EP 58: Navigating Microsoft Licensing

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INTRODUCTION VOICEOVER: Dive into the world of innovation with us as we unravel the challenges, breakthroughs, and latest trends that are shaping our digital landscape. This is Tech UNMUTED, your guide to the tech revolution.

TERRY: Hey everyone, welcome to another great episode of Tech UNMUTED. I'm Terry, and I'm here today with the honor of interviewing Mary Claire. Mary Claire is one of our premier Microsoft licensing experts here at Fusion Connect. She's been in the business for a while. You know what? Mary Claire, why don't you introduce yourself to us?

MARY CLAIRE: Yes. Thanks so much for having me on. Like Terry said, I'm a Microsoft licensing specialist. I've been in the Microsoft space since about 2019. Before that, I did tech sales as a lot of people that do marketing end up in. [laughs]

TERRY: Absolutely.

MARY CLAIRE: I started out doing contract acquisition for a previous company and then moved over into customer success and licensing, and really honed in on contracts and licensing expertise with enterprise customers.

TERRY: Awesome. In five years in the licensing business with Microsoft, five years is an eternity because you have seen things evolve. Microsoft changes something about once every quarter, much less every year. Five years is a lot of change that you've seen. Welcome. I'm glad to have you here. I appreciate it.

I wanted to do a couple of things. A lot of people don't understand the Microsoft licensing because it can be very difficult. I know bits and pieces of it, but I'm not an expert. I'm not your level by any means. I know that you've taken a lot of tests and certifications with Microsoft. Tell us a few of those and some of the places you've got specialties with Microsoft. I think you've done some core tests, and then you've probably got, I think, a security test and an AI as well.

MARY CLAIRE: Yes. I started out with my Microsoft certified professional certification, which I honestly don't even know if they offer that anymore.

TERRY: I had an MCP at one time. It was a long time ago.

MARY CLAIRE: Yes. Just really a general look at Microsoft and getting to understand all the different agreements, and terms, and everything because it really is a different language. I started off with that and with my Azure fundamentals. Then I got my AI recently. That's the most recent certification. I have the AI-900. I have the M365 fundamentals certification as well, and then the security as well. It's like S-900, MS-900, all the 900 certifications basically.

TERRY: That's awesome. That takes a real commitment. Quite honestly, getting the AI is extremely important. Everywhere that you hear it, everything is about AI. I went to a Microsoft Converge communication conference recently. Every other word was Copilot. It really was. We were talking about Teams rooms, Teams calling, contacts, everything was Copilot. Really smart on your part getting those certifications. I'm glad you're on board with us because those really do help us and our clients.

The first thing I'd like to do, I've got a few little bullets. If you see me look over, I'm looking at my notes. I've got a few bullets of things that I'd like for us to talk about today with our listeners and hoping that you can help shed some light on stuff. First one is probably the big picture question, and it's all about Microsoft licensing. I know licensing has evolved over the years. There's the legacy volume licensing, and that legacy volume licensing, I know that was SPLA and some other acronyms that Microsoft had, and then moved into the CSP and EA, which I know is still volume, but it's different. Can you explain to us a little bit about the CSP, EA, and the new licensing structures from Microsoft?

MARY CLAIRE: Yes, for sure. You'll still see some SPLA, some open value, open licensing, a PSA, et cetera, out there. Microsoft is really, the past couple of years, has been pushing customers to move to either an EA or CSP, mainly CSP. A lot of the enterprise customers, they're still going to be on an EA because there's that 500 user minimum. There's the three-year commitment to it. Microsoft is the one that's going to be deciding the pricing for those agreements, and they're going to be wanting to work with those enterprise agreements and have them on that direct agreement with Microsoft. That's an EA.

With CSP, there's so many users in the space now that are providing CSP to customers for those smaller businesses that want the more flexible agreement, that want to be working directly with their partners on support and on their licensing rather than working with Microsoft. That's the two different sides that we have now, is Microsoft wanting to retain these large enterprise customers and keep them on those enterprise agreements, and then these other customers that are fighting to get away with that, to work directly with a partner and have that support from them that are going to be on a CSP.

TERRY: Got it. You're saying if it's under 500, Microsoft won't even look at it, and they probably won't even look at it if it's under 1,500.

