Update to Cloud Solution Provider (CSP) program and Open License program changes

We’ve had a lot of questions from Service Providers and Hosters around the ability to procure Perpetual software licenses through the Cloud Solution Provider program (CSP).

Microsoft announced in September 2020 that they will be sunsetting the Open Business volume licensing program, at which point all non-software assurance breadth transactions will be fulfilled through CSP. 

Unfortunately this doesn’t change anything for Hosters, where SPLA will continue to be the primary licensing vehicle.  The use terms of License Mobility require you have Software Assurance with any license you want to leverage with a 3rd Party Hoster.

However, you can sell perpetual software licenses for on premise (at the client location) consumption or potentially use this license option to address hosting scenarios where customers have fully dedicated hardware.

For more information on these updates, click here

Windows Virtual Desktop: Is it time to start thinking about moving your Hosted Clients to Azure?

All the signs are there: Microsoft wants you to move your Hosted Desktop customers to Azure and it is starting to make business sense.

The first sign were the two consecutive price increases in RDS under SPLA. Compounded, these increases amount to over 25% increase in a period of just 2 years.

The next sign are the stringent requirements around being in the Qualified Multi-Tenant Hosting (QMTH) program. This program authorizes qualified third-party hosting service providers to host customers’ Windows virtual machines via Microsoft Cloud Agreement subscription or Microsoft Volume Licensing on multitenant hardware.

In October, 2020, Microsoft announced that to qualify for QMTH, the partner needed to deliver a minimum of $300,000 in CSP revenue in a year. 

The next sign hasn’t happened yet, but we believe it’s coming. The next SPLA price increase will focus on the Office suite. The margins on desktop hosting will get very slim and competing with the performance Microsoft can deliver might eat into those margins further.

Microsoft has already done this with Exchange. About 10 years ago there was a big push on Service Providers to migrate their Exchange seats to Office 365. Hosters could not meet the aggressive price points or differentiate their offering. They could either sign up for CSP, take advantage of the incentives and proactively move their hosted seats to Office 365 or risk having them cannibalized by other CSP providers or Microsoft direct sellers.

Microsoft was very successful in that initiative. We have no reason to believe they will not see the same success with Windows Desktop.

The barrier to entry into this new offering is a concern over both profitability and the expertise required to migrate and manage workloads in Azure.

We’ve partnered with a company we believe can remove both of these barriers and help you transform your hosted desktop business.

MyCloudIT.com delivers a solution that completely simplifies the deployment and management of virtual desktops in Azure. Moreover, their solution right-sizes the VMs to ensure you pay a little as possible.

You won’t need to retrain your system admin and get multiple Azure certifications to make this leap. MyCloudIT is providing free 1:1 consultation for any Service Provider looking to explore their hosted desktop options in Azure.

If you want to book some time with us to discuss how to transform your hosting business, click the link below to book a no obligation consultation. Or just email us at info@altariscloud.com.

Your Microsoft Licensing Experts at Altaris Cloud

SPLA Compliance: Keeping your SPLA Spend Down while Maximizing your Billing

We recently completed an engagement with a large Service Provider who had just acquired another large SPLA hosting company. The combined monthly SPLA bill was massive but over time we were able to reduce it by 40%.

How did we do it? Leveraging modern tools and expert analysis, Altaris Cloud began the work of collecting usage data, consolidating, and then optimizing the two environments. Some examples include:

• Host level hardware optimization

• The consolidation of physical hosts where there was capacity to reduce the number of Windows Server licenses

• SQL Server instance metering and deep dives to determine necessary functionality (core allocation, clustering, log shipping)

• SQL Server version modernizing that opened the door for cheaper editions

• Contract analysis and updating to not only determine but also assign license responsibility

The last point here is important, and I want to elaborate. The service provider was making assumptions that in some cases their customers didn’t own licenses they could leverage in the service provider’s environment and so the service provider reported the software under SPLA. In other cases they assumed the opposite without the proper documentation and contractual language in place putting them and their customer at risk for violating SPLA License Mobility rules.

