Microsoft Open Licensing Explained

Microsoft Open Licensing

• Open License: Buy perpetual licenses, a maximum of 5.
• Open Value: Includes Software Assurance and flexible payments.
• Open Value Subscription: Subscription-based, lower upfront costs.
• Key Benefits: Scalable licensing, flexible payments, perpetual options.
• Best For: Small to medium businesses needing cost-effective software access.

Microsoft Open Licensing is one of the most widely used volume licensing options for small and medium-sized businesses (SMBs).

Understanding how Open Licensing works can help organizations manage software costs, ensure compliance, and effectively plan their IT infrastructure.

This comprehensive guide will explore the key components, benefits, and challenges of Microsoft Open Licensing, helping you decide if it is the right option for your organization.

What is Microsoft Open Licensing?

Microsoft Open Licensing is a program simplifying software purchasing and license management for small and medium-sized businesses. It provides flexibility, affordability, and easy scalability, making it an attractive choice for organizations with at least five PCs.

The Open Licensing program provides access to Microsoft’s most popular software, including Office, Windows Server, and Exchange, while offering flexible purchase terms.

Types of Microsoft Open Licensing

There are several variations within the Microsoft Open Licensing program, each designed to address specific needs. Below are the key types of Open Licensing:

1. Microsoft Open License: The traditional licensing option allows businesses to purchase software licenses with a two-year agreement.
2. Microsoft Open Value: A more flexible and value-driven option, offering additional benefits such as Software Assurance, monthly payments, and easier license management.
3. Microsoft Open Value Subscription: A subscription-based version of Open Value allows organizations to access software through annual payments. It offers lower upfront costs compared to purchasing licenses outright.

1. Microsoft Open License

The Microsoft Open License is the most basic form of the Open Licensing program. It allows businesses to purchase perpetual licenses with the option of adding Software Assurance.

Key Features:

• Perpetual Licenses: Once purchased, the licenses are yours to keep even after the two-year agreement ends.
• Minimum Purchase Requirement: A minimum of five licenses are required to begin.
• Software Assurance (Optional): Offers access to product updates and additional support.

Example: A small business that needs Office licenses for ten employees might purchase them through the Microsoft Open License program. Once purchased, the licenses can be used perpetually, even after the contract expires.

Pros:

• Low Entry Requirement: Only five licenses are required, making it accessible to small businesses.
• Perpetual Ownership: No need to renew; the licenses are yours to keep.

Cons:

• Limited Benefits: This licensing type does not offer as many benefits as other types, such as flexibility or automatic updates.

2. Microsoft Open Value

Microsoft Open Value offers more flexibility in the licensing process, with benefits such as Software Assurance and payment options. This model is designed for businesses seeking value-added services beyond basic licensing.

Key Features:

• Software Assurance: Includes access to new software releases, training, and support.
• Three-Year Agreement: Open Value licenses have a three-year term with options to spread payments.
• Payment Flexibility: Organizations can spread out payments annually.

Example: A company wanting access to regular updates for Windows Server over three years might select Open Value to take advantage of Software Assurance, which provides the latest software versions and training resources.

Pros:

• Access to Software Assurance: Training, support, and upgrade rights are included.
• Payment Flexibility: Costs can be spread across three years, reducing the initial burden.

Cons:

• Longer Commitment: Requires a three-year commitment, which might not suit businesses looking for short-term solutions.

3. Microsoft Open Value Subscription

Microsoft Open Value Subscription provides all the features of Open Value but with subscription-based pricing. It allows organizations to pay for licenses annually rather than purchasing them outright, providing lower upfront costs.

Key Features:

• Annual Subscription: Pay for licenses on an annual basis.
• Lower Upfront Costs: These are more affordable for businesses that want to minimize initial expenses.
• Access to Latest Software: Software Assurance is included, providing continuous updates.

Example: A non-profit organization looking to minimize upfront software costs might choose Open Value Subscription. This allows them to access Microsoft Office tools without a large initial outlay, and they only need to renew annually.

