Why an updated Microsoft Enterprise Agreement? ® A GUIDE TO NEW TERMS IN THE 2011 MICROSOFT ENTERPRISE AGREEMENT JUNE 2012 Abstract/Executive Summary: Today, the blending of personal and work devices is challenging businesses to maintain secure IT environments, while ensuring compatibility. Meanwhile, organizations must more readily accommodate a dynamic and increasingly distributed workforce. For some companies these growing trends are driving their desire to deliver IT using cloud services and Virtual Desktop Infrastructure (VDI) solutions. Cloud computing and virtualization are challenging more traditional licensing models with new ways to develop, deliver and deploy applications and IT solutions. In response to these dynamics, Microsoft has made significant enhancements and structural changes to the 2011 Enterprise Agreement (EA) and related Enrollments. Why should you read this?  You’re signing or renewing a Microsoft Enterprise Agreement (EA) and wish to understand 2011 EA updated terms and conditions.  You’re conducting an in-depth review of 2011 EA terms and conditions against older EA contracts.  You’re advising fellow decision makers on updating or renewing your current EA. The result is a more versatile agreement that preserves the fundamental values of the EA, while adding new flexibility to help customers license Microsoft products and services for emerging IT options and changing workforce requirements. More specifically, these new agreements include additional terms to help you license Microsoft cloud services and offer greater latitude to include devices used to access Microsoft software through VDI. Also, the EA structure has been streamlined and modified to help clarify licensing requirements, improve pricing policies, and ease overall management for Microsoft Volume Licensing customers. When the time comes to renew your current EA, it’s invariably a decision with a number of factors to consider. The options available with modern Microsoft licensing, not to mention the effort required to review and negotiate new agreements, require that you have a clear understanding of how the updated EA licensing terms will support and impact your plans for the future. The goal of this paper is to help explain what changes Microsoft has made to the EA, why these changes were necessary, and how these changes can benefit your organization. Consider using this paper as foundational information to help you and fellow decision makers conduct a more in-depth review of the 2011 EA. Key Takeaways: This paper provides examples of how new terms in 2011 EA can benefit Microsoft Volume Licensing customers by:  Offering volume discounts for Microsoft on-premises licenses and enterprise cloud services with predictable pricing throughout your agreement term.  Expanding licensing definitions to be more inclusive of new computing devices appearing in the workplace.  Delivering support for virtual desktops through expanded product use rights and management tools. WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T  Helping you license future products, services, deployment options and user scenarios with modified agreement terms and structures.  Maintaining and enhancing business value classically associated with the EA such as easing license management and budget predictability. Additionally, there are some key changes that will impact your future renewal options. Most notable is the elimination of the one-year renewal option, and modifications to the annual True-up order timing and submittal guidelines. Why change the EA now? From its inception, the purpose of the Microsoft Enterprise Agreement has been to provide a cost-effective way to acquire the latest Microsoft technologies, help standardize IT, and simplify license management. In the past, when traditional desktop/server deployments were a larger part of the IT landscape, Microsoft amended and updated the EA terms and conditions with relatively simple changes. Over time, amendments were added to accommodate new technologies, deployment options and user scenarios, which allowed you to deploy new solutions without requiring you to re-examine your entire EA. An unintentional consequence began to occur where older EA contract terms were at risk of becoming further removed from the ways in which you purchased and used Microsoft products, thereby drifting further from the EA’s core value of simplified licensing management. Add to this the rise of cloud computing, the increasing popularity of virtualization and the proliferation of new and often personally owned computing devices in the workplace, and it became clear that the EA needed more than a basic refresh. The entire structure needed to be updated, streamlined and modified to help ensure your contract terms are up-to-date and allow you to take advantage of new licensing options anytime within the terms of your agreements. The result is an updated EA that provides more flexibility and procurement options and sets the stage for future licensing and deployment solutions, while easing overall management