Cloudy with a chance of Licensing
Latest news on Microsoft licensing, Cloud, and AI
Microsoft have announced that Azure Active Directory (Azure AD) will, from August 2023, be known as Microsoft Entra ID.
Nothing else changes – no licensing, no capabilities, no portals etc. – it’s just a re-brand:
See the announcement here.
Not much happening in May, this month we saw:
Products in the Core Services lists will store data at rest in the same geo as the service is deployed, part of Microsoft’s data privacy practices.
It’s the Microsoft Product Terms updates for April 2023 and, to paraphrase Puff Daddy and the Bad Boy Family…it’s all about Windows Server baby!
Some key changes that help to harmonise licensing across different platforms, which is a benefit for all of us involved!
Azure Hybrid Benefit for Windows Server changes:
No longer need to allocate 16 licenses as a minimum
No longer have to assign stacked licenses in groups of 8
Confirms minimum of 8 core licenses for AHB VM
Licensing Win Svr by individual virtual OSE:
No longer need to allocate 16 licenses as a minimum
CSP customers with Standard licenses can use Datacenter images as guests when licensing by virtual OSE – but must follow Standard edition use rights
CSP-Hoster:
Customers do not need Windows Server CALs or External Connector licenses when accessing “server software acquired from, fulfilled, and hosted by a Cloud Solution Provider-Hoster”.
SQL Server 2022 is now generally available and is, in Microsoft’s words, the “most Azure enabled release” so far.
There are a few licensing updates and changes to be aware of with SQL Server 2022 as well as a price increase:
Flexible Virtualisation Benefit
Both licenses with active SA and active subscriptions can now be deployed with any Authorized Outsourcer – that is, anyone who isn’t a Listed Provider (Amazon, Google, Alibaba). However, don’t forget that License Mobility through Software Assurance rights still exist (via SA) which allow you to put software on the servers of an “Authorised Mobility Partner” – and the Listed Providers are eligible for this.
Furthermore, when licensing SQL Server Standard or Enterprise by virtual OSE, if you have active SA you can run an unlimited number of containers containing SQL Server within that virtual OSE.
Related to this, Microsoft have made another change that will cause some issues for certain customers. Licensing a virtual machine based on the number of virtual cores now requires Software Assurance with SQL 2022 and, as that is the only option available for licensing virtual machines with SQL Server Std 2022 (i.e. you can’t license the physical hardware to then run VMs), this means that Software Assurance is a requirement if you have virtual machines with SQL Server Std per core.
Machine Learning removal
Looking at the Product terms, it appears that Microsoft have removed the rights for SQL Server Enterprise customers to use:
PAYG licensing
Enabled via Azure Arc, this new billing model enables organisations to pay for SQL Server on a monthly or hourly basis:
The servers must be connected to Azure Arc to use this option. For 2022, the Arc connection is a default part of the setup process while for SQL 2014 and above, it will be enabled via a capability within the Azure portal which is, according to Microsoft, coming soon. This seems to suggest that PAYG isn’t available with SQL 2012 or earlier which makes sense, given they’re all out of support.
See more on SQL PAYG here and the pricing is here.
New pricing
Microsoft have confirmed that SQL Server 2022 Standard, Enterprise, and Web pricing will increase by 10% from January 2023 – including public sector.
Let’s take a look at Microsoft’s financial results for the first quarter of FY23.
Looking at the individual divisions we see:
Overall revenue up 9% to $16.5 billion and within that:
Overall revenue was up 20% to $20.3 billion and within that:
Still a good increase but noticeably slowing down from previous quarters. Microsoft note that cloud margins are down primarily due to increased energy bills.
Overall revenue decreased slightly to $13.3 billion and within that:
“Teams is becoming a ubiquitous platform for business process.”
and shared that the number of enterprise users running 3rd party/custom apps has increased 60% year over year.
“we are going to optimize for long-term customer loyalty by proactively helping them optimize [Azure] spend“
This follows on from what he said last quarter (and also matches what AWS recently said) that helping customers waste less will ultimately help them spend more.
See all the info, slides, and transcripts here.
As well as the Azure Stack HCI news, Microsoft have also added Azure Hybrid Benefit (AHB) for AKS (Azure Kubernetes Service).
This benefit is available for Windows Server Standard and Datacenter (both with SA) and also CSP server subscriptions. Hosts must be Windows Server 2019 (and later) or Azure Stack HCI
Each Windows Server core license w/SA allows use of 1 virtual core of AKS. The AKS AHB is additive, meaning the licenses can be used to cover on-prem/Azure workloads AND to use AKS. You can see more info here.
Ignite 2022 saw Microsoft expand the Azure Hybrid Benefit (AHB) to grant access to Azure Stack HCI.
It is only available for Enterprise Agreement customers and only applies to Windows Server Datacenter licenses w/SA; licenses must be allocated for all physical cores in the Azure Stack HCI cluster. Licensing in this way allows you to use unlimited Windows Server base instances across the cluster. Furthermore, as per the Product Terms, the “dual-use” rights do not apply so licenses can be used as Windows Server licenses OR as Azure Stack HCI licenses.