Our analysis and the monthly reports we deliver to our License Management customers map individual client usage to their software consumption. We discovered in many cases – as just one example - that the end customer was consuming SQL Enterprise but only being billed by the Hoster for SQL Standard. Not only could that have resulted in a very expensive Microsoft audit outcome for the Service Provider, but they were also leaving money on the table.

They were not billing their customers as much as they were entitled to.

The outcome of this engagement not only lowered their SPLA spend by 40% but also increased their billings by 12%. Now they are fully compliant and more profitable.

This is just one example of a thrilled Altaris client. If this scenario sounds familiar to you, contact us and we’d be happy to review your unique situation. We can proudly provide relevant references.

To book an appointment, with no obligation, email us at info@altariscloud.com , simply reply to this email or click the button below to book an appointment through our online booking tool.

Your Microsoft Licensing Experts at Altaris Cloud

RDS Price Increase: What’s Next?

Back in November we wrote a post about the coming 10% RDS price increase coming in January 2021. That means for your February reporting (January usage) you will be charged the new price.

Officially they claim it is due to the significant investment Microsoft has made in Research and Development across its infrastructure products.  Enhanced capabilities such as supporting Offline use on internal networks, single sign on support, connection to an RD Broker without an RD Gateway, better 4k remoting improvements, multiple GPU support, and better network detection are just some of the listed improvements.

Strategically we do know that Microsoft is pushing hard on Windows Virtual Desktop with Windows 10, delivered through Azure and with Office365/Teams. In this offering, remote access can be bundled in with the service. Those affected are Service Providers who have been delivering Remote Desktop Services to their clients through private cloud offerings.

What’s Next?

While no one can predict which SPLA sku’s Microsoft will announce a price increase next, it’s fair to say that many of the user-based products, like Exchange and Office are obvious candidates. Office in particular is one that could go away entirely. Beyond Microsoft wanting people to purchase Office through CSP, Microsoft has always wanted their clients on the latest version of Office to ensure it compares as favorably to Google apps as possible.

One thing is certain, Microsoft won’t make any pricing changes until January of 2022, where they typically provide notice in November of the previous year.

Removing Office would present some challenges to ISV’s who leverage the Excel component for their application, but keep in mind, Excel can be reported as an individual sku. Resellers don’t often promote this but Excel can be purchased as a stand-alone sku [Part# 065-05720].

If you want to talk about your SPLA and how we might help you optimize your spend and remain compliant, click below to book a complimentary, no-obligation appointment with our Microsoft Licensing Specialists.

Your Microsoft Licensing Experts at Altaris Cloud

​Is Microsoft 365 Business a qualifying sku for QMTH?

Yes, Microsoft 365 Business Premium is eligible only for Shared Computer Activation (SCA). This means that Office can be assigned to Azure or a 3rd Party Datacenter, managed by a eligible QMTH Service Provider. Here is the original announcement:

Shared Computer Activation for Office in Microsoft 365 Business

We are excited to announce the ability to enable shared computer activation for Office by Microsoft 365 Business subscribers.

Normally, users can install and activate the Office 365 Business Client only on a limited number of devices, such as 5 PCs. Using the Office 365 Business Client with shared computer activation enabled doesn't count against that limit.

This helps in scenarios where multiple users are connecting to the same remote computer at the same time. The users can each run Office programs, such as Word or Excel, at the same time on the remote computer. Enabling shared computer activation for Office can also be useful in situations where multiple users share the same computer and the users are logging in with their own account. A few examples of where Office with shared computer activation enabled could be useful are:

• Three workers at a warehouse share a computer, each worker using Excel on that computer during their shift to track orders & shipments

• Five nurses at an outpatient clinic use Word on shared computers at the nurses station throughout the day to create encounter reports from a template

• The business owners, billing clerk, and the accountant connect remotely to a Windows 2016 Server running Remote Desktop Services (RDS) to use Excel and the company’s accounting software.