MARY CLAIRE: Pretty much.

TERRY: I know they don't look. You can play in that EA space between 5 and 15, but really, you don't hear Microsoft come in searching for a customer unless they're over that 1,500.

MARY CLAIRE: Yes, and even then, those customers that are on EAs, Microsoft is trying to pull them off an EA to just a completely direct agreement with them if they're over a certain mark of users. There's a lot of discourse in this space, but a lot of customers are really liking the CSP model just so they could have more freedom with working with a partner.

TERRY: All right, so you've mentioned CSP several times, and we're a CSP here at Fusion Connect. Explain to us a little bit about CSP, what it is, cloud solution provider, of course, but tell us a little bit about what CSP is and how some of the limiters on it versus EA. Just a little bit more about CSP, since that's what we can provide customers, and really that's what we talk best about. We're fully aware and we work in the space with EAs, and we can get to that here in a few minutes, but just tell us a little about CSP.

MARY CLAIRE: Yes, so CSP, or you'll also hear it called NCE because as Microsoft does, they did a name change about a year and a half ago. It's still used interchangeably a lot. CSP is for customers that are, like we mentioned, it's more geared towards the under 500 users. There are people over 500 who still use a CSP.

TERRY: Yes, we have several with several thousand licenses that are CSPs.

MARY CLAIRE: Yes, it gives you the flexibility to do either a monthly term, an annual term, you can do a three-year term if you really want to. Not a lot of customers want to do that, but it is an option, or you can have a mix of both. A lot of customers that have seasonal workers or interns or whatever it might be who, they're only going to be there for a couple of months. They'll put them on a month-to-month license and then have their annual term licenses so they can get that discount on there.

CSP is really geared to have a more flexible agreement, and there's also support that's included in it. For Fusion customers, for example, they're going to get their tier 1 support directly through Fusion compared to if you're on an EA, you have to either pay for an agreement with Microsoft for support, or you have to pay for a third party to have a support agreement, or you can pay per incident, which is still pretty expensive.

TERRY: Oh, I'm sure.

MARY CLAIRE: Microsoft taking away that break-fix support they used to have for EAs really pushed a lot more people to want to do the CSP model because the support is baked into the cost.

TERRY: Exactly.

MARY CLAIRE: I guess differences.

TERRY: Yes, we fully support our customers when we bring them on to CSP, so that's important. In talking about that, there are challenges that people run into regularly. There's mistakes businesses make with licensing, different things like that. What's some of the things that we can look at there? Then I want to talk about-- Actually before I do that, let's talk about one other thing. You and I were talking earlier, we were talking about EA and CSP and the differences before we got on this call. I know when a customer has more than a certain size, they tend to go to an EA. I think an EA is a minimum of a three-year term, isn't it?

MARY CLAIRE: Yes, that's correct.

TERRY: All right, so if I'm on a three-year term, but I grow by, say, acquisition, I really don't want to bring on new three-year licenses if I'm a year into that acquisition, especially because we all know, unfortunately, how acquisitions go when you acquire a company, there are duplicate roles throughout the company. They tend to right-size over that first year and you lose employees. Where I may have bought a company that had 200 licenses, I may only need 125 or 100 by the end of the first year. How would a customer handle that if they're sitting on an EA?

MARY CLAIRE: They could do one of two things, just depending on their timeline. They could either just bring all the licenses onto the EA, because on an EA, you can true down every year if it's a subscription license. However, with acquisitions, with getting everybody on the correct tenant, moving everyone over, it takes time. Putting those people on a new CSP under their existing tenant while you're doing that migration and going through all the M&A activities that you go through, it's a good idea to just put them either on a month-to-month CSP, so you can just spin down the licenses when you're done and you get them all moved over to the EA, or you can put them on an annual CSP, just depending on how long it's going to take you.

Having the option to do both agreements simultaneously is very beneficial, because like you said, you're probably not going to put the same amount of licenses. Then also just doing the activities of an acquisition is going to take time. Being able to just have them month-to-month so you can reduce as needed, rather than waiting a whole year on an EA to reduce is going to save you a lot of money.

