Microsoft EA True-Ups

Okay, Good morning, afternoon or evening, I guess, depending on where you are in the world. I think we have a global audience on today's webinar. So today we're here to talk about Microsoft True ups. I put the tagline that they don't need to be difficult or expensive on this. And so I'm going to spend today talking about Microsoft True ups, the process of Microsoft True ups, some tips and hints on ways that you can decrease or find savings on those true ups, etc. And so you know, who am I? Just for those of you that aren't aware, I'm Mike Austin. I'm one of the authorities on Microsoft licensing. I've negotiated well over $2 billion of Microsoft contracts. I worked at Microsoft in licensing for 10 years and have been helping organizations with software licensing around Microsoft and software asset management and a bunch of other things. Today we're going to talk a little bit, like I said, about true ups. I think the key thing to know about a Microsoft True up is there are different types of true ups. Even though I have an enterprise agreement and the true up, for those of you that maybe are just starting out in the Microsoft licensing world, maybe I'll just step back a little bit and talk about what a true up is. Then I'll talk about the different types. And so basically when I sign up for Microsoft ea, it's typically a three year contract and I commit to volumes of products on day one. So let's just say I sign on January 1st and I buy these products and I buy a thousand of them because I need 1,000 on January 1st. And then throughout the year I'm allowed to deploy without paying for them. And then on my anniversary date, so December 31st, I need to true up what I've been using. So in other words, if I went from 1000 to say 1200, I need to do a true up for 200 licenses and to make sure that I'm paying for what I use. Microsoft has different types of products and different classifications of products. So you're going to have perpetual licenses, you're going to have subscription licenses. And how true ups are treated for each of those are slightly different. Okay, so really the key thing to note is Microsoft really has two classes of products and two types of products. Okay, so they have enterprise products and they have additional products. And the way that a true up is, create, is, is treated, is different whether it's an enterprise or an additional product. And I'll explain that here in a few minutes. But enterprise products and the on premise version and these are very, very rare nowadays. These are your products like Office Pro. So the traditional on premise versions of Office Pro, your Windows 11 desktop OS and these bundles of client access licenses called the CoreCal and the eCal, then they have enterprise online services. And so these products are your Office 365 Esku, so E1, E3, E5 and then your Microsoft. I don't know why that says SCE. This is an old slide that should say Microsoft 365, E3 and E5 in there. And then basically those are enterprise online services. I'm going to get to what makes it enterprise versus additional here in a second. And then you get into additional products on premise. So those are going to be your Windows and SQL servers, your project, your Visio, etc. And then you also have additional products that are online services. These are things that are called like Visio Online Project, Online power apps, dynamics, etc. Understanding where the product falls is important because that changes how a true up is done or how you need to count. Actually, I actually went out and googled a Microsoft Enterprise agreement. I found one for one of the states and I just actually pulled some of the language out of that. So the one thing that I will sort of denote here is always check your contract. Although the language for these things is, is consistent for the most part, there are a few different versions out there. So some things might change a little bit. But this will be in the Microsoft Enterprise agreement. The actual agreement itself, there's a whole section on troops and we're going to actually go through that whole section today. And so the first thing to know is if it's an enterprise product. Okay. And I've done other sessions on more depth on enterprise products and things like that. But again, we'll just go over. These are your Office Pro, your Windows OS, your Core Cal, your eCal. And so typically, most of the time nowadays you don't see these as these are now in office365 and. But there are still some companies that have these on their EAs. If you haven't moved to O365 and you're still on premise, you. You may have these. But there are also scenarios where there are certain use types or use scenarios where they may have these. So typically those would be things like kiosks and shared PCs. So if you think about, you know, a manufacturer, maybe their shop floor PCs that they have, you know, on premise licenses on still for various reasons, we'll see these things in retailers, we'll see them in like healthcare at maybe nurses, nursing stations and things like that. But the key thing here is to note the language, right? It says that basically an enrolled affiliate must submit a true up order for any changes since their last order. So in other words, on that anniversary date. So if I signed on January 1, I need to place that true up for anything that's changed. And for enterprise products, this, it must be determined by the number of qualified devices or qualified users. Okay, so why do they have qualified devices and qualified users here? Some products are based on devices. So in other words, is it installed on a PC server, etc. Those are going to be your Windows and your Office licenses and others you potentially could license either device based or user based. So the, the cals here, the core CAL or the ECAL you could have bought based on devices. So in other words, the device needs a CAL to access the server or bought by user, depending on the math. You would make the determination there. So basically it says any since your last order. Now the reason this is any since your last order are most people, the vast majority, I would say probably somewhere around 80% or more, actually do their true ups at their anniversary date. So they do them once a year. But there are organizations for purchasing reasons and budgeting regions, reasons that will actually place true ups throughout the year as they're actually deploying products. Now there's some benefits and disadvantages to that. I'll cover that off in a few minutes. But that's why it says