• Field service employees use Office on a computer that's located in a conference room to update/write reports when needed.

• Remote medical billing coders and auditors working from home connect to Windows Virtual Desktops (WVD) in Azure with Office installed to work on highly sensitive medical records.

Technical support page:
https://docs.microsoft.com/en-us/deployoffice/overview-shared-computer-activation

• The Microsoft 365 Business Premium plan is the only business plan that includes support for shared computer activation. There are other business plans, such as Microsoft 365 Business Standard, that include Microsoft 365 Apps for business, But, those business plans don't include support for shared computer activation.

• Microsoft 365 Apps for business doesn't doesn't support the use of Group Policy, so you'll need to use another method to enable shared computer activation.

• Shared computer activation isn't available for Office for Mac.

If you have questions about anything related to CSP, Microsoft Volume Licensing or SPLA, please book a no obligation appointment and we’d be glad to assist you.

Your Microsoft Licensing Experts at Altaris Cloud

Don't Overpay for that Acquisition

The CEO of a large, privately-held Managed Service company once said to me, “You don’t build SaaS hosting companies to pass on to your kids.” It was a bit tongue-in-cheek, but the point was clear. Most entrepreneurs build hosting or managed service businesses with the goal of one day being acquired. And for years now, that’s what has been going on: tons of mergers and acquisitions in the hosting space. Not just the traditional managed service companies, but ISVs as well. According to this article, there were 44 acquisitions in 2017 in the Digital Health Care space alone.

What we see over and over is the acquiring companies don’t practice proper due diligence in the one key area...software licensing. They review the financials closely, but they don’t verify the software licensing position of the company they were acquiring. 

We have seen time and time again where an acquisition occurs, they take on the Microsoft licensing reporting, and then they get audited by Microsoft. Gaps are identified and the acquiring company is now left footing a large bill that was caused by a business model they just acquired.  Not only did they over pay for the acquisition because they didn't account for the non compliant licensing costs, but now paying for non-compliance for years prior when they business wasn't even in their control. 

Companies spend tons on lawyers to facilitate mergers and acquisitions, but they often don’t require a licensing baseline review as part of the deal.

Here’s 5 things to look for when acquiring another company:

1. Does the company being acquired have a SPLA agreement? If they don’t, they are still liable for all license costs and penalties for the entire time the Microsoft software was deployed.  This means you are now liable if you don't perform your due diligence.

2. When was the last time they were audited by Microsoft? If it’s been more than a year, we recommend a baseline review.

3. How is SPLA usage collected and reported? If the only method is an output of a billing system, that’s a huge red flag.

4. Does the company being acquired have someone who’s an expert in SPLA licensing? Did you know that it’s a requirement of the SPLA agreement itself (fine print 😊 ).

5. Does the company being acquired have strict IT processes for software provisioning? Watch out for skunk work projects and IT projects that fly under the radar.

Before you get into negotiations, perform that due diligence on the critical area that drives your profit margin, the software costs.  At Altaris Cloud, we deliver a complete analysis on your new hosted environment(s).  Not only what the true cost of ownership is in the future, but potential liability for past use.  Our reports can be used as leverage in the negotiating process to drive a real value based on revenue but also real costs associated with running Microsoft software.

If your company is thinking about merging with another company or making an acquisition, Book your free consultation and talk with the SPLA licensing experts. We will make sure you are in the best position to negotiate.

As Always,

Be SPLAWESOME!

RDS: Another SPLA Price Increase Coming in January, 2021

Microsoft just announced a 10% increase to Remote Desktop Services (RDS) coming in January 2021. This after a 15% increase as recently as January 2018. Unlike other years, this is the only SPLA sku that will see an increase in January.

So why did Microsoft choose to focus on this particular SKU? Officially they claim it is due to the significant investment Microsoft has made in Research and Development across its infrastructure products.  Enhanced capabilities such as supporting Offline use on internal networks, single sign on support, connection to an RD Broker without an RD Gateway, better 4k remoting improvements, multiple GPU support, and better network detection are just some of the listed improvements.