TERRY: Yes, and we have a lot of customers that will come to us that are on an EA. They're like, "Oh, well, we're on an EA, but we just acquired this company, so we know it's going to be a pain to-- we're going to have to pay for these licenses for the whole year or for more than a year, because we can only true down and we're not going to be done in time to true it down next year. It's going to take us the full year, and we're six months into our year."

A lot of them, we've been able to give them a one-year term to get them some of those discounts they can take advantage of. It may not be as aggressive as their EA, but it does give them a discount, lets them have that full year they need to do their M&A activities, and then they move those over into their EA after the fact.

A lot of people don't realize you can have both of them on the same account. The same tenant can have both an EA and a CSP. That was really something interesting when you and I were speaking that I wasn't aware of. I heard EA. I walked-- oh, I can't help. Let's look at other solutions. Let's look at your voice. Let's look at your other things. To know that you can have EA, CSP, everything else together, that's a great thing for people to hear.

All right. Now let's get into the challenges. I was going to move us into the challenges, but now let's get into some challenges. Really tell us about some things that people, as you do licensing evaluation-- here at Fusion Connect, we do offer an evaluation of your licensing for you. We'll have you or one of the team members sit down and look at a client's licensing with them, share screen over the shoulder. That way they don't have to grant us permission or anything. We'll review that with them. We'll ask them about how they do business, things like that. What are some of the common pitfalls you find that customers are doing that they probably should think about? Wrong license, things like that. Just give us some information on that.

MARY CLAIRE: There's a lot to choose from.

[laughter]

TERRY: I bet there is. Just a couple then. Just a couple.

MARY CLAIRE: Microsoft doesn't really make it easy to understand. I think I'll go two different ways here. First, one of the biggest is customers that are buying full package product licenses. They're getting Windows Pro and they're just buying it from Best Buy or Amazon, whatever it might be. Then they're trying to buy, I don't even know, just a Microsoft Office license. Then they're sitting here like, how can we do security? How can we do this? It's just like, well, the products that you have aren't really-- You're not buying business products. You're buying mainly home use products.

TERRY: That's when Microsoft moved from O to M, right?

MARY CLAIRE: Yes. It's just people not really aware of, oh, there's a difference in buying a home license versus a license for a business. Because they're like, "We just need Microsoft Word and Excel." It's just like, "Okay, cool. How are you securing all of these users and everything?" Having conversations like that, where these customers are just like, "How do we make sure everything is secure? We're buying all these mismatched products." Really going through their user base and having them help me understand what their users need and the different types of users they have. Because there's frontline users, there's the CEO, there's sales, there's customer service, and they all need different functionalities.

They don't all need an E5 license because customers, when they don't understand, they're just like, "We'll just get this because it has everything we need," but they don't fully understand what all is in it. I think just customers that are underbuying and not really realizing what they actually need for their user groups, that's a really big challenge that we run into. As well as customers that do own an E5 or an E3 with E5 add-ons, and they don't fully understand what they own.

They're getting these other products like Mimecast or, oh my gosh, I'm blanking, but a bunch of other third-party manufacturers that are doing the exact same thing as the Microsoft license they own. They're basically paying for the same product twice. Really just going through and educating, making sure that they understand this is what you own, what else is in your environment that you're paying for, that if you don't like the Microsoft version of that, that's fine. Let's reduce what license you have. If you are paying for this other third party and that agreement's coming up for renewal, maybe we don't renew, and we really just focus on implementing the Microsoft technology there.

TERRY: Exactly. So many people have E5s and they just don't realize what all you-- The E5 is the top-end license. It gives you a lot of things embedded in it. Then I've seen other people that have an E3 with E5 add-ons and they've added so many add-ons and then they go to do their voice solution with us and they add on a phone system license. By that point, their E3 Plus is almost the same price or more than their E5.

MARY CLAIRE: Yes. Once you get to about that three-add-on mark is where it makes sense to just go E5. Because a lot of people are like, "We want Defender. Oh, we need ENTREP E2 because we want privileged--

TERRY: We need Intune.

MARY CLAIRE: Yes. We need Power BI. It's just like, okay, well, once you start getting to about that three-add-on mark, then we should look at just doing E5. It really doesn't have to be the full E5 license. There's a lot of different add-ons that you can do, whether it's just like the security bundle or the compliance bundle or the security and compliance bundle. It's just really understanding what each user group needs and making sure that you don't already have that product in your environment via a third party. That's going to help people make sure they're not overspending because there's a lot of partners out there that will just tell you E5 because that's what's good for them, but it's not necessarily what's good for the customer.

