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Organizations Running Office 365 Windows Applications and Windows 10 in Amazon, Google, and Alibaba Should Re-check Licensing

by Stephen White  |  June 10, 2020  |  Comments Off on Organizations Running Office 365 Windows Applications and Windows 10 in Amazon, Google, and Alibaba Should Re-check Licensing

The following is a guest blog by my excellent colleague Michael Silver

In August 2019 Microsoft announced new rules for licensing its software for use on “dedicated cloud hosts”, including Amazon’s AWS, Google’s GCP, and Alibaba (https://www.microsoft.com/en-us/licensing/news/updated-licensing-rights-for-dedicated-cloud).

Office 365 and Windows changes took/take effect the next time the organization renews their Microsoft agreement after October 2019 and Office 2019 changes took effect on 1 October 2019. Gartner wrote about the server licensing implications in G00391683, but the implications on client software, and more specifically VDI and DaaS, are more difficult to understand.

The changes could present significant challenges for organizations committed to Office 365 and want to run VDI or DaaS in the cloud. The announcement affects how Windows 10, traditional Office, and Office 365 must be licensed for running VDI or DaaS on Alibaba, Amazon, and Google clouds (referred to by Microsoft as “Listed Providers” http://aka.ms/listedproviders). While Microsoft actually includes itself as a listed provider, the licensing materials include clauses that exclude Azure from some of the new rules.

Products are affected as follows:

  1. Windows 10 Enterprise – to license Windows 10 Enterprise for use on listed providers, organizations will need to license ‘VDA per user’ after their next renewal. Organizations that license Microsoft 365, would need to add ‘VDA per user’, even though they already pay for Windows 10 in the Microsoft 365 license. According to Microsoft, the step-up SKU from Windows to VDA for Microsoft 365 is not valid for use on listed providers. Another option would be to license components individually rather than licensing the suite. A separate clause in the Product Terms allows Windows 10 Enterprise E3 and E5 to continue to be used on Azure.
  2. Office 2019 (as opposed to Microsfot 365 Apps for Enterprise or Business, formerly Office 365 ProPlus) – Volume licenses purchased before 1 October 2019 can still be used on listed providers, but licenses purchased on 1 October 2019 or later may not be run on listed providers including Azure. Organizations that need more Office licenses from 1 October 2019 or will need to subscribe to additional licenses from the cloud provider using Microsoft’s SPLA (Service Provider License Agreement) program.
  3. Office 365 Windows Apps – once a customer renews its Microsoft contracts on 1 October 2019 or later, there is no way to compliantly run the Apps for Enterprise applications on AWS, GCP, or Alibaba (Office 365 browser applications may be used with no limitations). This was not specified in the Microsoft announcement nor in the FAQ to which it refers. A separate clause in the Product Terms allows Office 365 Windows applications to be used on Azure.

So how should organizations preferring to utilize one of the listed providers and run Office365 through that environment proceed? Options are limited and may entail revisiting plans, compromising through use of classic Office applications rather than Office365 (which has its own problems), or a challenging negotiation.

Links to Gartner research on DaaS and related strategy considerations

Changes to Microsoft Server Rules in Dedicated Cloud Environments Require Immediate Attention Published 23 October 2019 – ID G00391683

Market Guide for Desktop as a Service Published 6 November 2019 – ID G00368228

Physical, Virtual and Cloud Desktops: Is a Hybrid Approach Inevitable? Refreshed 8 January 2020, Published 27 September 2018 – ID G00357601

 

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Category: cloud  licensing  

Stephen White
Research Director
4 years at Gartner
16 years IT Industry

Stephen White is a Research Director in Gartner's IT Asset Management, Vendor Management and Procurement team, focusing on strategic licensing and negotiation strategies, asset management, and reseller engagement. Mr. White leverages his experience in software sales and consulting to assist IT leaders through his coverage of best practices in license life cycle strategy and trends, license metric and pricing practices, contract negotiations, optimizing terms and conditions, sourcing, and relationship management. Read Full Bio




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