microsoft licensing analysis - an introduction

“I see Microsoft as a licensing company first, and

second as a technology company. It's not that

they don't have good technology, but they're

driven by, consumed by, licensing.”

- Daryl Ullman, co-founder and managing director of the Emerset Consulting Group

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“Clients that go into their Microsoft software negotiations prepared with good asset management will make more informed licensing decisions and will spend less than those that do not.”

“Start the negotiation process at least three months (and preferably six months) prior to the expiration of your current agreement.”

“In conjunction with demand management planning, create realistic financial scenarios for licensing costs that span at least six years (or, alternatively, two software refresh cycles) to determine the financial impact of any licensing decision you may make. This is particularly important when moving to cloud or subscription services.”

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• Use perpetual licensing

entitlement as leverage to

walk away from SA.

• Perform a careful cost

benefit analysis on SA

benefits.

• Profile users to rightsize

license fees.

• Introduce competition to

improve your position.

• Leverage global pricing.

- Gartner, May 2013

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Cost

Time

Trend

“Why is our spend on Microsoft software not showing the same downward trend we expect from all our other suppliers?”- CFO

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1. Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it.

2. The acceleration a of a body is parallel and directly proportional to the net force acting on it, is in the direction of the net force, and is inversely proportional to the mass of the body.

3. For every action there is an equal and opposite reaction.

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"Microsoft is pushing you to make choices long

before you know what their impact will be. This is

gambling, and you don't have to do it. Use the

licenses you bought without paying Microsoft

more for it."

- Paul DeGroot, Analyst & Principal Consultant at Pica Communications

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Release date: October 26. 2012

Prices starting at $199 ($69.99 - 3 month promotion).

Upgrades starting from $14.99 (June 2. entitlement available for a limited period).

Versions:Windows 8 RT (ARM tablets).Windows 8 (consumers).Windows 8 Professional (corp. and OEM).Windows 8 Enterprise (enterprise w. SA)

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What users want What IT wants to deliver

”53% of the employees use their own device at work”- Forrester

”By 2015 employees will be expected to bring their own devices”- Gartner

”Companies hire employees, but people show up”

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Source: Alessandro Perilli in an interview with Version 2 at Virtual Day conference, Copenhagen Denmark, May 2010

• ”The price is still too high”

• ”There are still many issues to be addressed.

Although many vendors have been pushing VDI

for 2-3Y, it has not become mainstream.”

• ”So many components are required that the

investment in virtualization software and better

network is significant. The licensing cost

especially to Microsoft is very high, when you

use VDI. Microsoft does not have VDI friendly

licensing agreements.”

• ”VDI may reach mainstream sometime in the

future. But it will not happen now.”

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Source: http://blogs.forrester.com/print/david_johnson/13-04-01-has_vdi_peaked_a_change_in_the_adoption_drivers_sheds_new_light_and_new_life

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Advanced SharePoint functionality

Electronic Meetings

Telephony integration

Unified Communication

Exchange Archiving & Legal hold

Security

Monitoring

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• Low per server cost. High per user cost.

• BI and Standard Edition only.

• Beneficial when deploying a large number of

servers or when requiring BI Edition.

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• No server license – just a per Core charge.

• Minimum of 4 Cores per server.

• Enterprise and Standard Edition only.

• Beneficial when consolidating on Standard Edition.

Server + CAL Processor Core

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“Despite the increased media attention, we do not believe

that customer migration to Office 365 has been that

significant.

We believe email in the cloud is the primary driver for

Office 365, but we estimate that cloud email will only

constitute 10% of the email market by the end of 2014.

Additionally, of that 10%, we estimate that 75% of those

are organizations with less than 750 desktops.”- Gartner, in response to Microsoft claims of 25% enterprise adoption of Office 365, May 2013.

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ASSUMPTIONS Your input/data in bold

Economy COMMENT

Currency DKK

Estimatet LAR discount on Select acquisitions % 12,0%

Software frequencies

PC's that are not renewed before 0%

How many of your users has the need for Office Professional (Office Communicator)? (%) 100%

In use

Exchange (%) Yes 100%

SharePoint (%) Yes 100%

System Center Configuration Manager (SCCM) - SMS (%) Yes 100%

SQL Server CAL (%) No 100%

Remote Desktop Services - Terminal Server (%) No 100%

Lync - Office Communication Server (%) No 100%

Windows Rights Management (%) 0%

Systems Center Operations Management (SCOM) - MOM (%) 0%

Forefront Security Suite (%) 0%

Deployment history 2005 2006 2007 2008 2009 2010 2011

EA initially 33.000 33.000 33.000 33.000 33.000 33.000 33.000

EA price 1.182 1.182 1.182 1.182 1.182 1.182 1.182

True Up / New users - - - - - - -

True Up price - - - - - - -

Deployment projection 2012 2013 2014 2015 2016 2017 2018

Users 33.000 33.000 33.000 33.000 33.000 33.000 33.000

EA price 1.182 1.182 1.182 1.182 1.182 1.182 1.182

True Up Y/Y 0% 0% 0% 0% 0% 0% 0% Dynamic Growth Y/Y

True Up - - - - - - -

True Up price 6.650 5.567 4.484 6.650 5.567 4.484 6.650

Incl. CAL in partial SA

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Notice: Numbers are client side only. Same exercise can be made on the server side releasing 20-30% additional cost savings.

SUMMARY HISTORICAL ANALYSIS 2005 2006 2007 2008 2009 2010 2011 TOTAL Δ%

Historical EA - - 59.641.317 59.641.317 59.641.317 51.534.321 51.534.321 281.992.595

Select alternative - - - - - - 66.496.795 66.496.795 76%

Teoretical Additional Cost 215.495.800

BASIC SCENARIOS

ENTERPRISE AGREEMENT 2012 2013 2014 2015 2016 2017 2018 TOTAL ΔEA Δ%

New Enterprise Agreement 50.419.026 50.419.026 50.419.026 50.094.000 50.094.000 50.094.000 50.094.000 351.633.078 -

EA on Core CAL only 7.986.000 7.986.000 38.264.942 7.986.000 7.986.000 7.986.000 69.924.400 148.119.342 (203.513.736) -58%

SELECT 2012 2013 2014 2015 2016 2017 2018 TOTAL ΔEA Δ%

Pure Select - - 33.795.452 4.966.626 - - 86.613.754 125.375.831 (226.257.247) -64%

Office update postponed - - 33.795.452 4.966.626 - - 24.675.354 63.437.432 (288.195.646) -82%

ENTERPRISE SCENARIOS

ENTERPRISE DESKTOP 2012 2013 2014 2015 2016 2017 2018 TOTAL ΔEEA Δ%

Enterprise Agreement Step-Up 70.290.000 70.290.000 70.290.000 70.290.000 70.290.000 70.290.000 70.290.000 492.030.000 - 0%

Enterprise Desktop Select - - 33.795.452 4.966.626 - - 111.289.108 150.051.185 (341.978.815) -70%

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- ”If we are to save money in this scale, we need to do things very differently.”

- ”So?”

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“Persistence wins the day.”

“The savings potential is very real.”

“You can get considerable concessions leveraging licensing insight.”

“Standard T&C’s are not applicable in practice.”

“Compliance is not primarily a counting effort, but a question of documenting the compliance process.”

“Microsoft will play “the rental card”.”

“Microsoft will go a long way to keep their offering together (Full Desktop).”

“Microsoft will be even more focused on securing your business if you show insight.”

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”We are in the business of making calculated risks”- CEO in a large enterprise organization