minimum number of users that need to be licensed (contractual requirement versus actual usage). What did that (above mentioned) increase in processors just do to the number of users you're required to license?
• Server mobility in a virtual environment. For example, did you reassign your Microsoft Windows Server Standard licenses to your virtual environment? That's fine (assuming they weren't OEM licenses) as long as you are not using VMWare's V-Motion (or similar technology).  You can only reassign licenses once every 90 days in the Microsoft server operating system world - you might accidentally be drastically increasing your licensing needs by "harvesting" that Standard license versus appropriately licensing the virtual environment.
• Did you turn on enterprise functionality in your Microsoft SharePoint Server? If so, are other instances of SharePoint inheriting that enterprise functionality without your knowing it?  The enterprise functionality in Microsoft Sharepoint requires a Microsoft Sharepoint Enterprise CAL (client access license, this CAL is also contained in the Microsoft Enterprise CAL Suite).
• Do you have Mac's in your environment? Are they accessing a Microsoft Windows OS? How are you licensing that?
• Are you on an Enterprise Agreement (Adobe, Microsoft, Oracle, etc) and not including all devices in your environment? Check your agreements, unless it specifically allows you to exclude something these agreements typically require you to license all devices - read your fine print!
• Re-imaging devices using the wrong media. The quickest way to get out of compliance in a material way is to have the wrong media loaded to your image. Make sure this is in alignment and that a change control process is followed for any changes to the image including a licensing review.
• Are you assuming downgrade rights? For example, most Attachmate products do not have downgrade rights unless you have maintenance. Don't assume this right.

If you are asked (or told) that someone will be reviewing your licensing - get help before it starts. This is not the time to rely on your internal team unless they are licensing experts and stay current on all the publishers in your environment.

The ITAM Review has a great article series on the topic of "What REALLY Happens During an Audit", I recommend reading it whether you're going through one or just looking for more information.

Microsoft Enterprise Agreements - Microsoft SQL Server Strategies

In case you haven't heard it yet, Microsoft SQL Server 2012 is going to contain some major licensing changes. Customers with existing (or new prior to the release of SQL Server 2012) Enterprise Agreements (EA) or Enrollment for Application Platforms (EAP) with SQL Server included on those agreements have some great opportunities right now but should be working out a strategy to meet their current and projected needs.

If you're unaware of the changes, check out our blog on Network World to find out more details.

If you have SQL Server Enterprise on your EA or EAP before the release of the 2012 version you can continue to purchase the same licensing model until the end of your agreement. In other words, even though the SQL Server Enterprise server and Client Access License (CAL) model will disappear with the release of 2012, if you already have that model on your EA or EAP you can continue buying under that model until your agreement ends. Additionally, if you have SQL Server Enterprise processor licenses on your EA or EAP, you can continue to purchase processor licenses (rather than core licenses) through the end of your agreement.

This presents a number of opportunities for organizations to save money moving forward but having a strategy will be key! If you don't already have these products on your EA or EAP, you might want to consider if you should add them prior to the release of Microsoft SQL Server 2012 (as opposed to waiting until your next true-up which might mean you miss an opportunity). 

As always, let us know if we can help you create a Microsoft licensing strategy that is most beneficial to your organization!

Microsoft Windows Server Price Increase? Check Your Sources!

It has come to my attention that one of the large resellers is telling their US clients that Microsoft will be doing a 15% price increase on Microsoft Windows Server products effective January 1, 2012. The information I've received is that this is not accurate, that it does not apply to the US (Latin America may want to check into it though). 

However; I'm not a reseller and I'm not Microsoft so I don't have access to price lists. So, the point of my story? Check your sources! If one of your resellers is giving you this advice, please check it out with another reliable reseller and with your Microsoft account team. 

 Additionally, if your reseller does give you this type of wrong advice...might be time to re-evaluate resellers. Yes, everyone can make mistakes - but I'll tell you frankly, this reseller has been on my list of "least desirables" for a long time due to some of their practices and this just put a nail in their coffin for me. 

Happy Holidays - and here's hoping that January doesn't bring a price increase on Microsoft Server products!

Software Licensing Agreements - Enterprises Be Careful of What You're Signing!

I work with companies of all sizes so I see a lot of trends based upon size. One disturbing trend I've been seeing lately applies predominantly to my Enterprise customers who rely on their Procurement department to negotiate all contracts. 