for Microsoft Volume Licensing customers. Flexibility for cloud computing Information technology is in the early stages of a dramatic shift from client/server architecture to cloud computing, a shift that could afford not just lower-cost computing, but also faster, easier, more flexible, and more effective computing. A recent global study of nearly 1,500 business and technology leaders revealed that the majority - 85% - will be using cloud services moderately to intensively over the next three years.1 Because every business has its own unique starting point along this trajectory, every business’s journey to the cloud will be unique. One aim of the 2011 EA is to support your deployment choices as you re-envision the role of IT in cloud computing by allowing you to deploy Microsoft products on-premises, via the cloud, or in hybrid environments that combine cloud services with on-premises software solutions. With its increased flexibility to license Microsoft Enterprise Online Services such as Microsoft Office 365 and Windows Intune2, the EA enables you to transition to these cloud services at your own pace. Moreover, Microsoft’s approach to updating the 2011 EA establishes a framework to accommodate future changes that may be needed to help you license products and cloud services yet to come. 1 Harvard Business Review Analytic Services, How the Cloud Looks from the Top: Achieving Competitive Advantage in the age of Cloud Computing, 2011 Microsoft Office 365 delivers familiar Microsoft collaboration and productivity tools through the cloud. Windows Intune simplifies how businesses manage and secure PCs with Windows cloud services and Windows OS. 2 5 2 WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T License cloud services when it suits you, under one agreement With recent 2011 updates, the EA offers a seamless way for you to license both on-premises software and cloud services in the same agreement. This can help you license software and cloud services for different user types and optimize your technology spend to fit your IT and user needs. If you have an Enterprise Enrollment (sometimes called a Desktop EA or Platform EA), you can maintain your Enterprisewide coverage and related discounted price levels, with a mix of Enterprise Products and/or equivalent Enterprise Online Services. You can also purchase Enterprise Online Services with a 250 order minimum and with no companywide commitment required. This new flexibility of choice requires new license types and terminology to both enable and describe what licensing coverage is required should you move workers and workloads to the cloud. The following describes the presence and purpose of new terms found in the 2011 EA. Updated EA terms for cloud services:  3 As you consider moving to the cloud, you can do so gradually or quickly, as suits your organization. As an example, you might move workers to cloud services in one division or one department at a time. To support this move, Transitions3 have been established to help you move users to Office 365 and Windows Intune services, and not pay twice for similar capabilities. o The main benefit of this is to allow you to move to cloud services, at your own pace, and not face a perceived double payment for both on-premises and online services licenses. When this transition period ends on your next agreement anniversary date, it is then that you begin to pay full subscription license costs for Office 365 (Plan E1-E4) and/or Windows Intune services, and no longer pay for the onpremises licenses and Software Assurance (SA) coverage from which you transitioned. o The notion of online services equivalents also helps preserve your volume pricing levels for Enterprise Products, as both Enterprise Products [e.g. Office Professional Plus, Windows OS upgrades and Client Access License (CAL) Suites] and their equivalent Enterprise Online Services (Office 365 Plans E2-E4) and Windows Intune are considered when complying with companywide licensing commitments.  Taking advantage of Transitions does not require you to forego use rights to perpetual licenses you have at time of transition, even if you have not yet deployed said licenses. This supports your ability to “transition back” from cloud services using your perpetual (on-premises) licenses, should your IT landscape change.  Minimum orders for Enterprise Online Services have been established to help you license cloud services for new users with no companywide commitment. This option may be especially attractive to customers who have not yet chosen an EA because of its companywide licensing requirement for Office Professional Plus, Windows OS and CAL Suites.  