since your last order. Because if I started at 1100 or sorry 1000 and grew to 1200 and I put 50 on say in March and I paid the true up in March, I don't have to pay for 200 in December. I've already paid for 50, so I'd only pay for 150. Or if I made payments throughout the year. You sort of get the picture. There's. Okay, now the key thing here is to, to determine what is a qualified device, right? So Microsoft puts in that language that you have to true up for all qualified devices. So what is qualified device? So you actually have to go to the definition section of your EA to find out what a qualified device is here. And so Microsoft basically defines a qualified device as a personal computer that's capable of running Windows Pro locally or in a VDI and it accesses or sorry, so it's either a PC that can run Windows or it's a device that accesses a virtual infrastructure like a VDI desktop. So a virtual desktop or it locally or one that accesses any of the server products in the core count, right? So exchange your. And it they do say it does not include. So they actually say we're going to exclude certain things. Right? So if you think about it, qualified PC is basically anything that can run Windows or access a server that's running Windows and run that, you know, access that desktop OS on a server through a vdi, except for if it's an industry device or it's not a managed device, you know, and so at the customer's option, they could exclude those devices and then they go and say, here's what an industry device is, right? So they actually define that. I'm not going to go through that in a ton of detail, but industry devices could potentially be kiosks like retail point of sale systems, manufacturing shop floor systems, if maybe they're just running a process control. They could be devices in a hospital that are running hospital equipment, like X ray machines or, you know, CAT scans or whatnot. So there's a variety of these things out there in different industries that for whatever reason you would exclude them. And you would typically exclude them mostly because a. I don't want to put Office on them, right? Like that's usually one of the biggest, one of the biggest reasons that you would exclude these things. Now they also have a thing there that says it's a managed device. And they say here that you have to go to the product terms to figure out what a managed device is. In that case, you would just Google Microsoft product terms, go in there, you can pull them up and search for managed device. It'll tell you what that is. Those are the only way to exclude them. If you think about this, what does this mean from a true up perspective? If I'm licensing any of those products on a device basis, I have to license anything that runs Windows or is capable of running Windows and by the corresponding licenses for those if it's device based. So in other words, If I have 10,000 desktops, laptops that are in my environment, I have to buy 10,000 Office or 10,000 Windows OS. That's how I determine it. So if I grew beyond 10,000, I started at 10,000, I grew. I have to place the true up unless I'm excluding them as an industry device. Okay, now what's a qualified user? So qualified user is defined here as an employee, consultant and contingent staff. So it is a user of a qualified device. So if they're using one of those PCs that runs Windows or is capable of connecting to a VDI and running Windows, they're a qualified user or they access any software that's running in an enterprise product client access license. So that eCal, so that's going to be Exchange, SharePoint1 teams, Windows servers, System center servers, all the stuff that's in, in the ecal. Okay, so what you'll notice here, there's a couple of things that are important because I get asked all the time, are my contractors considered employees? And the answer is Microsoft will consider them an employee if they're either accessing qualified device or running software. So even if you think about offshore bpo, a lot of the times people are forced to license them even though they maybe work for Accenture or whoever because they're accessing Exchange servers and SharePoint servers right? Now one of the things that is gray with this, and this is a kind of a thing to note, right? A lot of times people don't really know how to read the, understand how the contract works, right? Because they'll be like, what's a qualified user? It's just our employees. So a lot of times they'll be like, hey, if they're an employee, an actual employee and we give them a paycheck or whatnot, then they're qualified. But Microsoft expands it to here. Now, a key thing to note from a legal perspective is if a definition is capitalized. So you'll see enterprise online services, enterprise product that's capitalized. If I go back here in the exceptions, you're going to see that managed devices capitalized and industry devices capitalized. If it's capitalized, it should have a definition within your contract, right? Or within the product terms. So you can see here that qualified users capitalized, but employee, consultant, contingent staff is not. So Microsoft leaves this gray area in their contracts by actually not defining what a consultant is, for instance. So as a consultant, a third party, is it an outsourcer? Is it, you know, somebody doing BPO processing? It's, it's not defined. Right. But then they'll fall back on this other language that says if you're accessing these things. So in other words, I have to license pretty much everybody that accesses Exchange. That's usually the way that it works. There's a lot of exceptions. We're going to talk about some of those in a minute. But that's kind of the way that that works. Right? So if I was doing, if I go back to the enterprise products, if I was licensing the core CAL as user based licenses, I'd have to buy one for every one of my users. So if I started with 10,000 users. And at the end of the year I'm at 11,000, I would true up 1,000. Okay, so a couple of tips on devices and users because a lot of times people say, well, how do I actually count those? Right? And this, this is actually relevant for the, what we're going to talk about Next, which is O365 and N365. But basically the way that Microsoft does this in an audit, and that's how I tell people you should count that same way. And if you don't like that way of counting and you want to try and figure out a way to get Microsoft to put something in your contract that states that this is how you're counting and that they agree to it. But the way that they're going to do