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Microsoft take Azure sales direct from March 2019

Microsoft have announced changes to how organisations purchase Azure cloud services.

Starting March 2019, Microsoft will introduce the Microsoft Customer Agreement (MCA), a new offering for Azure services which will make the “licensing transaction process easier, more efficient and simpler”.

What changes are they making?

The Microsoft Customer Agreement (MCA) is aimed at customers looking for “maximum control over their own Azure services” and who no longer require the “level of administrative support” offered by the Enterprise Agreement (EA) and (Azure-only) Server and Cloud Enrolment (SCE).

Interestingly, in the FAQ document, Microsoft say:

“We’re introducing the Microsoft Customer Agreement as the primary way for small and midsize customers to buy Azure services”

But are positioning this as a replacement for Azure purchasing within Server and Cloud Enrolments – hardly the realm of the SMB customer.

Why?

Microsoft’s aim is to create an “automated, digital purchase experience” – simplifying things for customers…and themselves. Reducing the number of contracts, agreements, portals, special terms, and different ways of doing things will streamline operations for Microsoft – saving them time and money, just as it will for customers too.

The Microsoft Customer Agreement

The Microsoft Customer Agreement will be a perpetual, non-expiring contract, and is the agreement already used when organisations purchase via the “Microsoft Store for Business.

Something I’m sure will go down well with ITAM departments the world over (!) is how you access the agreement:

“The Microsoft Customer Agreement is presented in Microsoft Store for Business as a hyperlink. You can view the agreement terms, including any discounts or credits that apply, during the transaction checkout process and click to accept it.”

The Microsoft Business store agreement can be found here:

https://businessstore.microsoft.com/en-gb/servicesagreement

but it doesn’t appear to have been updated since December 2017. Section 6 states:

“Upon request, which will be no more than twice in any calendar year, organisation will provide to Microsoft a report detailing the number of copies of each product or service licensed and assigned to End Users to date. Microsoft may audit an organisation’s acquisition, distribution and use of applications through the Service to verify and ensure the organisation’s compliance with the terms and conditions of this Agreement and (without prejudice to Microsoft’s other rights and remedies) bill the organisation for any underreported or unpaid usage.”

Going forwards, will this clause still be in there, and will it apply to Azure?

Pricing

Prices are based on the Azure.com RRP and there is no price protection with the MCA, something which is offered via EA/SCE. This means pricing through the MCA will have the potential to be more volatile and change on a monthly basis.

Eligibility

“Eligible” customers will be able to move existing Azure purchases to the MCA at the renewal point for their current enrolment. Eligibility will be determined by Microsoft and for those organisations, an email will be sent to the Azure administrator.

If you aren’t contacted, via email or a Microsoft sales rep, you’re most likely not eligible – either because of geography or the “the customized terms and conditions of your organization’s purchasing agreement”.

If you don’t want to purchase Azure this way, the recommendation is you purchase through CSP (Cloud Solution Program) via a partner.

Buy direct from Microsoft

The MCA is managed by Microsoft and your Microsoft rep, rather than your reseller account manager, will be the primary contact.

Microsoft state that “existing licensing partner(s)” can still be “included in…discussions” and will provide pre/post-sales support, as well as helping you to identify Azure requirements, but billing and support will be handled directly by Microsoft.

Microsoft are quick to point out that “partners play a critical role in this new commerce model”, with partners providing assistance to identify potential Azure offerings and to scope out the size of requirements as well as offering a range of “value added” services on top of the base Azure services. That said, I’m sure there will be some concerns in parts of reseller-land about this latest move.

What does this mean for you?

Certain organisations will find themselves forced to move their Azure purchasing to the Microsoft Customer Agreement from 2019 onwards. If you have an Azure-only Server and Cloud Enrolment, that agreement will soon disappear.

SCE Extended Term

The SCE agreement provides for an “extended term” should you choose not to renew. This gives an additional one-year of “month-to-month” access to the online services, including Azure – which will be billed quarterly at the “then current Consumption Rate” for [your] price level…plus a 3% administrative fee.

Whether you choose to enter the Extended Term or not, at some point you will need to change how you purchase Microsoft Azure.

Options

Purchase via EA

Microsoft’s announcement mentions only moving away from the Server & Cloud Enrolment (SCE), so purchase Monetary Commitment via an EA still seems to be an option going forwards – this would be the option most like that of an Azure-only SCE. However, one of the Microsoft LSPs states that EA will lose the ability to transact Azure too.

Purchase via MCA

A new 11-page agreement, electronically stored in the Microsoft Store for Business, that gives a “single…catalogue” that also includes 3rd party products and services. Purchasing will be done directly with Microsoft – whether this is good or bad depends on your experiences with Microsoft & partners really!

Purchase via CSP

Introduced in 2015, the Cloud Solution Provider program has been the catalyst for a lot of change around Online Services, particularly Azure. CSP makes it easier for partners to offer, and customers to purchase, bespoke 3rd party products and solutions that build on, and enhance, Microsoft Office 365 and Azure services.

Microsoft have already phased out the ability to purchase Azure via the MPSA agreement and now the same thing is happening to the SCE. If the Enterprise Agreement follows, that will leave organisations with 2 options to purchase Azure:

  • CSP (Cloud Solution Provider)

Or

  • MCA (Microsoft Customer Agreement)

Modernisation

As with so many changes aimed at improving things for customers, this will almost certainly make things more difficult for many organisations initially. Changing how services are purchased – and how they are paid for – can often present challenges inside an organisation.

This is another step on Microsoft’s “Modern Commerce” journey. First, we had CSP, then the removal of Azure pricing waterfalls, then programmatic changes to discounts and prices across volume licensing programs – now we have the Microsoft Customer Agreement.

It’s clear Microsoft are committed to their “modernisation” vision and want to make purchasing Azure an easier process on both sides of the transaction, but it remains to be seen how this latest change fares in the real world.

As Microsoft start to contact “eligible” customers, that will give a good indication of how widely this change is being rolled out initially and also where Microsoft see potential issues and limitations.

Further Reading

Microsoft announcement – https://www.microsoft.com/en-us/licensing/news/improving-azure-experience

Microsoft FAQ – http://download.microsoft.com/download/A/5/9/A599711B-6807-4757-B38D-1EE269F2F19B/CL-Commerce-Experience-FAQ-Customer.pdf

Microsoft Store for Business – https://docs.microsoft.com/en-us/microsoft-store/microsoft-store-for-business-overview

Microsoft Business Store agreement – https://businessstore.microsoft.com/en-gb/servicesagreement

About Rich Gibbons

Rich has been in the world of IT and software licensing since 2003, having been a software sales manager for a VAR, a Microsoft licensing endorsed trainer, and now an ITAM analyst looking at software licensing and cloud.

A Northerner renowned for his shirts, Rich is a big Hip-Hop head, and loves travel, football in general (specifically MUFC), baseball, Marvel, and reading as many books as possible. Finding ways to combine all of these with ITAM & software licensing is always fun!

Connect with Rich on Twitter or LinkedIn.

One Comment

  1. Jacobo Senior says:

    Will other MSFT online services follow this path as well?
    How will this impact Partners?

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