CAL Suite Bridge SKUs now exist to help you maintain licensed coverage for the Core CAL and Enterprise CAL components that don’t have cloud equivalents. When you transition your licenses from on-premises to online services, you benefit from the ability to “break up” your CAL Suite to align with the online services license constructs. For example, when a customer with the Core CAL suite moves to Office 365 Plan E3-E4, their Core CAL suite is modified to reflect the use of Microsoft SharePoint Server, Lync Server and Exchange Server (which “Transition” means the conversion of one or more License(s) to or from another License(s). Products eligible for Transition and permitted Transitions are identified in the Product List. 3 WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T have cloud equivalents), and Windows Server and Microsoft System Center (which do not have cloud equivalents, but remain as on-premises licenses). CAL Suite Bridge SKUs can also be thought of as “equivalent” SKUs, which allow you to retain price level discounts when you have hybrid deployments.  Online Services Step-Up Licenses now exist which allow you to move up to greater value productivity suites of Office 365 [e.g. from an Office 365 (Plan E2) to an Office 365 (Plan E3)] with the price reflected as a delta between lower- and higher- level service. These Licenses act similar to SA Step-up Licenses, which allow you to upgrade from a lower- to higher-level edition product such as Office Standard to Office Professional Plus, and pay only the pricing difference.  Online Services Plans for kiosk workers such as Office 365 (Plan K1 and Plan K2) present an opportunity to provision users with productivity tools which they may not have had an opportunity to access in the past. While the Kiosk Worker Plans do not satisfy the commitment requirement of your EA, they may be purchased under your EA to equip users who do not currently have a corporate email account or access to company portals. Examples would be 'deskless' workers, shift workers or retail store employees who share PCs.  License Reservations make Office 365 and Windows Intune available to you for use without requiring a purchase order up front. This process is unique to the EA and enables you to equip users with online services as needed, and account for these subscription licenses at your next agreement anniversary via new True-up provisions. This aligns with the True-up process for on-premises software.  Online Services Extended Terms now exist to help ensure continuity of your business-critical online services in cases of an unforeseen delay in renewal or no renewal. The impact of these updated terms is that the 2011 EA now gives you:  A way to transition to cloud services when it makes sense for your organization.  The flexibility to move your users between on-premises and cloud services as business requirements and expectations change.  The ability to match workloads of different types of users and fully use the capabilities of Microsoft cloud services.  The opportunity to adjust volume and mix of cloud services annually to meet fluctuations in workforce, including a way to scale up or down the number of licenses for temporary workers.  A no-cost grace period when you are moving your users onto cloud services, during the agreement year in which you transition. Changing TEI/ROI models for cloud services Although the EA’s cloud flexibility can and will help you adopt cloud services, it is but one aspect that will play into your decisions to do so. While studies indicate that customers will see cost savings in specific categories such as hardware, software, IT labor, less travel, and end users and IT administrators experiencing increased productivity, these are set against the costs of deploying cloud services, which can include labor from planning, piloting and migration efforts, hardware, fees and training.4 For EA customers, some of these latter costs may be mitigated by leveraging the ability to 4 4 Forrester, The Total Economic Impact of Microsoft Office 365, June 2011 WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T transition certain licenses with Software Assurance, and taking advantage of other Software Assurance benefits that support cloud migrations. (See section on Software Assurance support for cloud services.) More latitude for different devices When the EA program first started, a key determinant in setting Enterprise Product pricing and companywide licensing commitments was to count the number of “qualified desktops.” This has historically included desktop PCs, laptops and workstation PCs. Excluded from this count had been industry devices (or dedicated line-of-business devices such as sales terminals and kiosks), along with any devices with an embedded OS such as smart phones and iPads. The 2011 Enterprise Enrollment replaces the term “qualified desktop” with “qualified device.” This later definition enables companywide licensing requirements for Enterprise Products to include all desktop PCs, laptops and workstation PCs used by or for the company’s benefit, as well as any devices with an embedded OS that access a Virtual Desktop Infrastructure (VDI). It also gives customers the option of including in their “qualified device” counts industry devices along with devices with an embedded OS even if they do not access a VDI. This change means you can license these additional devices under your EA to gain pricing advantages and