this in an audit is they're going to come in, they're going to look at your Active Directory, they're going to try and determine what devices are active on the network based on Active Directory. That should scare you. Most people's Active Directory is very dirty, has lots of extra devices and users and things like that. But really what they do is they go and look at Active Directory and go if it's enabled. And then they look at some things like last password reset and a couple of other things within AD to say, yep, this is an active device on the network, therefore this is your account. And so in an audit scenario, a lot of the times we'd actually see people like, I'm licensing 5,000 because I have an inventory system that says we have 5,000 devices. And then they find out Active Directory says they have 7,000 active devices out there, and they're like scrambling to try and figure out where these 2000 are or trying to figure out how to, how to get those negotiated out of their, their agreement. So similarly with the users, it's usually done via Active Directory. Again, enabled users within Active Directory, they will sometimes go in and look at things like Exchange Email accounts as well to see if you got users that are in exchange that are active. Again, why would they do that? When we go back to that definition, right, that definition says that if they're using one of the products inside of the enterprise calc. So they will go and look at your Exchange Email accounts and see if you got users in exchange that aren't in Active Directory and try and try and push those into the accounts that you need to license. Okay. And we already talked about, we already talked about contractors, right? So what's the difference between an enterprise product and an Enterprise online subscription. Okay, then the difference is just what, what it is. Right. So an enterprise product are those on premise. The online subscriptions are the O365 products. You're going to have O365E SKUs, you're going to have the M365E SKUs, you have the Enterprise Mobility Suite and the Windows E3 and E5. So Windows can become a subscription, the Windows 11 can become a subscription. Not going to go into the difference between E1, E3 and E5. I have other webinars that you can go and find on our YouTube channel where I go through these in depth. But you know, basically these are the products. One thing to note is that the Office 365 and M365F SKUs are not enterprise subscriptions. Okay. So again, if you look at the definitions from the contract, enterprise products include enterprise online services. And then online services are defined here. Now the reason that I bring this up is when I'm signing an ea. What does this mean? It means that because the definition says that all devices and all users need to be licensed. I have to license all my devices if it's a device based license, or I have to license all my users if it's a user based license. Unless I can exclude them for things like that industry clause or in the case of O365 and365 if they're an F user and an F SKU user is somebody that is using a kiosk, does not have a dedicated PC, you know, could potentially just be accessing through a mobile device and there's limitations on the size of screen and things like that. Okay, so again, some tips for an enterprise online subscription. True up here, the count in theory should be equivalent to your active users and active directory minus F users. So again, if you haven't, if you're not fully deployed into O365, and I'm going to get into some of the challenges on bloat and counts in a few minutes. But if you haven't fully deployed into O365, this is how you would determine how many O365 license need if you were to be audited. Right. You can have different profiles here. Like you'll see some people that have O365E1s and M365E3s and some M365E5s. We won't get into the complexities of managing that and some of the risk that that brings in this call. But you can potentially have that. And we do see that quite often. Right. And we're going to get into how you adjust these counts in a bit. Now the one thing that's a little bit different with M365 or these subscription products, all of the subscriptions, whether they're enterprise and additional, is on premise product, I basically can deploy and then at the end of my anniversary date, on my anniversary date, give the count and do my true up with subscriptions. Because the O365 tenant needs to have a subscription in the tenant. When I need more licenses, I actually do what's called a reservation. Okay. And this reservation just means I go in and say I need 100 licenses. It doesn't mean I need to pay for it at that point in time, just means I'm reserving 100. So it puts 100 more licenses in my O365 tenant and then I can go and subscribe, sorry, assign those to users. Okay? And so that's a little bit different because with the true up, I don't really need to do anything. I just deploy all year long and then just do account submit it with, with subscriptions. I need to put them in the tenant so that my users can get access to the services in the cloud. Okay, now what is an additional product? So an additional product is anything else that you can put on an enterprise agreement, which is pretty much all Microsoft products. There's some exceptions, but the vast majority of them can go into the enterprise agreement. And additional product is anything that's not an enterprise product. Right? So these are going to be your Windows servers, your SQL servers, your Visio, your projects, your msdn, et cetera. Right? Now the difference between an enterprise product, the biggest difference between an enterprise product and an additional product is whereas the enterprise product I have to license for all my devices or users with additional products, I can just put what I want on the ea. Okay? I don't have to put it all on as long as I have enough licenses to cover my use. Right? So let's just take a simple example. Let's say I've got project, I'm running 2016 on premise. I might have 200 of those. I could have 115 Project 2016 licenses that I bought and cover 150 of my machines. I could have 50 inside of my EA, which will give me 2016 software assurance and the most current version of it, but I have 200 licenses to cover. Okay? So I don't need them all to be covered in the ea. So that's the biggest difference is with an additional product, I don't need to license everything. Okay? And even at true up time, I don't necessarily need to true it up. I could look at it and say I don't want to buy, to have