As a smart partner you use the Windows Server CSP Subscription license (1y or 3y) on Azure under AHB. That saves you 90% on the comparable PAYG Windows server license that you pay if you deploy a Windows Server in Azure with the Windows Server license included. (if this is new to you, read my previous blogs: Blog - The CloudLab — Selling Azure Migrate Services).
However, you can save a lot more on the Windows Server CSP Subscription license. In recent years, more than a thousand Azure migrate business cases have been processed by our application. As it turns out, the configuration of a typical VM has 3.6 cores and is 13.1 GB. More than 70% of the VMs that are migrated to Azure have 8 cores or less, especially after the 'right sizing' of the VM configuration.
If you provide your Azure Windows VMs with a Windows Server license via AHB and a CSP Subscription license, you will probably provide every VM with a 16-core license, even though 80% do not use 16 cores. That is the general license condition. However, an interesting condition has been added for all Azure implementations:
Each set of 16 core licenses entitles Customer to use Windows Server on Microsoft Azure on up to 16 Virtual Cores allocated across two or fewer Azure Base Instances. Each additional set of 8 core licenses entitles use on up to 8 additional Virtual Cores on one Base Instance .
(If you want to read it yourself: Commercial Licensing Terms (microsoft.com) )
This means that you can use a 16 core Windows Server license on two VMs that do not have more than 8 cores and that is in 70% of the cases. It takes some administration but saves 50% of the license costs.
When we point out this condition to partners, all are surprised and unaware of this code. Even the Microsoft specialists from the Partner channel are unaware. This is because the Azure Pricing calculator does not provide any means for partners to see and thus understand the benefits of CSP Subscription licensing.
With the Smart Azure Calculator, you can do this, except that you can make quotes much faster, these calculations are also much more competitive. Users of the Smart Azure Calculator double their success rate from quotes.
Experience for yourself how you can save a lot of time and make better offers with the Smart Azure calculator. We offer you free of charge to work out an Azure migrate business case together, so that you can experience it yourself. Mail me: firstname.lastname@example.org
@DaphnevanVliet @hermank @dikvanbrummen @LeahanneHobson
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Many Hosting and CSP partners believe that the transition to Azure will cost them a lot of margin because they are forced to part with the SPLA licenses. In this blog I explain that a transition to Azure certainly does not hurt their profitability, assuming the Azure license policies are properly used.
I will limit myself to the two most used licenses that have the greatest price impact during an Azure migration: Windows Server and SQL.
In order to make the different license models comparable, Microsoft has been billing licenses based on core numbers since 2018. This sounds easier than it is, especially for Windows Server.
The following license models are compared with each other:
CSP Subscription licensing 1-year commitment
CSP Subscription licensing 3-year commitment
The Azure Pay-as-you-go (PAYG) licenses that are included in the VM price (but differentiated here)
All prices mentioned are partner net USD prices, based on the Amsterdam price level.
The hosting partners' business and profitability is based on creating a volume advantage over the largest possible group of customers. This is especially true for the Windows Server Data Center Edition, although with the introduction of the new Date Center SPLA Windows Sever 2019 licensing conditions, Microsoft has already begun to nibble on this volume advantage. In addition to the licensing of the physical processors per host, Microsoft has also added a license multiplier, the licensing of the OSE: Operating System Environment (read VM).
We see the effect of this reflected in the comparison of the different license models. To make the differences of the models visible, I make three comparisons.
Price comparison per core. Without distinction between physical and virtual cores or taking into account any other condition.
2 nd comparison.
The Data Center license costs are based on an HP ProLiant BL460c with two processors with 20 cores each and 512GB of memory. That means 25GBRAM of memory per core.
In this comparison, the license costs over the 5 license models for an entire VM-series are compared, in this case a Dv4 series. Which means there is no economies of scale for the Data Center edition.
Same comparison as under 2. However, now the license costs of 100 VMs per type are compared based on the applicable license conditions. Now you can clearly see the scale advantage of the Data Center editions.
The conclusions for Windows Server licenses:
It is clear that the use of the PAYG Windows Server licenses makes your quotation unnecessarily expensive. In other words, the use of CSP subscription licenses give room to make extra margin.
The enormous economies of scale of the Data Center editions have diminished significantly with the 2018 condition changes. In fact, the 3-year CSP subscription licensing even offers a significant cost advantage over the SPLA Data Center licenses.
However, the big difference is that the Data Center edition can be shared among many customers. The CSP Subscription licenses are tied to a specific customer, if flexibility is desired, only the extremely expensive PYAG license remains. This binding at customer level is a serious shortcoming in the current CSP license conditions and costs business and / or a lot of Partner margin.
The pricing conditions between the different licensing options are identical. For hosting partners, there are no SQL Data Center editions or other license forms that bring benefits of scale.
The price comparison between the different license options therefore looks like this:
The conclusions for SQL licenses
The differences are a lot smaller here. The price difference between SPLA and PAYG prices is zero. If a customer is willing to commit for 3 years, there is a saving of 17%.