Procurement is a key player in any negotiation, but I think it's risky to rely completely on them for finalizing a software licensing agreement. What may look benign to a Procurement expert may easily send off red alert signals to a licensing expert. Within the past month alone I have seen supposedly well negotiated language cost three of my newer clients over $5 million combined to a single publisher. While we can frequently get these agreements re-negotiated we were brought in after the publisher already had been made aware of the situation and their eye on the paycheck...hard to get much of a budge then. 

Here are some examples: 1) Microsoft Enrollment for Application Platform (EAP). Sure, this offers great discounts on SQL server as well as other products but be sure to read the fine print! This enrollment commits the company to licensing all of their SQL deployments (or other product that is enrolled) through the EAP. If you own legacy licenses and are running legacy versions but you didn't enroll those licenses into the EAP with Software Assurance you are essentially giving up your right to that license for the term of the EAP. Even new licenses that you buy but don't buy through the EAP are essentially useless. 2) Audit or true-up assistance program clauses. Check these over carefully to make sure that the scope of any outside assistance is clearly identified and restricted to the appropriate products, divisions and terms. Also make sure that it doesn't provide restrictions that the underlying agreement doesn't dictate (such as the requirement to purchase maintenance, etc). 3) Downgrade rights. Not all software automatically has downgrade rights. Attachmate products for example frequently do not permit downgrade rights unless you procure maintenance. If your technical organization needs to run older versions of the software make sure your agreement provides for you to procure additional licenses but still run the version that meets the needs of your organization. 4) Definition of the Enterprise, entity, affiliates, etc. Make sure this definition fits your organizations needs. Signing an agreement that defines your Enterprise as being all "Knowledge Workers" for example, isn't necessarily a good fit if you have a large percentage of users who do not use the technology being licensed (for example, licensing all your "Knowledge Workers" for the Microsoft Core CAL when you have a significant percentage that are on Novell and Notes with no Microsoft interaction except the Windows Server CAL). By definition you would have to procure licenses that would never be used and cost far more than the license you do need. 

While many of these apply to organizations of all sizes, I find that the small/mid-size organizations that rely more heavily on their IT or licensing staff to negotiate the contracts often catch these before signing (but yes, Procurement plays an important part so there may be many other costly mistakes these non-Procurement folks are making). 

My recommendation - Procurement, make sure the final review process includes your internal Licensing Expert (if you have one) or your IT team (if you don't have one). Also, give some solid consideration to having an external expert review it - the price tag is very reasonable and the risks are extremely high.

Network World Contest Giveaway!

Great news to anyone who has wanted to attend our Microsoft Licensing Webinar course but was having trouble getting the budget to cover the costs...we've joined together with Network World to offer one free seat in our upcoming May training. Check out the Network World contest! Hope to see you win!

Microsoft Licensing an In-depth Webinar Course

For years I've been asked to teach a class on Microsoft licensing. Not the surface stuff you find out easily but the in-depth ins and outs that folks responsible for appropriately licensing (or architecting) their environment need to know about.

My only problem with doing so is that adult retention isn't that great...so I'd pour tons of information into their brains for hours on end and they'd walk away knowing maybe 3 key items. That doesn't solve the problem!

Now, I've finally done it in a way I can feel good about...a webinar series that is recorded and made available to attendees after they walk away! The course is broken down into 5 consecutive weekly webinars lasting 2 hours each (that's 10 hours of actual content, but served in bite sized chunks).

This will allow attendees to:

• Learn in-depth Microsoft licensing details from an independent expert,
• Eliminate licensing ambiguities when negotiating Microsoft agreements,
• Save money through better leveraging licensing and knowing key negotiating tips,
• Be able to review content "on demand" after completion of the course while saving on travel costs!

Early bird discounts are available for the first series until March 9, 2011...each early bird window closes two weeks prior to the start of training.

Check out the course here.

Software Asset Management - 2011

What is it about 2011 that makes me think...we have officially reached "the future"? 

Is it just that I'm now so old that when I thought forward to the future it was anything after 2010? Probably...but since old age seems to keep growing further and further away from me as I age, I refuse to accept that as the answer, LOL! 

What will happen to Software Asset Management in 2011? My crystal ball is far from perfect but I'll take a stab at predicting this year anyway... 