software assurance on this because you know, it's a product that we're not going to upgrade or whatever reason. And I could just buy a license. Only now in theory, I wouldn't have true up rights if I'm doing that and I should pay for it in the month that I deploy it through like an MPSA or some other program. But I could, you know, I could make that determination whether I want to have software assurance on it or not. Because inside of the eam, forced to take software assurance. Okay? Now, additional online services, again with these things, it's not really a true up because I'm going to have to reserve them if I need them. Because if a user needs to get a project online or a PowerApps license or Power BI, they're going to have to have that assigned in the, in the portal within the O365 portal. I need to have licenses in order to do that. So I actually make the reservation. I could choose to pay for it at the time that I do that, or I could pay for it at the anniversary date at the end. Okay? And so the one thing that I will say is we do see a mix of this. We do see some organizations that like to wait until their anniversary date and then pay for it all. And then we see organizations that like to pay for them as you go. I'm, I'm, you know, I understand why organizations pay for them as you go. You know, sometimes I'm a little, not sure why they do it because it could put them in a position where they're over licensed and if they're not doing an exercise to clean up their licenses and they're just reserving, reserving, reserving or you know, paying for them, you know, paying for a Windows server. We had a client here, I'm just going to use an example. This is a real scenario. We had a client, we started working with them just recently and they hired us to come in and take a look at their, their true up. They wanted to figure out if they needed to do a true up or you know, they were trying to save some money. And their process was whenever they bought a server, they would true up Windows licenses right away. Windows server licenses, they would just buy, you know, if it was new, hosted by 16 cores of data center, true it up, submit the order, pay for it, and then with SQL they would wait till the end of the year, wait for their reseller to send them some form, try and do some calculation, and then submit a true up for SQL. So they were kind of doing a mix. When we went in and we looked at it, we actually found because of the way that they were doing this, they were not resetting their licenses, right? Like they were basically just looking at, I'm buying a server, I'm going to, you know, I need licenses for it. Now if they were retiring one, they would transfer the licenses when they retired the hardware. But they were just buying and buying and buying. When we went in, we actually found that they were something like $200,000 a year in Windows servers over licensed. So they've been doing true ups and they didn't need to, right? Because they were treating it as kind of a purchasing exercise. And so it cost them 200 grand, but they didn't need to. They just gave Microsoft $200,000. Their annual spend on Microsoft Windows servers I think was like 400. So they gave them 50% more than they needed to that year just because of a process. Right? So there's some benefit to it from a finance perspective, but it could put you into these positions where you're overpaying right now. The adverse, the wait until the end. A lot of the problems that most organizations have, we get called a lot of times like, oh, we got like that seven figure true up and we didn't budget for it. So they've been deploying all year long, doing whatever they do and then they come in, they're like, oh, we had this big true up. We weren't expecting it, right? And then they don't know what to do about it because they weren't watching it because they didn't have to in theory. I'm going to show you some language here in a couple of minutes that maybe debunks that a bit. But in theory they didn't have to. So they just waited and then they get these big true ups. And so what's the right thing? It's probably a balance, right? It's a balance of looking at your licenses on a regular basis, figuring out do you actually need to do true ups? If you need the budget, if you got budgeting things, then maybe look at doing it on a quarterly basis, reset your licenses on a quarterly basis because that's what you want to do is reset your licenses to meet what you need today. Okay, so the next question I Get. So that's how. That is how a true up works. Now, the next question that I often get is when is my true up due? And there's a lot of confusion around this, particularly in the last year. So if we read this language, the true up is due between 30 and 60 days prior to the enrollment anniversary date. So let's go to a contract that's signed January 1st. That means that I have to place my order between November 1st and November 30th. Really? Right. 30 to 60 days before. It shouldn't happen in December, according to the contract. Now, a lot of people don't get around to them, do them in December. Those are considered late true ups. Okay, but you know, in theory, that's what happens. If your EA is in June, you should be placing your order by May 31, right? Somebody in between May 1 and May 31. Now, there's an exception to this, right? That exception is in the last year where you only have to do it within 30 days prior to the expiration date. So if we go to our January contract, that means if I'm in the final year of my contract, my last true up is due December 31st. And the reason I bring this up is in renewal negotiations, we often see clients getting pressured by Microsoft to place that true up order 30 to 60 days prior in the last year. They don't. They have to just place it before the last day. Microsoft wants you to do that because they want to understand the budget, they want to understand all this stuff, and they're putting pressure on you now, if you know it, sure, go ahead and place it. If there's a lot of stuff that's changing and we're going to talk about a couple of clients that if they had got pressured into this, was devastating to them from a financial perspective because you need to do the right things here. If they're putting pressure on you, just show them this language. So often I've. I've been in conversations where they're like, well, my Microsoft rep says this. I'm like, cool, let's pull up your contract. Let's take this exact screenshot. Let's send it over to them. We'll highlight that section where it says prior within 30 days of