It is activated in the Azure portal:
I question the phrasing in the Microsoft announcement here as it says that customers “exchange” their Windows Server licenses to get Azure Stack HCI. This suggests that they are somehow transformed from one type into another but that doesn’t appear to be the case – as this is via AHB, it is simply an additional right that doesn’t change the underlying licenses. As with allocating Windows Server licenses to “regular” Azure, it seems one can re-assign from Azure Stack HCI licenses back to Windows Server Datacenter licenses following the 90-day rule.
Given the increasing level of focus on CSP and the MCA, it’s interesting to see that it is restricted to Enterprise Agreement customers only. It not being made available for Open Value and MPSA customers is, rightly or wrongly, business as usual these days but CSP has been getting a lot of shiny things lately.
This new way of paying for Microsoft Azure was announced at Microsoft Ignite 2022 and seems to bear more than a passing resemblance to Amazon AWS Savings Plans. The similarities are probably a bonus for customers, meaning you don’t have to learn 2 totally different IaaS cloud payment options.
Azure Savings Plans is, to some degree, the next step beyond Reserved Instances (RI). This new offering comes with a spend commitment on an hourly basis (over 1 or 3 years) and gives discounts over the PAYG pricing on resources where you have consistent usage. Eligible compute services include:
Savings Plans discounts are applied automatically (starting where the largest discount exists) to any eligible services on spend up to the hourly commitment i.e. £7 per hour. Any spend over that amount is then charged at PAYG pricing so, just as with Reserved Instances, accurate understanding of current and future usage is a must.
They only apply to infrastructure costs but can be combined with Azure Hybrid Benefits for Windows Server & SQL Server etc.
Savings Plans are available for Enterprise Agreements, Microsoft Customer Agreements (MCA), and Microsoft Partner Agreements.
Enterprise Agreements
Microsoft Customer Agreements
Microsoft Partner Agreements
Partners can use Home > Savings plan in the Azure portal to purchase savings plans for their customers.
Savings Plans can be paid for upfront or on a monthly basis, and you don’t pay any more for choosing to spread payments. That said, monthly prices may vary on MCA due to impact of exchange rates.
If you currently have Azure Reserved Instances but would like to move to Savings Plans, you’re in luck – you can trade in Reservations for Savings Plans. The hourly commitment of the new savings plan must be greater than the leftover payments that are cancelled for the returned reservations. That said, not all reservations can be traded – those not eligible are:
Beware – Savings Plans cannot be cancelled, exchanged, or refunded. Automatic renewal of Savings Plans isn’t on by default but can be activated if you so wish.
You can set the scope of Savings Plans to restrict where the savings can be applied. Your options are:
Microsoft have provided information to help with reporting and cost analysis including how to identify wasted spend and how to access the CSV files here.
To get this, and more, in your inbox each month – sign up to my newsletter here!
At Microsoft Build 2022, they have introduced us to the new Intelligent Data Platform.
They say this will help in “removing points of friction between your databases and analytics systems while automatically mapping and governing your full data estate” and allow developers/organisations to “Focus on building innovative apps—and spend less time managing your data“.
Is it a new product?
No – instead it’s a collection of existing products that MS position as forming a better, cohesive eco-system for organisations. Those products are:
The latter enabling comprehensive governance of data across all these different locations, products, and use cases.
For many organisations across a variety of verticals, data is the key to success. However, given the increasing regulatory pressures and growing threat of cyber attacks – not managing that data effectively can be one of the largest risks a business faces. The dual concept of helping organisations better connect their data to extract more useful insights more quickly AND securing all that data will surely seem a particularly attractive offering for a lot of customers. Several other organisations, including Amazon and Google, are heavily focusing on data too – it’s the next frontier for winning/losing customers in many ways – and I’m sure Microsoft will continue to enhance this area of their business. I’m also sure they will be selling this concept, and the underlying products, heavily during renewals and customer briefings etc.
Microsoft’s financial results for Q3 FY22 (Jan – Mar 22) are in and, once again, they’re showing strong growth in all their key focus areas. They also listed several big name customers that they’re working with including:
and called out Boeing, Heinz, and Westpac among customers making “strategic” Azure commitments.
Satya Nadella always hits us with a good quote during the earnings call and this quarter’s was:
“The last two years have proven that every organization needs a digital fabric that connects the entire organization”
Let’s take a look at some of the numbers:
Revenue = $49.4 billion – up 18%
Operating income = $20.4 billion – up 19%
Really strong top line numbers as always – remember, this is for just 3 months!
Revenue = $15.8 billion – up 17%
Microsoft saw growth in SMB and frontline SKUs as well as increase in Revenue Per User – a key SaaS metric.
Office on-prem revenue was down 28%, continuing the downwards trend that we’ve been seeing for a couple of years now. It was noted as well that the end of Open Licensing has caused a drop in transactional license sales during the last quarter.
Revenue = $19.1 billion – up 26%
Another strong showing from Azure…with the number of $100 million Azure deals more than doubling over the previous year.
The server products increase includes Window Server & SQL Server in hybrid use cases (as well as Nuance) and again Microsoft mentioned the impact of Open Licensing’s end.
Overall this is another great performance from Microsoft, giving them good momentum as they move into their Q4 (April – June) which is always a busy time of year. It will be interesting to see the full FY results in July for sure!