TERRY: Right. I'm going to throw you a curve ball. This is something I forgot to talk about before, but you're mentioning the licenses and how you can break out the different. I want to say it happened on April 1st, and I thought it was an April Fool's joke when it was announced, and it obviously wasn't, was the split out of Teams from the Microsoft licensing stack. A lot of people don't realize, or they think, "Hey, I've got this stock already. All my new ones, I have to buy them separate, this and that."

I think there is going to be a time coming up real soon where they are going to have to go ahead and true up to the newest NCE license with Teams broke out. Can you tell us a little bit about that? I know I'm putting you on the spot because we didn't talk about this before, but it clicked. It was something that I think, especially our listeners are concerned with because we do the calling for Microsoft runs through Teams. When Microsoft made that announcement, some people aren't aware of it at all. They're like, "What announcement is TERRY talking about?" Other people are fully aware of it, but they have some misconceptions. Tell us a little bit.

MARY CLAIRE: Yes. Rolled out April 1st, announced April 7th, something like that. As of right now, there's not a date where Microsoft is saying, "When you renew, you're going to have to renew onto this new license." If you already have licenses, we call them legacy licenses now with Teams included. When you're up for renewal, you can still keep those licenses. Microsoft doesn't have a date yet that they're going to [crosstalk].

TERRY: Can I, if I grow, if I've hired three people?

MARY CLAIRE: You can, yes, until September, I think 30th of this year. After September 30th, all of those legacy licenses will be removed from the price sheet. You won't be able to do upgrades anymore. If you're like on M365 E3 with Teams today and you want to go to E5, you need to do that before the end of September. You're not going to be able to do that after.

TERRY: We need you to help. If you're ready to upgrade or you're thinking about upgrading this year, talk to us now. Let's get you upgraded to E5 sooner rather than later.

MARY CLAIRE: You need to do it before the end of September. That's been the communication from Microsoft. That date has changed several times.

TERRY: It does surprise me.

MARY CLAIRE: Potentially it could change again. Right now, it's still holding steady at the end of September timeline. Yes, like you mentioned, if you are thinking about upgrading and you want to keep your-- with Teams licenses, we need to look at doing that pretty much as soon as possible to make sure that we can do that before the end of September. As of right now, all of the legacy licensing, you can still renew it. You'll still be good. There's not a date on that yet. If you are going to buy any new subscription, so if you're on E3 and you want to buy some E5s and you're not upgrading those licenses, then it would be without Teams.

TERRY: Without?

MARY CLAIRE: Then you'd have to buy the Teams add-on.

TERRY: Got it. Okay. Yes. I appreciate you taking that on the fly question there.

MARY CLAIRE: It's been a big topic of conversation.

TERRY: I am sure. It has been for us, for me, too. I hear it. I do a lot of conferences, a lot of shows, and everybody asks me, "Hey, what's this whole thing about them splitting out?" It happened over in Europe six months, nine months ago now. It was only time before it happened here.

MARY CLAIRE: Another way for Microsoft to make some cash.

TERRY: Yes. Honestly, I think it was also some of the other competitors out there felt a little pushed out, because Microsoft did have all of it in one bundle that included their communication, their Word, Excel, PowerPoint, all of that in one bundle, but also including the communication. Once they tacked on and started doing calling through that more and more, it became where people were a little intimidated by it. Of course, groups are going to get together and they're going to push, so it is what it is.

All right. Last question I want to ask is really to ask you: what are some tips that you would give our clients about staying up to date on their licensing? In licensing and engagement, what are some things you recommend that they do on a regular basis, or what time frames do you recommend if they do plan on changing things but they're under a contract? What's the lead time? Things like that, just general. Let's give our users some talking points or some thoughts about some best practices, if you don't mind.

MARY CLAIRE: The biggest thing is just really understanding what licensing you own and understanding your user groups and what they need. That's something that meeting with me, meeting with Fusion, we can go over and really go into depth on the specific needs of your organization. Because once you understand that, then you're going to be able to understand what licenses you actually need.