expiration and ask them why this doesn't apply to you. And then they laugh because Microsoft never responds to that because they have no. They have no recourse because the contract actually states this. Right? So this is when it's due. Year one, year to 30 to 60 days prior. Year three, the day before it expires or before you place your renewal order. Right. So lots of times it's late. What will happen on a late true up is if you have reservations, Microsoft's automatically going to bill you. So with reservations, when you get your reservation report, we always say let's go through that and make sure you actually needed those things. You know, you're not allowed to typically return these licenses unless it's kind of within the first 30 days. There's a little bit of a grace period and design behind the scenes process with your reseller that you can do. But we've also had clients where they did a bunch of reservations. They were done incorrectly for various reasons and then they just went to Microsoft and worked with Microsoft to back them out. So again, that's kind of a negotiation. But you definitely want to review those reservations. Okay. The next question I get asked around true UPS is if I have to true up can I actually do reductions? So this is kind of a twofold answer. Here's the language out of the contracts, a section called subscription license reductions. Okay. And basically the answer here is if it's an on premise license, there are no reductions. None. Right. If it's enterprise subscriptions. So let's go back. Enterprise subscriptions are Office 365 M365E SKUs. Those are the EMS SKUs and Windows E3 or E5 if I'm buying that as a subscription. Those are enterprise. I can reduce, but only to the quantity that I initially signed for. So what does this mean? Let's say I'm an organization that signed for 5,000 M365 E3s in year one, it grew to 6,000 in year two. Times got tough and we shrunk to 4,000. Right. What that means is on my year two anniversary, instead of paying for 6,000, I can decrease not to 4, but to 5. I can only go to what I signed. There's a floor to where I can go for enterprise or sorry for additional online subscriptions. Project Online, Dynamics, Visio, powerapps, Azure, Monetary, Commit any of these things that sit in the CPS under additional online services. CPS is the price sheet. That's kind of the receipt of what you're buying you get from Microsoft. On my anniversary date I can reduce to zero. Okay. That's a key thing because so often these are things that Microsoft throws into deals in order to incent you to take to get a deal. So I've seen I want to deal on Microsoft 365. Microsoft's like take all these power app licenses that you're not using, but we will only give you a discount on that if you do this. And so then they're like buying all these things and then like two years later I'm like, why are you still paying for power apps? You're not using them. You could zero those out on your anniversary date. I didn't know that. Right. So on your anniversary date for an additional online services, you may take them to as low as zero. Now again, you got to read your contract because sometimes Microsoft might give you a concession and then put language in the contract that says that you can't. You're stuck at those levels. Right. So not just read your EA agreement. It says one thing, you have to look and see if there's any amendments and what Microsoft has done there. Okay. The other thing to note with the enterprise ones is that you can move them around between the ease. Right. So Maybe I've got E5s and I'm using them. Maybe I can move them down to E3s or E1s or whatnot. So I can move between those. Now one of the key things to note is that the F SKU, the frontline workers SKU, so F1, F3, whether it's O365 or the M365 version of it, is an additional product. So there is no restrictions in how much I can true that down. So if you think about what's going on in the economy today with, with a bunch of, you know, kind of layoffs and things like that, unfortunately if I'm a manufacturer and I have a, you know, 20,000 M365 F3s and we reduce our workforce to 10,000 on my anniversary date I can go down to 10,000 even if I signed at 10,000 or 20. Sorry. Right. So the F. The F SKUs allow you to decrease because they're an additional product below whatever you signed for. Okay, so I'm going to talk a little bit. I've been going through these, but I'm going to talk a little bit about some of the challenges that we see. Right. When it comes to true up for Windows and SQL Servers. People are lacking the data to calculate the true up. And so what do I mean by this? We hear so many times, like I've heard people like. Or true ups coming up and like they strike up these sort of mini projects for 12 weeks to go and figure out what their true ups are. That's somebody that has poor data quality because in theory you should be Able to figure these things out in a couple of hours. Like literally run a report, get the license position, figure out what you need and then just go and validate that it's all right. So they spend so much time doing that and then they don't even really know how to, how to do this. Right. And so here's the process that we go through and that we highly recommend for clients. Clients, right. Is you need to make sure you have good data quality when you're doing these things. Okay, and what does good data quality mean? That means that you have 95% at least, you know, typically 90 to 95 on servers, but somewhere 90% plus of the, of what I. You know, if you think about a Venn diagram, active directory, we talked about that. So devices that are active, based on what active directory says, inventory, say SCCM, Altair, ServiceNow, Discovery, whatever it is, think of a Venn diagram inventory and in active directory overlapping at 95%. If it's less than 95%, you need to go and figure out why. Right? Is it not in inventory, is it an off, you know, a non managed device, what is it? And try and get to there. Because once you have that, then you can make decisions. Then you need to make sure that you have all the right attributes reporting in order to do licensing and that you understand these things. Okay, because what do I mean by attributes? So if we look at Windows servers, that's core based licenses. So I need to know, do I have all the, do I have the correct core counts? There's virtualization rules. So do I know all the hosts? Do I know the host to guest relationships of the VMs? Is the, you know, is server mobility happening? So moving from host to host is disaster