Yet Azure offers an interesting alternative that can significantly reduce the SQL license price and that is the 'constraint VM ”. The concept of constraint VMs is that relational databases such as SQL, but also Oracle, need a high throughput and a lot of memory and less cores for good performance. This means that in terms of cores too large a VM is chosen and therefore far too many license costs are paid. In some Azure VMs, such as the Edsv4 series the core count can be constrained to one half or one quarter of the original VM size, which means that the price of the SQL license is halved or reduced to only a quarter of the cost .
With the Azure pricing calculator you cannot choose CSP subscription licensing or see the effect of a constrain VM on the SQL license costs.
That is why we have built the Smart Azure Calculator with which you can easily calculate all these effects and you can play with your margin and see where your optimum lies.
Give it a try or contact us to see it work.
@DaphnevanVliet @LeahanneHobson @dikvanbrummen
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The success of the Microsoft hosting channel is largely based on the SPLA licenses. A simple, clear license model which is charged per month based on the used licenses reported by the partner. Based on mutual trust. The Datacenter editions in particular are attractive, as a result of which the volume advantage and thus the margin of further virtualization remain with the partner because the license is not tied to a specific customer.
With the introduction of the new Date Center SPLA Windows Sever 2019 licensing conditions, Microsoft has already begun to nibble on this volume advantage. In addition to the licensing of the physical processors per host, Microsoft has also added a license multiplier, the licensing of the OSE: Operating System Environment (read VM).
That, along with the annual increase in SPLA prices, betrays Microsoft's desire to willingly or unwillingly motivate hosting partners to migrate to Azure. There is a lot to be said for that. The Microsoft Cloud has so much more to offer than a rack containing some servers on which, with a lot of skill and effort, security, version management and support are arranged by a hosting partner. Despite that, most hosting partners still make a big living from this business and Microsoft is not making it very attractive financially to make the switch to Azure.
After all, SPLA licenses cannot be applied to the Azure Cloud, but strangely enough they can be applied to the 'dedicated host' environments of AWS and GCS.
A hosting partner developing its business on Azure has two licensing options. Purchase Windows Server and SQL licenses as part of the (pay-as-you-go) VMs. These prices are up to 90% more expensive than the SPLA licenses. Second option is to use CSP Subscription licensing with Azure Hybrid Benefit. The price levels are then close to the SPLA licenses.
However, there are two very big differences.
The SPLA licenses are per month, the CSP Subscription license requires a commitment of 1 or 3 years. This removes the flexibility that makes a public cloud different.
CSP Subscription licensing is bound per customer, ie if the customer drops out, the partner remains with the obligation.
The latter is typical of the paternalistic way in which Microsoft deals with its hosting partners. In this, Microsoft continues to deny that the hosting partners' business is based on creating a volume advantage over the largest possible group of customers.
You can also see this denial in:
The need to manage each customer in their own Azure subscription, under penalty of losing your CSP margin.
For that reason, hosting partners cannot set up their own 'PaaS' services, such as an SQL Cluster or an RDS-farm that can be used across multiple customers.
In that context also Windows Virtual Desktop, a Microsoft PaaS service that must be setup for each specific customer including a separate domain controller per customer.
Or the Reserved Instances discounts, which only apply with customer specific instances. As with the Subscription licensing bound, the 1 or 3 year commitment obligation must be imposed to the customer or the partner is forced to take the risk.
When writing this blog, the many annual Microsoft Partner global events come to mind where every key-note speaker highly rated the unique partner eco-system and its importance to Microsoft.
Dear Microsoft leaders: it has become time to put your money where your mouth is!
Any personal question or comment on this blog: email@example.com
Microsoft denies in their Azure pricing and licensing co.nditions, that hosting partners' business and profitability is based on creating a volume advantage over the largest possible group of customers.
This stops a lot of Hosting partners to make the final step to migrate their entire business to Azure.
Microsoft needs to stop customer-specific-licensing-binding on Azure and lift the licensing-agreement to the level of the CSP partner, independent of a specific customer.
Read the blog for all the details around this delicate story.
If you agree, share or like this post as a powerful signal to the Microsoft leaders in Corp to take this issue seriously.
Any question or comment, mail me firstname.lastname@example.org
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You have these Customers? Who are running a legacy Dynamic’s application on-premise and are reluctant to consider to move to Azure or Dynamics 365?
But you find it difficult to make a comparison between the current on-premise cost and what that cost would be to run it on Azure or Dynamics365?
We introduce a 5 steps approach in winning business cases to convince these customers to migrate.
But first you have to make the choice if you focus on just the migration of the Dynamics application or include all workloads and with that make a business case to migrate the complete customer’s infrastructure?
Based on our experience we can tell that the business case will look so much better if you include the complete environment. Otherwise, the remaining data-center cost will kill the business case.