Software audits rise - sorry, I know you've been hearing that threat for years but based on what I've seen so far in 2011 I think you can count on it as a fact. As the economy (and therefore companies) see an improvement I think you'll find publishers starting to come forward to find out what you have (and haven't) been doing in the past couple of years. They know you've been spending less money with them, so they want to make sure you've been licensing appropriately. Software audits are expensive (even if you're fully compliant and don't have to buy anything), so before you respond please reach out to us to see how we can help! 

Cloud Computing continues to grow and initially companies will manage these in a decentralized fashion (you buy it, you manage it). Hopefully some will remember lessons learned from the past and have these managed centrally by their Software Asset Manager. When I spoke on this topic at the IAITAM Conference two years ago there was a lot of uncertainty from Software Asset Managers as to who owned this responsibility - frankly the role that owns it is the role that steps forward to take control of it. My suggestion is that a saavy SAM Manager will realize that they add value to this function and this function adds value to their position. If you don't have your controls in place for managing Cloud contracts, please talk to us about appropriate processes and controls. 

The role of the CIO will become more ambiguous. OK, so this isn't SAM but it is important to SAM. I think we are clearly seeing the assimilation of IT into the whole of the business. Regardless of industry, IT is critical to all areas of the business and business owners are going to want more control of it. While a certain amount of centralization and segregation of duty is imperative to maintain controls and manage cost, I will not be surprised to see the role of the CIO disappear. However; on the flip side, I think you will start seeing more former CIO's transition into the role of the COO (possibly a natural evolution as CIO's have long been advised to become intimately familiar of all the business units they are serving). If this transition does take place, you might well see the role of SAM Manager follow suite (especially if the SAM Manager has taken on the Cloud Computing aspect). 

Is my crystal ball failing me or do others see the same? Let me know! 

One thing I do know for certain is that Cynthia Farren Consulting will launch an updated website in 2011 (OK, I cheated...since it already launched earlier this month). We tried to simplify matters and provide more valuable content - let us know how we did!

Walking Away From a Microsoft Licensing Agreement

When finances are tight it's not uncommon for companies to start expiring their maintenance contracts, including software maintenance. As with any maintenance agreement that is allowed to expire, it's important that an organization understand the full implications of their actions so that it is a strategic event rather than a reactionary one. 

This is a big topic so will cover several postings - check back for more updates or e-mail us with specific questions. 

Microsoft has three primary ways for an organization to acquire licensing rights - subscription licensing (Microsoft Desktop Optimization Pack aka MDOP is an example), perpetual licensing (their traditional model where once you buy it you own the rights forever), or perpetual with maintenance (Microsoft Software Assurance aka SA). 

Subscription licensing expires at the end of the subscription agreement (unless there is a buy-out option). I'm not going into details on this type for this article. 

Perpetual licensing does not expire but also does not have upgrade rights. So again will not be discussed in this article. 

Perpetual licensing with Software Assurance includes upgrade rights until the SA expires. When SA expires, your organization is entitled to the latest version of the product which has been released to volume licensing customers. Those licenses then become perpetual licenses but inherit the licensing terms from the agreement under which they were acquired. 

For example, a customer who had a full platform Microsoft Enterprise Agreement (which automatically includes SA) which they allowed to expire at the end of May 2010 would walk away with perpetual licenses for the following Microsoft products: Office Professional Plus 2010, Windows Server 2008 Client Access License (CAL), Exchange Server 2010 Standard CAL, SharePoint Server 2010 Standard CAL, System Center Configuration Manager 2007 R2 Client Management License and Windows 7 Enterprise (but be aware of any subscription components, those are not perpetual). However; those perpetual licenses will always be restricted to the licensing rights under the Enterprise Agreement (for example, no secondary use rights for Microsoft Office which means if a user has a desktop and a laptop each would require its own license). 

While a license is covered under SA, it is at it's most flexible. Consider your future plans prior to allowing SA to expire. A couple of things to think about: 1) Will you be using any of the enhanced functionality of the Microsoft Enterprise CAL Suite? 2) Will you be increasing your server virtualization efforts and will Microsoft Windows Enterprise Server or Microsoft Windows Datacenter edition provide you with a more cost effective solution? 3) Are you licensed under Device CALs when User CALs might be more effective or vice versa - these can only be changed at time of renewal and guess what...you're not renewing. 

However; now is still the time to push the envelope on this (before expiration) as there are ways of getting this changed as long as you still have active SA. The first two scenario's would be covered by "Step-up" licenses from lower versions carrying SA. This allows you to leverage the monies you've already spent on the lesser edition by paying a reduced price for the higher edition but can only be completed while you have active SA on the product. 

