Changes To Microsoft Licensing

terms related to outsourcing rights and dedicated hosted cloud services Change 1-Oct.

Microsoft’s off-premise outsourcing terms are changing October 1, 2019, evidently to clarify the distinction between on-premises/traditional outsourcing and cloud services, and create more consistent licensing terms across multitenant and dedicated hosted cloud services, the core of the changes being:
 

• On-premises licenses purchased without Software Assurance and mobility rights cannot be deployed with dedicated hosted cloud services offered by “Listed Providers” being Microsoft, Alibaba, Amazon (including VMware Cloud on AWS), and Google (the changes don't apply to any other providers - yet - and if/when they do you'll get 12 months to get compliant).
• Microsoft licenses with License Mobility through Software Assurance can now be used on dedicated hosted cloud services with any Listed Provider who is also an Authorized Mobility Partner.
• Microsoft licenses with Software Assurance can be used with the updated Azure Hybrid Benefit, including on the newly launched Azure Dedicated Host.

Now there’s one statement that seems to negate it all (page 3 of the FAQ) given all of the Listed Providers are currently in the Authorized Mobility Partner list which we’re seeking clarification from Microsoft for (italics added):
 
Do the updates to the Outsourcing Software Management clause affect my rights to deploy licenses with an Authorized Mobility Partner? License Mobility through Software Assurance rights will be expanded to permit deployment of licenses with License Mobility coverage with Listed Providers’ dedicated hosted cloud services for those Listed Providers who are Authorized Mobility Partners. (and importantly) Rights to deploy licenses on Authorized Mobility Partners’ shared servers are not impacted by the outsourcing update.

But that aside, lets dissect it all ...

Firstly, what exactly are “dedicated hosted cloud services”? Microsoft’s states this to be the “services offered by major public cloud providers typically with elastic, ondemand, pay-as-you-go resources, like their multitenant cloud services.” Multitenant cloud services? Wouldn’t that be the opposite of dedicated?? Well for the Listed Providers examples given are “Azure Dedicated Host, Amazon EC2 Dedicated Hosts, single tenant nodes from Google” – all dedicated – and “VMware Cloud on Amazon Web Services (AWS)” – so perhaps the/an exception being SDDC architecture. 

The first thing to note - the change won't impact the use of existing software versions under licenses purchased before October 1, 2019 so you can continue to deploy and use software under your existing licenses on servers dedicated to you, just not workloads under licenses acquired on or after October 1, 2019 (and don’t forget that just performing a Software Assurance renewal doesn't affect your perpetual use rights for existing versions). And secondly, rights to deploy licenses on Authorized Mobility Partners’ shared servers are not impacted by the outsourcing update.

So what to be wary of …. as usual, the limitations:

• Use of Windows Enterprise licenses with Listed Providers dedicated hosted cloud services will require Windows VDA E3/E5 user licenses, so if you’re in this situation but have existing SA coverage or E3/E5 subscriptions you’ll have until October 1, 2020 to migrate away from the Listed Provider if you want to avoid having to buy these additional licenses.
• A number of products do not have License Mobility through Software Assurance and are therefore not permitted to be run with Listed Providers’ dedicated hosted cloud services, such as:
  • Office Professional Plus
  • Windows Server (although you can move your External Connector licenses)
  • Core Infrastructure Server (CIS) Suite
  • System Center Suites (excepting Standard/Datacenter Management Servers)

Are there any alternatives? Well, besides any SPLA or otherwise ‘bundled’ licensing options available with the provider service, enter the Microsoft Azure Hybrid Benefit (!) where, solely with Azure Dedicated Host, there are exceptions (!!) if you happen to have current SA or equivalent subscription rights. And what might the Azure Hybrid Benefit provide:

• the option to license by virtual machine (Datacenter or Standard), or to license by physical host, but allocate core licenses only for the number of cores available to you (Datacenter only)
• use is governed by the Online Services Terms (OST) and therefore does not require base CALs
• permits you to host solutions on Azure for access by your customers
• equivalent of on-premises fail-over rights for SQL Server, and in the case of SQL Server Enterprise Core licensed at the host level, the equivalent of onpremises unlimited virtualization rights
• Both SQL Server and Windows Server are eligible for Disaster Recovery Rights and new version rights

Oh … and don’t forget – to make use of License Mobility through SA, you must ensure that you:

• Run your licensed software and manage its OSEs on shared servers under the terms of your volume licensing agreement;
  
• Deploy your Licenses only with Microsoft Azure Services or qualified License Mobility through Software Assurance Partners; and
  
• Complete and submit the License Mobility Validation form with each License Mobility through Software Assurance Partner who will run the licensed software on their shared servers.

For more information check out the Microsoft Announcement and associated FAQ's