Are you up to date with Microsoft’s licensing shakeup?
Got a few spare days and the patience to go through the October 2019 changes to Microsoft licensing and understand how they impact your business? No? Thought not.
But as you approach license renewal time, you most definitely need to know how the latest round of changes will impact your business and your license costs.
In October last year, Microsoft introduced a new and practical module-based licensing model, which breaks up how you buy in a very finite way. And, in theory, and if you know what you are doing, it should cost you much the same as the previous license model, possibly even less!
Before you jump in, the first thing to remember is that the October ’19 changes only impact you once you reach the end of your current license agreement term. If that’s in 12 or even 24 months, then don’t panic (yet), but if it is in the next month or two, you need to get to grips with the new licensing now.
To note – the summary below is not a full and inclusive list. If you’d like the lowdown on every change in detail here’s some light reading for you. First, there’s the 60-page Microsoft Dynamics 365 License Guide, and then there’s the also the 60-page Microsoft PowerApps License Guide. You need to read and understand both guides to be truly expert.
As well as the per app licensing model, changes were made in late 2018 to the use rights for the Team Member License. Under the new license, you’ll be restricted to a set of designated app modules (Customer Service Team Member, Sales Team Member and Project Resource Hub). You will no longer have access to Customer Service Hub, Sales Hub, or any custom app modules. You’ll also no longer have the ability to use the Microsoft Mobile application in an offline state, and you‘ll be limited as to which custom entities you can use.
All of this means that there is a journey ahead to align your business with these updated use rights before they’re technically enforced (i.e. access is switched off). This technical enforcement comes into play at the end of December 2020.
The October ‘19 changes move Microsoft APIs to a commodity model. As an example, in a recent customer meeting, we reviewed their API volume. They were entitled to 100,000 API calls or transactions per 24 hours from an integration perspective, but the reality was they were handling 650,000 calls a day. Under the new licensing for APIs, this volume will attract a surcharge of $3,750 a month (or $45,000 a year). However, as a piece of good news, we can sort out this issue by taking a more lateral approach which doesn’t include splashing out on extra licensing! In theory, the customer’s delta is 500,000+ API calls over the delta (their base consumption entitlement). But if we identify which integrations are causing this high influx of calls, we can redesign the integrations to reduce double handling of data through the API.
Done well, we they can potentially reduce their API call volume down to a few hundred. Crisis averted.
Storage is also affected by the October ’19 changes. Historically, storage has been costed in a single metric. So, for example, you would have a base level of storage plus any entitlements. You may have fifty gigabytes of storage and use 25 gigs for your production database, and the other 25 for your UAT environment. If you needed anything over this, you could purchase it at a flat per gig price (regardless of what you were going to use it for). Under the license changes, storage is now broken down into database storage, file storage and log or auditing storage – and the rate for each is different – which makes a lot of sense. So file storage, which has fewer demands on it, costs less than the storage you need for a busy production or UAT environment.
Before October ’19, your license included a certain number of pre-production environments (which included storage) but you’d need to pay for any extra ones you needed. Moving forward you will have a total allocation of, say, 50 gigs, but as long as you have one gig of database allocation free, you can have as many pre-production environments as you want – up to your 50 gig total. As with APIs, we have some smart strategies to maximise the benefits of this change. Keep your environments lean and keep costs down.
A major change in October ’19 was Microsoft’s announcement that they were phasing out Dynamics Portals and replacing it with Power Apps Portals - and a new licensing contract. This transition requires a lift and shift approach as Power Apps Portals are in a different section of the Microsoft landscape. The costing structure is more complex (talk to us about ways to mitigate costs), but luckily the migration process is as simple as a click of a button.
"Big" October also saw the deprecation of the Power Apps Plan 1 and Plan 2 which were restructured to become Power Apps Licenses and this came with new user rights.
The other thing that came into play in October was the change to Dynamics Finance and Operations licensing. This is now divided into Finance, and Supply Chain Management, so you start with Finance as your base product and pick-and-mix the other functionality you need.
The old Dynamics 365 plan type licenses no longer exist. The new model requires you to choose an application (for example, Sales Plus or Finance Plus) and then buy additional attached licenses for subsequent related modules. This moves on from the old model of bundled functionality, allows you to just pay for what you need, and makes the functions you always-wanted-but-couldn’t-justify surprisingly affordable.
The good news is that this more granular model makes your licenses less expensive. But the bad news is that it adds considerably more complexity to choosing them. Without the input of a skilled and knowledgeable technology partner, your next round of licensing is potentially fraught with (costly) danger.
As you’d expect, a lot of customers have asked us about the impact of COVID-19 on the October ’19 licensing shakeup. Microsoft has taken a proactive approach and extended their licensing and technical enforcement deadlines. They’ve also provided a range of offers which should help organisations to weather the current crisis, and provide a strong platform for continued business growth. Check them out here.
Following the October licensing changes, we’ve seen some customers facing substantial increases in their costs. However, there are many ways to balance the impact of Microsoft’s new a-la-carte cost structure. Smart consulting and restructuring can often pull your costs back to a pre-October ’19 level.
You can take a DIY approach. But it comes with risks. With most applications now presented as individual SKUs, the Microsoft price list is pretty daunting. Microsoft Dynamics alone has over 450 SKUs.
The good news as far as you’re concerned though, is that we have the expertise and specialist knowledge to help you choose the right licenses and applications. We know the changes inside out. And if you already have your own software asset licenses with active software assurance attached, we can help you reduce your costs – considerably. There are some details you need to know around this, but if you’d like to know more, just reach out. We can help you put the pain of October ’19 behind you.