Watch for more to come...or if you're considering walking away from a Microsoft Licensing Agreement talk to us first, it can help you avoid future costs and headaches!

Microsoft Revamps Partner Program – Costly licensing impact on Partners?

Microsoft has a very generous internal use license program for its partners. In generalities, a Microsoft Certified Partner gets 25 copies of most all desktop software (and Client Access Licenses – CALs) and 1 or 2 server licenses each for most server technology for internal use in the form of annual license grants; a Microsoft Gold Certified Partner gets 100 copies of most desktop software and 1 to 5 server licenses each for most server software. There are additional license grants based upon expertise “competency”. These amounts can be multiplied by each location that qualifies at the same level as the overall company up to a maximum (along the lines of 500 desktop and 2 to 25 servers for Microsoft Gold Partners). 

 These license grants are obviously very valuable to Microsoft Partners in helping them minimize the cost of running their organization. However; Microsoft is now changing their partner program (for the first time in a long time) which will end up reducing the number of internal use software license grants for most partners. The new Microsoft Partner Network will replace the designations of Registered, Certified and Gold Certified with Subscriber, Competency and Advanced Competency. While there are some changes at the Registered and Certified levels (Subscriber and Competency) as it pertains to licensing the real impact comes to Gold Certified Partners who will not qualify for the Advanced Competency designation. $300k Example: One of my Software Asset Management customers is a Microsoft Gold Certified Partner with 1 additional enrolled location and several competencies. This entitles them to about 200 copies of most desktop software and CALs and a number of server licenses including 10 Microsoft Windows Server Enterprise license grants and 8 Microsoft Windows Server Datacenter processor license grants. However; this company will not qualify as an Advanced Competency partner so will instead drop down to a Competency Partner (think Certified Partner). Assuming they continue to have 1 additional enrolled location this will drop their license grants to 50 copies of most desktop software and CALs and about 2 server licenses for some servers (Microsoft Windows Server Datacenter will not be included). The financial implication of this is over $300k. 

Even those partners that do not lose their current level in the program will feel some impact from licenses being excluded from the core licensing (for example, Windows Server Datacenter edition will not be part of the core licenses). One of the hardest challenges is that IT typically manages the licenses and yet the business typically manages the partnering relationships. If these impacts are not discussed between both teams internally there could be a large number of former Microsoft partners who are now out of compliance in their licensing. 

Understanding the Dates: Each year partners have to re-enroll in the program. Those partners who re-enroll prior to 10/10/2010 (now changed to end of October) will be renewing under the existing designations of Registered, Certified or Gold Certified and will have their annual license grants based upon that enrollment. At their anniversary date in 2011 their licensing grants would change. For partners who re-enroll after 10/10/2010 (now changed to end of October) they will be renewing under the new designations and the new licensing grants will take effect. There are other changes that take effect regardless of enrollment status effective 10/10/2010 (now changed to end of October) so please be aware that this information is only as it pertains to license grants. 

What to Do: Obviously it is very important for current Microsoft Partner’s to clearly understand the requirements of the new program and where their company will fit within this program. Microsoft is doing a lot to help and their Partner desk is extremely helpful so leverage these resources! Take a good look at the license calculator tool to determine what your new license grants will be and start the budgeting and communication process internally to avoid a surprise hit to your software budget next year. If things get too confusing or time consuming, consider hiring a professional to handle the transition for you.

Mergers & Acquisitions - Software Licensing in the Due Diligence Process

It's been said that 2010 is the year of M&A (LOL...again, there have been many years in the past that have also held that moniker) and having just seen a posting on LinkedIn on this topic reminded me that it's probably time to blog about it again (check out my earlier posting on this topic for additional information).



There are lots of things to be considered, but I'm going to focus on the company doing the acquiring for this posting - if you need other scenarios check out our whitepaper on the topic.



There are typically two scenarios in acquiring: (1) you don't acquire any of the IT assets, or (2) you acquire all the assets of the company, including IT assets. The first scenario is simple as you know walking in that you have to provide these assets yourself. The second scenario is where the waters get muddy.



If acquiring all of the assets, the assumption is typically made that all the software installed at time of acquisition is (a) properly licensed and (b) the license will transfer to the acquiring company. Unfortunately, these are both naive assumptions and too frequently incorrect.