Strategically we do know that Microsoft is pushing hard on Windows Virtual Desktop with Windows 10, delivered through Azure and with Office365/Teams. In this offering, remote access can be bundled in with the service. Those affected are Service Providers who have been delivering Remote Desktop Services to their clients through private cloud offerings.

WHAT CAN YOU DO?  

As a Service Provider you can always explore offering Windows Desktop Services to your clients through CSP. Microsoft is pushing this angle aggressively along with expanded Office365/Teams usage (see their latest earnings guidance). If you do decide to explore this route, make sure you fully consider all costs involved. In some cases, the margins may not be as appealing as what can be achieved through a private cloud offering. Furthermore, as a Service Provider you do lose some customization abilities if you go down this route. That said, there are some significant incentive-based rebates you can tap into if you decide this is the right move your business.

More immediately, in order to mitigate the impact of the upcoming price hike, you can make sure you are correctly reporting RDS. In our experience, RDS is the single most over-reported SKU identified through the Microsoft audit process. Many Service Provider do not put the required controls in place, limiting remote VM access to only those who require it. So before you start considering your public cloud options, and converting your customers over to the Azure offering (which could take many months), make sure you control your immediate costs by only reporting what your clients are consuming.

At Altaris Cloud we have worked with hundreds of Service Providers, conducting private reviews to determine exactly what you should be reporting and paying to Microsoft for SPLA.

One other point of consideration is that RDS Client Access licenses, purchased by your clients through traditional Volume Licensing programs such as Open or EA, may be appropriated for RDS consumption in your cloud environment.  We can help you review the specific terms and qualifications which the govern Extended Use Rights, but this can be a viable alternative to reporting SAL usage under SPLA.

This recent price increase does not have to impact your bottom line. With a proper review by SPLA experts we can help you increase your profits.

To book an appointment, with no obligation, email us at info@altariscloud.com , simply reply to this email or click the button below to book an appointment through our online booking tool.

Your Microsoft Licensing Experts at Altaris Cloud

Microsoft Announces a Massive Change to the CSP Direct Program

Early this week Microsoft started communicating a new requirement to partners in the CSP Direct program. Effective immediately, Partners who want to enroll as direct bill partners in the Cloud Solution Provider program must meet at least USD300K in Cloud Solution Provider program revenue during the 12 months prior to their required support contract renewal date.

Further, for existing CSP Direct Bill Partners partner this requirement goes into effect January 2021 and the partner must show the $300k in the prior 12 months upon renewal of their support plan agreement.

The official announcement can be found here

 It is interesting that Microsoft states in this announcement that “This new revenue requirement will help partners in the Cloud Solution Provider program build a more profitable business through the right model”

If you are a CSP Direct Bill partner who does not meet this revenue threshold, it is not clear how this will make your business more profitable.

First, you will have to move to be a CSP Indirect partner, which means lower margins.

Second, under the indirect model, partners lose their QMTH (Qualified Multi-Tenant Hoster) rights. What this means is that they will no longer be able to host Windows Desktop or instances of Office 365 in their non-dedicated hosted environment.

 For those who find themselves in this position, the options are limited. Instances of Office 365 and Windows OS can be sold through CSP at a reduced margin but won’t be eligible to be installed on the hoster’s shared hardware anymore. Instead they would need to be deployed on dedicated hardware, hosted on Azure, or placed on the shared hardware of another QMTH provider. It might even be time to dust off those old Office SPLA SKUs.

If you find yourself in this situation, please contact and we can review your unique situation and discuss options. We can discuss the different options CSP offers that may help you stay in the direct program or, if you were considering entering before, how you can become eligible. 

To book an appointment, with no obligation, email us at info@altariscloud.com , simply reply to this email or click the button below to book an appointment through our online booking tool.

Your Microsoft Licensing Experts at Altaris Cloud