recovery happening? Whatever it is, I have to look at all those things. Is it in the cloud, what's the impact on that? Right? So I need to make sure that I have all the attributes I need to make a license position. So just so people know, in order to make a proper Microsoft license position, there's something like over 250 different attributes that you actually need in order to do that. Now, not for every product, but across the entire footprint. Right. The next thing that you should do is reassign all your licenses to get your optimal position. Right. We see this so often, people buy licenses, they might even have SAM tools like software asset management tools like Snow Software, Flexera, ServiceNow, SAM Pro. And they're like, we ran it, we're compliant or we ran it, we need to do a true up, right? But what ends up happening with those tools are they're not, they're not dynamic, they're static in license assignment, especially on server, complex server stuff on desktops and kind of simple device based licenses, maybe this is a little bit different, but for the most part for dynamic things like servers, very complex things, they're very static. So in other words, I go in and I assign my licenses to a host and they stay there. And so when we run the reports and the reconciliations to see where we sit, what ends up happening is it just looks at, it says, oh, it's got Data center licenses, you're compliant. Doesn't look, they say maybe they have only two VMs on there now and it shouldn't be data centered. Right. And so you want to reset your licenses. So I already talked about this client that was like doing all these Windows Server things, right? Buying them throughout the year and they were chewing them off. Well, if they had done a reset every quarter, they wouldn't be doing these trips because they would have found out that they were sitting on, you know, I think they had like a thousand extra cores of licenses for a number, correctly. Right. And they could have just brought in a new one and then just, you know, run it like, oh, yep, here we go, reassign them. Right. The challenge here is a lot of times they're done based on projects and budgets and projects and things like that. And that's all fine and dandy, but from a compliance perspective, if you're doing internal accounting account that way, from a compliance perspective, make sure you're compliant, right. And do it in the most cost effective manner. And so you should reassign that. Right. And you have to make sure that you, you know, what we're seeing is a lot of people are so unsure of how licenses work in the cloud, right. Like Windows servers. Can I use them in aws? The short answer is basically no. There's a very limited scenario where you can nowadays which is getting less and less. The way I count in Azure is different. I'm going to talk about this in a minute. The other thing that we see here a lot of the times is System Center. We might see clients that have non production and are excluding licenses and then they find themselves non compliant. Because System center can't be used in a non, can't be excluded with msdn. It's not included in the MSDN rates. MSDN rights allow you not to pay for Windows and SQL and non production. But System center is not non production in those scenarios. If you're using System center to manage Dev task, qa, et cetera. That's a production use of System center and it needs to be licensed. And it's not one of the products that in the MSTM list of things that I don't have to license, it's not there. And so, so often we go in, we're like, you guys need System center licenses for this. And the flip side, we see people also buying cis, which is core infrastructure licenses, which are Windows and System center in a bundle when they don't need to. They could just buy System center and save a bunch of money, right? On Office 365, we're seeing way too much over buying, right? There's just way too much. We see. And I'm going to show scenario here in a little bit where people are buying more licenses than they have employees. I had a conversation with a CIO the other day and he's like, Mike, I'm buying 14,000 some odd O365 licenses. And with contractors, we only have 11,000 people. Why am I paying for 3,000 more than I need? And this is one of the things that irritates me a little bit about Microsoft, right? So if I go back to the EA and the language in the ea, the EA says I have to buy licenses for all qualified employees. So in his case, 11,000 something. But the tenant itself consumes subscriptions and so it's consuming 13,000 someone. So even though his contract says he only has to pay for 11,000, he's paying for 13,000. Now you go to that with Microsoft, they just go, ah, that's the way that it works. But in this case, they're getting 20% more licenses than they should be. The reason it's on service accounts, it's on board rooms, it's on accounts that are disabled. There's lots of different reasons for that, right? The other thing that we see on O365 is people are oversubscribing. They get caught in the I want a deal from Microsoft and they buy the bigger bundles than they need and it's costing people substantial money, right? The other thing is they might know these things. They might know we've got licenses assigned to boardrooms or whatnot, but we're afraid to change those because what's the impact to the end users? You know? And instead of trying to figure it out, they're just like, we're not going to do it. Come throw their hands up, right? Or like they're afraid to make a change. Like you know, we've seen the users that are like, you got all these users that are on Office365, we have all the data to prove that they're only using the functionality of an F license. They're not. And that they're on kiosk, but they don't want to change it because they're afraid of the impact to the end user. But it's costing them a million bucks a year. Right. And so they're afraid to do these things. And so you really need data so that you can make these decisions. Right. And then the other thing is, like on the online subscriptions, so often we're seeing people forced to buy them just to get a deal from Microsoft. Power, Apps, Dynamics, all this stuff. They don't track that they can zero it out, or they maybe are told by Microsoft when they sign the deal, oh, don't worry if you don't use this, we're going to work with you this year to deploy it. But if you don't use it, you can zero out and true up. And then they come, they get their workbook, they're so busy, they just sign off and they keep going. And it's in