In the ideal situation, IT would have the opportunity to receive the licensing statement (including copies of contracts and proof of licensing) for the company being acquired in advance so it could be factored into the valuation of the company (remember software is frequently the 2nd or 3rd largest line item in the IT budget and represents significant expense).



However; reality is that acquisitions are typically completed without IT's involvement or even if IT is involved they are very limited in the information that can be shared in advance of the completion of the deal.



So, how can IT help the company avoid acquiring someone else's licensing headache? Through education and quick follow up.



A couple of basic steps:

1) Get the issue on the table in advance of M&A activity. During M&A you're going to have a hard time getting the attention of the proper parties so preempt the situation.

2) Get some allies on the topic - legal counsel, CFO, compliance officer and purchasing officer are all key allies. Obviously this means senior level IT to senior level operations discussions.

3) Create a high level IT due diligence checklist of what IT truly needs to (a) help avoid large unnecessary costs and (b) ease integration post acquisition.

4) With the aid of your allies, get the IT due diligence checklist added to the overall company due diligence checklist. Be prepared for push back and be able to quantify through hard dollar and compliance risks the reason behind each item.

5) Post acqusition, work fast. Not only do you have a mandate to get the company integrated but you also need to ensure that if there are any licensing costs associated with acquisition that you're able to identify those for proper accounting in the financial statements as part of the acquisition cost.



Get help - understanding the licensing terms for each major publisher and the transferability of those licenses can be a daunting task. Now is the time to focus on integrating your two companies, have an expert handle the acqusition licensing issues for you.



Any other suggestions? Post them!

Microsoft SQL Server 2008 R2 Licensing Changes - CALs Also!

(Updated 5/18/10 based on info from Microsoft)

I heard an ugly rumor yesterday about Microsoft SQL Server 2008 R2 from Gaby Amar at Softmart saying that in order to use SQL Server 2008 R2 in a server/CAL model you will have to have 2008 R2 CALs as well (typically for R2 releases you don't need an updated CAL). Well...checked it out with Microsoft licensing and he was absolutely correct (I should have known better than to be surprised, LOL)!

Basically, Microsoft SQL Server 2008 R2 is a major release (think in terms of a release such as Microsoft SQL Server 2000 to Microsoft SQL Server 2005) so don't let the lack of year change in the naming convention fool you.

Customers who have active Microsoft Software Assurance on their exisiting SQL Server products will have the new release rights, but those that don't will need to purchase new licenses in order to run the software (for those who run in Server/CAL mode this means both new server licenses and new CAL licenses).

CAL Requirements

1. If you have Microsoft Software Assurance currently in effect on your SQL Server CALs, then you are entitled to SQL Server 2008 R2 CALs
2. If you do not have Software Assurance, you must have SQL Server 2008 R2 CALs to run SQL Server 2008 R2 using the Server/CAL software licensing model (in other words...don't try to run with your older SQL Server 2008 CALs).

You may be wondering why I'm making such a big deal about this...after all it is a new release, of course new licenses are required. My point is this: it is a departure from how Microsoft has licensed Windows Server 2008 and Windows Server 2008 R2 where the Windows Server 2008 CAL can still be used on the newer version Windows Server 2008 R2.

Additionally, there are changes to the processor licensing for SQL Server 2008 R2. You might want to check out some of these resources for more information on this and other SQL Server 2008 R2 changes.

Microsoft has provided the following links for further information on licensing:

• The SQL licensing quick reference guide: http://www.microsoft.com/sqlserver/2008/en/us/licensing.aspx
• Direct link to the guide: http://download.microsoft.com/download/2/7/0/270B6380-8B38-4268-8AD0-F480A139AB19/SQL2008R2_LicensingQuickReference-updated.pdf
• Overall SQL Server 2008 Licensing FAQ: http://www.microsoft.com/sqlserver/2008/en/us/licensing-faq.aspx
• Microsoft SQL Site: http://www.microsoft.com/sqlserver/2008/en/us/
• Product Use Rights has info on the following products: R2 CALs (OCS, System Center Configuration Manager, System Center Operations Manager, System Center Virtual Machine Manager) http://www.microsoft.com/licensing/about-licensing/product-licensing.aspx

For more information on virtualization and SQL Server 2008 R2 check out Andrew Fryer's blog.

If you have any questions - let me know! This is a huge change in Microsoft's licensing trend.