Everything You Need To Know About Microsoft’s New 2022 Licensing

ID: In three lines of paper airplanes. One stands out because it is yellow and points a different direction.

The assumptions we made about licensing last year will not hold this year. Microsoft made numerous changes to their program, which they are implementing at the end of 2021 and early next 2022. Be aware of these changes as you plan your licensing spend for the coming year. 

Microsoft New Commerce Experience: Evolving Licensing for an Easier Full Stack Management 

In 2022 Microsoft will sell its subscription license to organizations through the new commerce experience. Microsoft 365 and Dynamics 365 previously sold as per-user licenses, but now they are selling per seat. The per-seat license authorizes a single user to consume the licenses on unlimited devices. Azure subscriptions also changed so that they are all bundled under a single plan. Azure subscriptions under the old subscription model will have to transition to the new Azure Plan. 

Per Seat Subscription License Changes Part 1: Cloud Solution Provider (CSP) Direct Partners for Support and the New Commerce Experience 

Microsoft grew its subscription offerings over the past several years, selling subscriptions through its CSP partners. There are two types of CSP Partners, an indirect partner and a direct partner. An indirect partner purchases their license from a distributor and then resells them to the customer. A direct partner or Tier-1 CSP must pass additional certifications and pay for premier support from Microsoft. TechHouse is one of the few direct CSP partners available in the US. Why is this important? Microsoft is releasing a new way of buying subscriptions early next year, the “New Commerce Experience. (NCE)“. With NCE, your subscription must be through your CSP partner to receive premier support on that subscription. Only Tier 1 Direct CSP partners are required to purchase Premier Support. 

Per Seat Subscription License Changes Part 2: Enforcing Annual Agreements and the New Commerce Experience 

NCE will no longer allow users to reduce quantities on annual agreements. All subscriptions will now be annual, even if the payments are monthly. Today, customers can reduce the number of subscriptions during the yearly agreement. But with the New Commerce Experience, that will no longer be an option. The customer is committing to that quantity for an entire year. Microsoft will offer new subscriptions on a month-to-month basis, but Microsoft charges an additional 20% for that flexibility. To help reduce overall cost, customers can choose a mix of annual and month-to-month licenses. 

Per Seat Subscriptions License Changes Part 3: Some Questions Still Out There 

Microsoft is still trying to work out how to handle switching partners during an annual agreement. It is unclear if you can switch or must wait for the annual renewal to change. 

If your current agreement with Microsoft expires after March 1, can you continue to suspend and adjust without penalty, or do you have to pay for the entire year at the cutover to NCE? We believe you will continue to change without penalty until that subscription’s end date, but we have not yet heard definitively. We met with Microsoft just last week and will continue to stay updated on the recent announcements and changes. If you have any questions about the NCE experience, email your concerns to us or submit them using the form on our contact us page. We will work to get the answers to you in time for your planning. 

Microsoft Perpetual Licensing Changes 

Microsoft changed how they offer perpetual licenses. Effective 12/31/2021, the only way to purchase perpetual licenses will be through a Microsoft Cloud Solution Provider (CSP) partner. The CSP channel is now the centralized location to buy subscriptions and perpetual licenses. If you currently have Open License agreements with Software Assurance (upgrade rights), you will not be able to renew them after 12/31/2021.  There will not be any new Open License agreements after 12/31/2021 either. At that time, you can purchase subscription licenses to access the current version. You can continue to use the perpetual licenses in perpetuity, but you will not be able to renew existing agreements or purchase new ones in 2022. 

Perpetual licensing is a one-time purchase that allows you to use the software without any time limit. People often think of this as owning the software, although it is a license to use it. If you are running Windows 7 or Windows 8 on your desktop, it is most likely because you have a perpetual license for that software. A positive effect of perpetual licensing was that it was a one-time purchase that continued to work for you into the future. Even if you did not purchase upgrades, you still could count on Microsoft to continue delivering “security patches” without charge for the product’s life span – typically, ten years. 

Times have changed, and cybersecurity attacks are more severe, frequent, and dangerous. It is no longer safe to work with tools written ten years ago when the defenses were much less. Enter the requirement for continuous updates. A subscription model enables the software publisher to update the product frequently. 

Some Good News with Dynamics 365, Power Platform, and Reporting RDLs 

  • Free access in Teams to D365 data: View Dynamics 365 Sales and Service data in Teams without having to pay for a Team Member license. 
  • PowerApps: PowerApps per app and per-user licensing have been cut in half effective October 1, 2021.  
  • PowerBI Premium Per Seat Licensing: Finally, those on-premises SQL Servers can move to the cloud. PowerBI per-user licensing is now available with paginated reports. Create RDLs and view them through the PowerBI Premium per-user licensing. 
  • Common Data Model and Dataverse Capacity: Microsoft developed the Common Data Model to help organizations have a centralized data store across applications. Recently renamed from the Common Data Service to the Dataverse, the standard data model is now licensed on a capacity model. Database, log, and audit storage are all billed separately. Database storage is by far the most expensive. For this reason, it is essential to evaluate D365 storage and align it with the most cost-effective storage solution. 

With So Many Versions of Windows Licensing, Which One is Right for My Team?  

Microsoft Windows licensing is available in various ways: OEM, Retail, Perpetual, Subscription, and even as a virtual desktop service. A virtual desktop service is like Remote Desktop Services – a hosted Windows desktop in the Cloud. You securely log in to the virtual desktop from another computer. Once on the desktop, all activity occurs there as if running on the physical machine in front of you. 

New machines today ship with a version of windows on it already, Windows Home or Windows Pro. We always recommend Windows Pro for organizations because it allows you to control the update process and leverage BitLocker for security, among other features. You can upgrade to Windows Enterprise for even more advanced computer management and more advanced security. 

During the supply chain challenges over the past year, many people found Windows machines with home editions, often selling far above their prior prices, and grabbed them up instead of not having a device at all. We strongly recommend purchasing at least the Windows Pro upgrade. 

You may have a machine that does not have Windows installed. For example, you were given a computer, but it was wiped clean, or an older operating system like Windows 7. You can purchase a retail version of Windows and install it on the machine. 

The full version of Windows Pro can only be purchased as a perpetual license. Once you have Windows installed on a machine, you can upgrade – from Home to Pro, from Pro to Enterprise. Upgraded licenses are available both as subscriptions and as perpetual licenses. 

Windows Virtual Desktop is not available as a perpetual license; however, it is available via two different subscription models: Windows 365 and Azure Virtual Desktop. Windows 365 is a preconfigured per-seat subscription model for a virtual Windows desktop in Microsoft’s Cloud. Your team member can log in from anywhere, connect to the device, and work. It is like the idea of a Remote Desktop.  It is easier to configure and has a fixed price each month. That convenience comes with a cost. Microsoft also offers a non-bundled version, Azure virtual desktop. This solution requires configuration and offers variable fees based on how much the product is used.  Due to this, if configured correctly, it can significantly reduce the needed spending each month on consumption.  

Our knowledgeable Microsoft licensing team will gladly help with any questions you have for licensing in the new year.