their budget, so they just don't care. Right. And so they, they don't, they don't pull these things out because they don't plan ahead to remove them. Right. And they don't or they're not tracking whether they're actually using them. Right. And that's because they don't have the data to track whether they're actually using, using this stuff. So these are a couple of challenges that we see now. The big one that we see coming up, and we're seeing more and more of this, and this is about moving to the cloud, right, Is that Windows and System center licenses are the same on premise, but not in the cloud. And so what do I mean by that? If you look at a Windows and System center license on premise, Data Center, Windows and System Center, I put it on a host and I can manage all the VMs and I can have unlimited Windows VMs on a host. It's exactly the same. But when I move to the cloud, they don't work the same anymore. System center is no longer about how many VMs, or I guess it's more about how many VMs. Because with system center in the cloud, whether it's AWS or Azure for System center, as long as you have SA, I can manage 2 VMs with 16 cores of standard or 10 VMs with 16 cores of data Center. So in order to figure out how many System center licenses I need in the cloud, I need to know how many VMs I'm managing. And then I just do some simple math. Now, on Windows, I can't use it over at aws, with the exception of one really small use case inside of Azure, I get the Azure Hybrid benefit. And Basically for every 16 cores, I can have two VMs. If it's data Center, I can still use it on premise and use two VMs in the cloud. If it's standard, I can do two VMs in the cloud or on premise. Can't do both. Think about that. I have these things called CIS licenses, core infrastructure licenses. So many people have them, they're in their agreements, and that's Windows System Center. And then all of a sudden I move to the cloud and Windows Server no longer equals System center from a licensing perspective. Therefore the cis, CIA, CIS licenses lose all of their value to me. Right, and I'm going to show you exactly how this works in a second. Our client that we just helped through this right now. Let's talk about this one. Right, So a lot of people are moving completely out of their data centers, or they're like really scaling them down. So they had all these hosts and all these VMs in their data center. So this client that I'm about to talk about moved every one of their production hosts out of over into Azure. They no longer have any. Right. So in Windows, I move them over to the cloud. I don't have any on premise to put those Windows Data center license on to get Windows unlimited virtualization anymore. They're all gone. They're all in Azure. Right? So in this case, Windows Data center and Windows Standard for an Azure Hybrid benefit are equal. One VM of one VM of eight cores or less in wind in Azure for every eight, every eight course of Windows or SQL Server line or, sorry, window, Windows Server that I have in Azure. Right? So on premise it's unlimited virtualization. With standard it's two VMs, but in the cloud they're equal. Except for Windows Data center is a multiple. I think it's like six or seven times the cost of a Windows Standard license, right? So now all of a sudden I move. So let's just take a simple example to illustrate this. Okay, I'm a simple customer. I have one host, 16 cores, 40 VMs. I have 16 cores of data center in on premise, unlimited virtualization. I'm plugging along. Life is good. We decide that we're going to move all 40 VMs into Azure and get rid of our, our own server on premise. We move them over. I can only license two of the 38 or sorry, of the 40. I got 38 that I don't have licenses for. So you didn't buy that through compute or I need to go out and buy licenses. Worse, if I have Software assurance on those and Data center and Windows are the same, I can keep my essay on Data center but pay for like six less. You see where I'm going, right? Microsoft has created a mess here and it's going to become a bigger mess because we are seeing more and more now when we analyze Azure hybrid benefits. In true ups, people do not have enough anymore. When they first started migrating, they had all these Data center licenses and had unlimited, you know, had, you know, access. They've chewed through the access and now they're at these points where they don't have enough. And this, I believe is going to be where Microsoft starts auditing pretty heavily soon if the revenues really continue to slow. Their Q2 results weren't as great as they would like. The revenue slowing. I think this is one of the areas that they're going to audit. And the thing is like you think about this. I have software assurance. Let's make this simple. Software assurance on CIS licenses and I don't need them anymore. All I need are a bunch of Windows standard because I'm moving it to Azure and I'm not using SCCM to even manage it anymore. I can't trade those in. They don't allow me to. What this does, this is the case study. This is what actually happened with a client. They had CIS licenses and a mix of standard Data Center. They had Visual Studio for MSDN for their dev servers. They were using that only on SQL. They were applying CIS licenses to get System center. Even though they had dev clusters, they had actual dev clusters that they didn't need to have Windows on. When you don't have dev clusters, using MSDN to manage Windows servers probably is very complicated. Plus usually you had Data center licenses and those servers were covered under the unlimited virtualization in the VMs. But in this case, they could have just been buying System center but they were overpaying for CIS licenses for their dev cluster. Right. But moving forward, they're going to keep the devs dev cluster on premise. All they need is System center licenses for the few hosts that they have left with their dev cluster that they're leaving on premise. For the time being, they're leaving it there because it's a different group. It's probably going to aws, not Azure. But you know, they're leaving it there, right? They moved all their production VMs to Azure, right? And so they don't need CIS licenses anymore. They need to count the number of VMs they need by 10 data center or sorry by 16 cores data center for every 10 VMs and then they need standard Windows Server licenses, you know, eight cores for however many ahub they need. Right? So imagine being them for I think nine years they've been paying for CIS licenses, paying for sa, they do