As Microsoft Marches Into Cloud, Its Already Complex Licensing Gets Even More Baffling


For services like Office 365, it's fair to wonder how much customers would be willing to spend, in terms of time and resources, to figure out the licensing when there are simpler alternatives.

Microsoft is aware that its complex licensing is causing some customers to ditch Office 365 and other cloud apps.

In an invitation-only meeting with partners last month at its Worldwide Partner Conference, Microsoft's Connor said some customers have been "overwhelmed" by the complexity of Microsoft's licensing.

Some are going to Google, which has just two SKUs for Google Apps, Connor said at the event.

In competitive situations where Microsoft is going up against Google, this could become a problem, Pica's DeGroot told CRN.

"When a customer brings Google and Microsoft in to talk cloud, the Google rep is in for two hours and the customer understands it," DeGroot said. "The Microsoft rep is in for two hours, and the customer is actually more confused than before."

Office 365 is "a good product," but Microsoft's attempt to straddle perpetual licensing for fat clients while moving customers to the cloud is "complicated," DeGroot said. "Google has no interest in either perpetual licenses or fat clients, so they don't need to consider any current customer licensing investments," he said.

Microsoft's licensing is so challenging to decipher, the company has seen fit to build licensing expertise into its channel program. Microsoft has a volume licensing competency in the Microsoft Partner Network and a Microsoft Certified Professional Credential for licensing.

One Microsoft partner, who requested anonymity because he also works with Microsoft competitors, says the explosion of SKUs is actually driving more business his way.

"The many options has made our expertise more valuable, because we understand the customer's pain points and business problems," the source told CRN.

Sometimes, a mix of different SKUs is the best way to go. "If a company needs advanced archiving features for a particular group of employees, but isn't going to use the Outlook client, we can mix and match licenses to fit their needs," said the source.

Microsoft's view is that having multiple licensing options is the best way to cater to its diverse customer base.

"Customers tell us that, when it comes to their productivity needs, one size does not fit all," a Microsoft spokesperson said in an emailed statement. "We have customers that span the smallest of businesses to the largest of enterprises across varying industries all of whom have different layers of complexities within their organizations.

Ultimately, all these different product numbers are "something of a necessary evil," said Miro's Hegedus. They allow the same Enterprise Agreement to be used for both on-premise products as well as cloud-based services. This reduces the number of agreements that the customer would otherwise have to manage.

If they're willing to put in the legwork of going through all the Office 365 SKUs, or work with a partner, customers can find exactly which features and functionality they need, and avoid paying for ones they don't.

Reed Wilson, founder and president of Palmetto Technology Group, a Greenville, S.C.-based Microsoft partner, says it's fairly easy to figure out which version of Office 365 is the best fit for a specific customer.

"It can be daunting," Wilson said of the Office 365 SKU list. "But if you ask the right questions, you can find out what they need pretty quickly."

PUBLISHED AUGUST 1, 2013