other EA benefits, as opposed to licensing them through a separate Select Plus agreement for instance. An example might be a large retail company purchasing Windows OS upgrade licenses for its in-store terminals. Bringing these previously undefined devices under your EA can offer pricing advantages, as expanded device counts may result in a lower per-unit price level across all Enterprise Products and Enterprise Online Services (see section on Establishing Price Levels). It also eases compliance with existing licensing requirements relevant to Windows VDA and Office by helping account for all devices that access the software through VDI in one agreement. Finally, the expanded definition sets up your organization to license future types of devices, with the price predictability and manageability classically associated with the EA. Changes to basic structure and additional terms Streamlined agreement structure At its core, the EA enables you to license sets of Microsoft’s products on a large scale for substantial savings. While that certainly has value in today’s economic climate, customers and industry analysts are asking for more flexible licensing options delivered in a convenient way. In response, Microsoft has enhanced the Enterprise Agreement to offer an even better licensing vehicle for on-premises software and cloud solutions, while aligning licensing for products, programs and services to customers’ wants and needs. EA Agreement Structure: Microsoft Business & Services Agreement Enterprise Agreement Enrollments: The structure of the Enterprise Agreement consists of three components: Enterprise Enrollment Enrollment for Core Infrastructure the Microsoft Business and Services Agreement (MBSA), the Enterprise Enrollment for Application Platform Agreement, and any Enrollments. The MBSA covers multiple Microsoft Volume Licensing programs including the Enterprise Agreement and also Services terms. The Enterprise Agreement governs all Enrollments signed under the EA. Each Enrollment then contains terms which apply only to the specific offers available under that Enrollment, as well as outlines ordering, billing and pricing terms. 5 WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T By simplifying the “umbrella” EA contract, and placing more detailed agreement terms such as product and service definitions, price setting, order requirements, renewal terms etc. in the Enrollment Agreements themselves, the 2011 EA:  Streamlines contract review and negotiation by aligning contract documents under one thin umbrella Agreement, which allows you to focus your review on the Enrollment terms associated with the licensing solutions you’ve chosen.  Simplifies the license agreement process by allowing general governing contract terms to be signed once, without the need to re-negotiate terms when you choose to purchase additional licenses through your Enrollment(s).  Increases Enrollment openness and flexibility to allow the addition of new products and services and licensing options, which helps reduce the need for overriding amendments to enable future licensing scenarios.  Merges EA and EA Subscription Agreements so that if you have Enrollments under both programs (standard Enrollment and Subscription Enrollment) you sign one set of documents, streamlining the agreement acceptance and overall renewal process.  Modernizes terms and terminology using simplified language to make agreements more concise and to address ambiguities. Establishing price levels When you start your EA, your volume discount will be based on one of four pricing levels A through D, with D Level applying a higher discount to per-license pricing than C, B or A Levels. With the 2011 EA changes, customers may benefit from the way new pricing levels are established. Before the 2011 changes, your pricing levels would be established for each of the three product pools (server, systems, and application), based on the quantity of licenses you purchased within each pool. Now, price levels are set by taking the highest license count among four price groups, [which have been expanded to include Office 365 (Plan E1-E4), Windows Intune and Windows VDA licenses] and applying this price level to all Enterprise Products and Enterprise Online Services. This new method means that you’ll find attractive pricing regardless of whether you choose to license for on-premises, cloud or virtual deployments and simplifies the budgeting and procurement processes. An Example: A customer with 2,300 Users and 3,000 Devices is purchasing the Core CAL Suite and Office Professional Plus. Customer has also chosen to license the Core CAL Suite by user. This will result in a purchase of 2,300 Core CAL Suite licenses and 3,000 Office Professional Plus and licenses. With previous pricing rules: o Core CAL Suite is priced at a Level A percentage discount, while Office Professional Plus is priced with the higher percentage discount associated with Level B pricing. With 2011 EA pricing rules: o Both Core CAL Suite and Office Professional Plus licenses receive the higher