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Sorting out Microsoft Online Services licensing

Microsoft spent the better part of last year pushing its Microsoft Online Services to partners, who worried about shrinking margins and fewer services opportunities.

Much of that campaign focused on the customer demand for cloud computing, or Software plus Services, as Microsoft calls it. And that was a very valid point. A lot of businesses would rather let someone else deal with management, support and the other back-end hassles associated with Exchange, SharePoint and other software — especially when the economy is going down the toilet.

But Microsoft neglected to mention the flip side of that coin: Software plus Services adds a whole new layer of licensing options, which are already confusing enough for Microsoft partners.

To be successful selling Microsoft Online Services, partners will need to sort that licensing confusion out for customers. Luckily, there’s a new report that gets the ball rolling. “Q&A: Licensing Microsoft Cloud Services,” by Forrester Research analyst Christopher Voce, explains how customers’ existing on-premise software licenses can affect their decisions to purchase Microsoft Online Services.

“The on-premise licensing constructs like per-processor and per-server licenses don’t translate to an online services world where the licensing constructs are tied to more usage-based metrics,” Voce writes.

The report explains the three basic types of Microsoft subscription licenses, which is a good start for any partner:

  • User subscription licenses (USLs): These entitle an end user to use a specific online service. Unlike Client Access Licenses (CALs) for on-premise software, USLs are tied only to users, not devices.
  • Services subscription licenses (SSLs): These gives business-wide access to a specific online service, but they’re only for Forefront Server Security Management Console and Microsoft Learning Solutions for now.
  • Add-on subscription licenses (add-on SLs): These offer additional features, such as extra storage, for existing subscription licenses.

The report then goes on to explain how these options tie in with Microsoft’s on-premise software licensing, the different purchasing options and the role partners play in selling the licenses. As Microsoft and other vendors move more and more of their offerings into the cloud, these are the questions customers will be asking, and solutions providers will need to know the answers.

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