If you're coming up on a renewal, I would say usually with CSP, about 60 days in advance is going to be a good time to really figure out those numbers that you want to renew and to also evaluate if you need to do some users on a month-to-month term versus others on an annual term and work with us on getting different renewal scenarios together so we can make sure once we're in that window to adjust the licensing, that we're in a good spot, that it's not going to be stressful for, the client, and that we're going to have a good next term. Really have everything optimized and locked in where it needs to be because on an NC, you can't reduce those licenses throughout the year.

TERRY: People don't realize they auto-renew. By default, it goes straight to auto-renew. Really you have to go in and tell it, "Don't auto-renew my licenses." When they're moving from one CSP provider to another, they have to go turn off that auto-renew for their other provider to provide those. Those are little things that we really need our listeners to think about as they plan and grow and do things.

MARY CLAIRE: that's something too that we'll go over with clients in the process, like if they are moving to Fusion, is making sure that they're communicating with their current partner on turning off the licenses because there's been so many times where we've been working with them and then the partner is just like, "Oh, whoops, they auto-renewed." There's a lot of things that we go through with our customers to make sure that they're set for the next year, that they're not going to be double-paying for any licenses, and that they're not over-licensed, and that we've really evaluated different renewal scenarios with them.

TERRY: Mary Claire, tell us a little bit about optimizing.

MARY CLAIRE: Another way that people can optimize is the M365 Admin Portal actually has a tool. It's the Usage Analytics Dashboard. You do need a Power BI license to use it, but it's basically a pre-made dashboard that gives you user information, adoption information, usage. If you can go and use that to really see what users are using the full capability of the license they have, then, again, when we're coming up to renewal, we can review and say, "Okay, this user really doesn't need all of these features. Let's look at putting them on, X, Y, Z license."

That's another way that people can look at their licenses and understand really what their organization is actually using. The same thing with using frontline worker licenses. A lot of people don't take advantage of those, but they're super cheap.

TERRY: They really are.

MARY CLAIRE: Yes, if you have a warehouse workers or if you have people who are just on tablets and stuff, using a frontline license is going to be a great way to get them licensed and secure because they do have the security features on there as well. They're a lot cheaper than the license.

TERRY: The frontline, the voice portion of the license. You have to enable voice, and then you get a calling plan. The enabling voice portion on a frontline, I think, is half the cost. Microsoft heard from all of their frontline companies that, "Hey, it's great that you've lowered our price on frontline worker licensing, but we still have to pay the same amount to enable the keypad." Microsoft heard what they were saying, and I think they cut that by almost 50% or more. Frontline workers, they've taken good care of them. That's a good thing.

MARY CLAIRE: Yes, it really just comes down to understanding your user groups and user needs and understanding what you owe with the licenses that you're buying. That really will help you optimize come renewal on what licenses we need to renew and what licenses your users actually need to be using.

TERRY: Got it. It's been great. I really appreciate you being here and taking some time to talk to us today. Do you have any final thoughts for the people listening right now? Anything you want to say? Then I'll wrap us up.

MARY CLAIRE: I think, really, if you're having questions or anything around Microsoft licensing, let's set up a call. Let's chat about your environment. I love to go through people's environment and really just help them understand what they own and empower them to understand the products that they have in their environment so that they can use them. Because there's a lot of really cool products out there, but just a lot of people don't fully know what they have. Yes.

TERRY: Cool. Thank you, everyone. We appreciate you joining us today. Mary Claire, thank you so much for joining us. We really appreciate it. If you are interested in any of the things we talked about today as far as licensing goes with Microsoft, please don't hesitate to reach out to our sales teams here at Fusion Connect. Connect with me on LinkedIn. Connect with Santi [Cuellar], who's our other host on LinkedIn. I'll bet Mary Claire's on LinkedIn as well. Connect to us. Look for us. Quite honestly, just thank you for joining us. Subscribe to the podcast. We look to talk to you again soon. Have a great day. Thanks.

CLOSING VOICEOVER: Thanks for diving into the tech world with us today. Don't forget to subscribe and hit the bell icon to never miss an episode of Tech UNMUTED. Stay curious. Stay connected.

Episode Credits:

Produced by: Fusion Connect