The end of Open is nigh: what Microsoft’s licensing change means for you

What Microsoft’s licensing change means for you

Microsoft has announced that within the next two years, it will halt its Open License programme for SMEs – but how will this affect you?

A long, long time ago, we all used to buy our Microsoft software as a one-off purchase, use it for a few years, then upgrade to the next version. In theory these ‘perpetual licences’ meant the software was ours to use as long as we wanted, but in practice products became outdated, went end of life, and eventually became unsupported.

For the last twenty years, Microsoft has sold these perpetual licenses to small and medium businesses through its ‘Open License’ programme. Now most customers are buying licensing on a subscription basis and benefiting from the continuous updates that go with it, so it’s not a great surprise to see changes to such a long-standing programme. Indeed, one major software vendor moved to subscription-only sales of its main product as long ago as 2013. Microsoft has announced that Open Licenses will begin to be phased out from January 2021, and all products currently bought through Open License will be moved to Microsoft’s Cloud Solution Provider (CSP) programme, with a projected final close on traditional Open licensing by December 2021.

Notwithstanding this change, perpetual licenses aren’t going away anytime soon – if you want to, you can continue to buy these licenses from Microsoft, it’s just now that will need to be from a reseller via the CSP programme (CSP Perpetual Software). You’ll still retain full ownership to any perpetual licenses you buy, or have already bought, which means that your Microsoft software will keep working just as before. Additionally, I should add that Microsoft have not yet announced any plans to remove the OVP or OVS agreements – although OVS Agreements’ popularity has dwindled in favour of CSP licensing.

On the other hand, is now the time to think about exactly why you buy perpetual licenses?

In the past, there have been some concerns about security and data governance of cloud-based solutions such as Microsoft 365. It’s debateable how valid these concerns were, but today I don’t see that as a problem for almost all businesses – Microsoft has data centres in the UK, and your data is safe and overseen by the UK’s laws.

Microsoft is continuing to give you the option of buying software on its subscription model, or with a perpetual license, but the subscriptions are increasingly attractive. You get effectively the same product, but it gives you the flexibility to just pay for what’s being used, on a month-by-month basis. This means that if your staff numbers drop, you don’t pay for unused licenses – which with COVID hitting the economy so hard, has been a life saver for many companies having to make savings. Subscriptions also give you predictable costs, and simpler asset management for your licenses.

While it’s no secret that Microsoft sees subscriptions as probably the best solution for all customers eventually, it’s giving SMEs the choice, right now, of subscription or perpetual licenses. It’s up to you, of course, but I would always recommend the subscription route – there’s a lot of uncertainty around, not least due to COVID and I hate to say Brexit, so buying perpetual licenses doesn’t really make sense unless you are sure about how your business will adapt to the current and upcoming challenges. I’ve been proud to have helped some of Total’s customers to make big financial savings through subscriptions, specifically where they’re trying to adapt to an ever-changing environment.

For any business, licensing can feel like a complicated area. If you want to make sure you handle it efficiently, and take advantage of any financial savings available, feel free to drop me a line and ask for my advice – Total is here to help.