percentage discounts associated with Level B pricing. Note that Microsoft may re-level your pricing discount should your organization grow and qualify for increased discounts (for instance, through a corporate acquisition where you increase the number of devices/users in your organization). Such re-leveling would require a new customer price sheet to reflect the new discounts, and any releveling would apply to all future orders for the remainder of the current agreement term. 6 WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T True-up orders With the 2011 EA, Microsoft made changes to the True-up order due date, which helps Microsoft ensure you’re taking advantage of allowable license transitions or license reductions. This change is important as it means you’ll want to start to prepare for your True-up earlier than you may have in the past. The True-up order window has changed and is now 60-30 days prior to the Enrollment anniversary (formerly this was 60-day prior to anniversary to 15 days after anniversary). Note, however, that the True-up timing change does not impact when you receive your annual invoice. You can still be billed at your anniversary, versus the time you submit the True-up order. Renewals: While Microsoft and customers often talk about renewing an EA, technically renewal decisions are made for individual Enrollments. Your EA may contain several Enrollments such as Enterprise Enrollment, Enrollment for Core Infrastructure (ECI), or Enrollment for Application Platform (EAP). Key updates include:  Three-year Renewal: Although with some earlier agreements customers occasionally used the one-time, oneyear renewal option, renewals have now been standardized to have three-year renewal terms. This is applicable to all 2011 EA Enrollments and can help simplify license management.  Available fixed buy-out pricing: For Subscription Enrollments, upon initial purchase you will now have visibility to the fixed prices for any buy-outs should you choose this option at the end of your Enrollment. This will help you plan for and fully understand the cost of purchasing these perpetual licenses in advance of any buy-out purchases.  Enterprise Product mix changes: In earlier agreements continuing your Enrollment with a change in Enterprise Product mix (i.e. covering more or fewer Enterprise Products) required you to execute a new Enrollment. Going forward, the updated 2011 Enrollment terms will enable you to change your Enterprise Product mix for a renewal term without such a requirement.  Available Additional Products: In earlier agreements, ECI and EAP customers were required to purchase Additional Products, such as required Client Access Licenses (CALs), via a separate agreement. Updated Enrollment terms now allow customers to purchase and manage Additional Products directly through their ECI and EAP Enrollments. Volume Licensing updates that enhance the EA Software Assurance support for cloud services As you consider moving to the cloud, Software Assurance can help you plan for your migrations and manage your onpremises and hybrid environments with benefits including:  7 License Mobility which lets you deploy certain server application licenses on-premises or in the cloud in a shared hardware environment. Beyond offering more deployment options, License Mobility can help lower cloud infrastructure costs by letting an authorized cloud service provider use your existing licenses. WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T  Planning Services that offer additional guidance to help you plan a migration to Office 365 (Plan E2-E4), optimize your private cloud, or extend on-premises applications to a public cloud.  IT and End-User Training which you can use to build technical skills and ready users for Office 365.  New Product Versions which give you access to new software versions as soon as they are released for onpremises licenses covered under SA. You can use these to reduce the costs of updating desktops to optimize the Office 365 services or update core server products to support hybrid deployments. Support for virtualization, and more More companies today are choosing to virtualize parts of their desktop infrastructure. When you license the Windows Operating System (OS) upgrade through the EA all Windows PCs and devices are covered by Software Assurance. This not only helps reduce the costs of your VDI computing models as described below, but also means you can deploy Windows 7 Enterprise Edition via VDI anytime. Newer sources of VDI support include:  Windows Virtual Desktop Access which lets you use your Windows PCs to access virtual desktops with no additional licensing costs, and extends VDI access via roaming use rights to cover scenarios such as employees’ occasional home use or remote access from public or employee-owned PCs.  Windows Thin PC, which enables you to repurpose existing PCs as thin clients by providing a locked-down version of Windows 7 Enterprise. This can mean significant savings for your virtual desktop and thin-client computing models by reducing the need for new thin client hardware.  