what Microsoft wants, moves to the cloud and all of a sudden you can't break apart that CIS license and just buy Windows or System Center. And I need to go and buy licenses again in order to do what I need to do right? Now the reason that they would do it is basically what they needed to buy. If they stayed where they were doing, they were going to pay. It's not a huge client. Guys like this, you know, you don't need to be big for these things to have impact, right? So, so if they just continued doing what they were going to do and then truing up and kind of cleaning up to make sure they were compliant would have been $210,000 per year in licenses. Now they were actually prepared to spend something like 300, some odd thousand. But when we explained this to them, they looked at it and said well it's 210. But when we said no, no, actually what you want to do is rebuy all your licenses, do this at Citizen center, buy Windows standard ll only get rid of all your data center essay because it means nothing to you anymore or just keep a little bit just in case type thing, right? So we went through all the risk benefits, all that sort of stuff. It's 172,000, right? So that's a 25% reduction. Almost just there, that's buying L only that should be a lot less because they should be able to just get assay only if Microsoft had a trade in program, which they don't, right? And then for added measure, we reviewed their SQL servers, right? They had bad data, right? They had the wrong additions, they were not assigning licenses correctly. So what I mean by that, they thought that certain things that were actually express were enterprise. We're assigning licenses to those, we clean that sort of stuff up. And then they also were using enterprise licenses to license SQL standard. They're like, well we got extra enterprise licenses and we need some standard, which makes sense when you have them but when you get into a renewal, look what happened. $600,000 a year in SQL licenses, down to 210. Okay? So these are the sorts of things that you can do when you have the right data and you're looking at it right now. I wanted to talk about an online subscription one, right? So here's an example of a client. So this is a report that we built for this client. Not going to go through it in a ton of detail, but there's a couple of things to note. Each of those, box 1, 2, 3, 4 and 5 are where they're buying licenses that they shouldn't be. Okay? And that equated to $600,000 a year. Now this is a second anniversary, okay? So they can reduce. Now remember Enterprise subscriptions, these M365 and E3s, they can't reduce to zero. They can reduce to what they signed for when they, they signed up. Any of the stuff below that. Those are all enterprise or, sorry, additional online services that they can reduce to zero. Right? Look at this. Viva topics. They got 4,000. They're using zero. They haven't even assigned them. Microsoft threw that into the deal. There's a simple $16,000 back just by zeroing that out on their anniversary date. They were ready to place an order for what was here, by the way, they were just going to replace that order. And so again, we gave them the data to look at this stuff. And then we also went one step further and looked at their Dynamics365 usage. They signed a deal three or two years ago for Dynamics365 for a ton of users. Okay. And they had a plan to move to Dynamics. It never transpired or they didn't have the visibility into what the sales. Org was doing to actually see if it got as widely adopted as they thought. Right? Because if you look here again, you can't see this a little hard, but they had like 3,000 licenses and they had like, they almost had them all assigned. They had 91% of them assigned, right? So they were assigned to users. But when we actually went in and looked at the usage, they were using 3% of them. Right? So that was $1.65 million in licenses that they were paying for. Second anniversary date, they could take that down from 3,000 to about 100 and say 1.65 million. Right? So what ended up happening, we identified that 800,000 of waste in those enterprise licenses. They were able to get about 2/3 of it. So they got about 600k of the 800 you couldn't get it all because it couldn't reduce it. And they also had some things where they were like we're just not sure whether these users are going to use it. And because of when, when we were engaged, they just didn't have enough time to investigate it. They got 600,000 back there and saved 1.65 million on their Dynamics 365 licenses. So these guys saved 202.25 million when they engaged us. They're like we want to get at least a 10x return. I won't tell you what their exact return was, but it was a multiple of 10x. They got 10x plus plus plus return on our services. They just didn't have the data to do these things right. And this isn't even talking about what we did for Windows and SQL Server, which there was more there. So I'm just going to throw this out there. June is a big month for True ups, right? In fact, as we learned today, they actually supposed to be done next week. We're super busy but we do have room for a couple of people to get in. If you got a True up that you want to get done in June, we offer assistance for the whole Microsoft stack. We can look at the Windows, SQL servers, any of the other on premise if it's Relevant still your Office365 subscriptions. We can even look at your Azure and figure out where you're wasting money there. And we can do these things in fairly quick order. So if you'd like some assistance to maybe drive some cost out of your True up this year, you know, and want a 10x plus plus ROI like the client I just showed. Drop me an email, let me know that you want some True up assistance, that you're on the webinar and we'll give you 10% off on that on that service if you sign up before the end of the month and we'll help you with your True up for June or if you got one coming up in the future, you know, maybe your renewal is not until December, you won't get ahead of it or your anniversary dates not till December. You want to get ahead of it. More than happy to, more than happy to help you out there. So with that I will. I think I don't see any questions today, but I'll just stay here for a quick second. If anybody has any questions, please feel free to drop it in the chat. Otherwise everybody have a, have a wonderful rest of your day and thanks for, for joining us and hopefully hopefully this this was a helpful and informative session on how Microsoft True UPS work. Great everybody, thanks. Have a.