For most partners making a detailed Azure design for the complete infrastructure makes it a time consuming, substantial pre-sales investment, that prevents many partners from doing this.
What makes the pre-sales investment so high is that most partners start to make a time consuming detailed technical design and use that to convince the customer to make the move to Azure.
But the only argument the customer is interested in is a TCO analysis and an accurate cost estimate of what it means to run all the workloads on Azure and for that you don’t need a technical design!
Let me show you how you do that, quick, accurate and transparent with the Smart Azure Calculator. Here a typical NAV 2013 customer with 25VMs, including NAV, SQL and RDS.
After importing the Excel import template, the rest of customer data is entered. The application is estimating the running cost, based on benchmark data. These estimates can be overwritten by real customer data.
Then the Smart Azure Calculator is mapping the existing VM configurations to appropriate Azure VMs, based on GBRAM/Core ratios in combination with workload purpose.
As a case handler you can change the selected Azure VMs and decide about the sourcing of the operating system. Here you can save a lot of money!
Then an accurate estimate is made of the Azure cost to run the customers workloads on an equivalent Azure infrastructure in a ‘lift & shift’ scenario. As you can see you can manage your margin. The presented cost estimates are customer net prices, including your margin.
Next step is visualizing the benefits of Azure optimization, like right sizing, snoozing and the use of reserved instances. As you can see the estimated monthly Azure compute cost drops from $ 8,385 to $3,637. Total cost drops to $15,857, this then includes NAV licenses, related cost as well as the entire infrastructure. This is the first scenario, showing the customer that they can save $3,000 per month to move their current NAV environment, as it is, to Azure.
Third step is to find out if it makes sense to use Azure SQL instead of SQL Server. The difference is presented as a TCO comparison. In this case Azure SQL is not bringing cost benefits, due to the high storage cost.
Fourth step is WVD. The current RDS solution is running 95 users of hosted Office 2013. The presented WVD environment is based on Microsoft 365. The additional price to make the step from Hosted Office to Microsoft 365 in combination with WVD is $1,900 per month for 95 users.
Fifth step is showing the cost impact if migrating the existing NAV environment to Dynamics 365 Business Central on-premise or to Azure to Business Central Cloud. You can see that in the Business Central Cloud solution the cost consist entirely of monthly software subscription cost.
And if you only would have focused on the migration to Dynamics 365 Cloud, the customer would probably have said: Too expensive! Why should I pay $ 1,700 per month more?
But if you look at overall picture you see that the cost levels remain the same, but the big difference is, the customer will now run on Dynamics 365 Business Central Cloud fully integrated with Microsoft 365. The newest of the newest and always up to date. This will bring them major productivity improvements against the same running cost.
And last but to not least the estimated Azure and Dynamics 365 cost of $ 18,843 per month includes your margin of $ 4,674 per month which brings you over 5 years close to $300,000 contribution.
You think this is a convincing business case? The application is generating a ‘ready-to-go’ presentation within a minute.
Want to convince more Dynamics customers to move to Azure ? Let us help you, as a free trial. Download the import template from our website www.thecloudlab.com and send this to email@example.com . We will prepare the business case for you in the Smart Azure calculator, explain how it works and give you free access to finalize it and then generate the customer presentation, ready to go!
Try it, you only can win!
#azure #cloudeconomics #azuremigrate #cloud #dynamics365 #navision
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Azure migration cases are only won by the correct application of Azure hybrid benefits in combination with Optimization benefits, such as right sizing, snoozing and the application reserved instances.
Despite the fact that Microsoft places a lot of emphasis on application modernization as the main motivation for persuading customers to migrate to Azure, the hundreds of cases we have done over the past three years show that the decisive motivation to move strategically to Azure the factor is price.
That makes selling an Azure migrate case so difficult, because more than 90% of customers believe that
Azure is much more expensive than a legacy hosting environment. And in the first instance it is. In a 'lift & shift' scenario, where the OS licenses are purchased including the VM. (PAYG pricing). In that case, the average price of an Azure environment is 42% more expensive than the legacy environment. And that is where many quotations fail, because the customer is not or insufficiently convinced to look further into the optimization of the Azure costs.
The accompanying graph shows the different steps that need to be taken to bring the price of Azure down substantially. The values mentioned are average price levels that we have aggregated over hundreds of cases. You could think of these numbers as a benchmark. As an attainable goal.
The biggest challenge is to convince the customer in the feasibility of these steps to achieve an Azure cost reduction. The most important thing is to be transparent about this. To show the customer what the options are from which he / she can choose and to make motivated choices together. Because the customer participates in making the choices, this increases the chance that they will agree with your proposal.
The Smart Azure Calculator facilitates this process from start to finish. This application makes it possible to make these savings costs together with the customer and immediately provide insight into the impact.
Would you even like to try this and experience how powerful this approach is? Send me an email firstname.lastname@example.org and I prepare the case for you so you can see how it works.
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