Roaming use rights for Office licenses covered with Software Assurance allows the primary user of companylicensed devices to remotely access virtual images of Office from public or employee-owned PCs, without requiring additional licenses.  The Microsoft Desktop Optimization Pack (MDOP) which is available exclusively to Software Assurance customers as an add-on subscription, offers tools to help improve application delivery, compatibility and management with advanced virtualization technologies. Classic EA values remain The EA is Microsoft’s “flagship” Volume Licensing Program and having undergone major revisions, still retains all of the hallmarks of value customers have come to expect. Regardless of whether you are considering cloud services and virtual desktop infrastructure or continuing to deploy all on-premises, the EA program offers the best overall pricing based on organization size, and helps you simplify software licensing and administration with a single agreement. You can still elect to spread the cost of your License and Software Assurance purchases across three annual payments via the Spread Payments SA benefit. In addition, Microsoft payment solutions help organizations acquire the latest Microsoft technologies while preserving cash and credit lines with flexible payments that vary from monthly, quarterly or semi-annual, each with the option of ramping or deferring to align with product deployment or any cash flow requirements. You can use Software Assurance benefits to get new product versions, plan future deployments, license cloud computing and VDI solutions and train and support both IT and users without incurring additional costs. Enrollments continue to help you license solution-focused technology suites in a cost-effective manner, and subscription options are available for those who want them. 8 WH Y A N U P D A T E D M I C R O S O F T E N T E R P R I S E A G R E E M E N T Finally, even with the increasing popularity of VDI and interest in cloud computing, large-scale desktop deployments are not going away. Microsoft continues to help make these deployments easier to secure and manage with attractive pricing on Desktop Platforms5, and advanced technologies found in Windows Enterprise Edition and MDOP. In short, Microsoft has enhanced the Enterprise Agreement to address what customers are asking for with respect to cloud, device and deployment flexibility. The EA has now grown into an even better licensing vehicle by preserving its fundamental values, while adding new flexibility to license products and services for emerging IT options and changing workforce requirements. 5 Desktop Platforms combine Windows Enterprise Edition, Microsoft Office Professional Plus, and a choice of Client Access License Suites (Core CAL or Enterprise CAL). These platform products are licensed for every device or user in your organization and offer additional savings over purchasing products separately. More Information: Contact your reseller or Microsoft account team or check the Microsoft Volume Licensing site. You can also read referenced analysts reviews and topic-specific information found in the Additional Resources section below.  In the United States, call (800) 426-9400, or find an authorized reseller.  In Canada, call the Microsoft Resource Centre at (877) 568-2495.  Worldwide, for information about Volume Licensing offerings available in your area, find the Microsoft Volume Licensing site for your country/region. Additional Resources:  Forrester, The Total Economic Impact of Office 365, June 2011  Harvard Business Review Analytic Services: How the Cloud Looks from the Top: Achieving Competitive Advantage in the Age of Cloud Computing, 2011  Microsoft, CAL Suite Bridges Overview, June 2011  Enterprise Agreement True-up Guide © 2012 Microsoft Corporation. All rights reserved. This document is provided "as-is." Information and views expressed in this document, including URL and other Internet Web site references, may change without notice. You bear the risk of using it. Some examples are for illustration only and are fictitious. No real association is intended or inferred. This document does not provide you with any legal rights to any intellectual property in any Microsoft product. You may copy and use this document for your internal, reference purposes. Microsoft provides this material solely for informational and marketing purposes. Customers should refer to their agreements for a full understanding of their rights and obligations under Microsoft’s Volume Licensing programs. Eligibility for Software Assurance benefits varies by offering and region and is subject to change. The Terms and Conditions of your Volume License Agreement and the Terms and Conditions under which any specific Software Assurance benefits are offered will take precedence in the case of any conflict with the information provided here. For eligibility criteria and current benefit program rules, see the Microsoft Product List. [Publication: 060812] Microsoft Volume Licensing 9