Pros:

• Lower Initial Investment: More accessible for organizations with tight budgets.
• Scalable: Adding or removing licenses annually as the organization grows or contracts is easy.

Cons:

• No Perpetual Rights: Unlike Open License, you do not own the software outright.

Microsoft Open Licensing Benefits

Microsoft Open Licensing provides numerous benefits for small and medium-sized businesses:

• Scalable: Licenses can be added as needed, which is particularly helpful for growing organizations.
• Flexible Payments: Open Value and Open Value Subscription offer annual payments, allowing businesses to spread costs over time.
• Access to Software Assurance: Software Assurance provides added value, including software upgrades, training, and support, which can reduce long-term costs and boost productivity.
• Perpetual Licensing (Open License): This option allows businesses to own licenses outright, eliminating the need for ongoing payments once the contract term ends.

Software Assurance: Enhancing Open Licensing

Software Assurance (SA) is a key component that can be added to Microsoft Open Licensing agreements. It provides additional services beyond just the license itself.

Benefits of Software Assurance:

• New Version Rights: Access to the latest versions of the software.
• Training and Support: Provides access to training materials and 24/7 phone support.
• License Mobility: Allows greater flexibility in moving licenses between physical and virtual environments.

Example: A company that purchased Windows Server licenses through Open Value may add Software Assurance to ensure they get the latest version when a new release becomes available, reducing the need for repurchasing.

Choosing the Right Microsoft Open Licensing Program

Selecting the best licensing model for your organization depends on several factors, including budget, long-term IT strategy, and scalability requirements. Below are some recommendations:

1. Small Businesses

• Recommended Option: Microsoft Open License.
• Why? If you only need a small number of licenses and want to minimize costs while maintaining perpetual ownership, the Microsoft Open License is a good choice.

2. Growing Businesses

• Recommended Option: Microsoft Open Value.
• Why?: Open Value allows growing businesses to spread costs across multiple years while accessing Software Assurance benefits like training and regular upgrades.

3. Non-Profits or Budget-Conscious Organizations

• Recommended Option: Microsoft Open Value Subscription.
• Why?: It provides lower initial costs and flexibility in adjusting license numbers, making it suitable for organizations needing cost-effective software without long-term commitments.

Microsoft Open Licensing vs. Other Microsoft Licensing Programs

Microsoft offers several other licensing programs, including Enterprise Agreement (EA) and Microsoft Cloud Solution Provider (CSP). Here’s a quick comparison:

Key Differences:

• Enterprise Agreement: Suitable for larger organizations that need significant volumes of licenses and want to simplify licensing across multiple products and services.
• Cloud Solution Provider (CSP): CSP allows for more cloud-based services and monthly payments, making it ideal for companies focusing on cloud transformation.

Licensing Compliance and Challenges

Common Challenges in Microsoft Open Licensing:

1. Under-licensing: Purchasing fewer licenses than needed leads to non-compliance, especially when scaling up.
2. Over-licensing: Buying more licenses than required leads to unnecessary expenditure.
3. Complex Renewals: Tracking license renewals can be complicated, especially for Open-Value and Open-Value Subscriptions with specific renewal dates.
4. Lack of Knowledge About Software Assurance: Businesses often fail to utilize Software Assurance’s benefits, resulting in missed opportunities for savings.

Tips for Managing Compliance:

• Conduct Regular Audits: Evaluate software use regularly to ensure compliance.
• Work with a Licensing Partner: Microsoft licensing partners can provide guidance on purchasing the right number of licenses and managing renewals effectively.
• Consider Software Assurance. If your organization plans to upgrade software or needs added support, Software Assurance can often provide more value than purchasing licenses separately.

Cost Considerations

Cost Factors to Consider in Microsoft Open Licensing:

1. Upfront vs. Spread Payments: Open License requires a one-time upfront cost, while Open Value and Subscription allow for payments over time.
2. Licensing Quantity: Open Licensing requires a minimum of five licenses, but purchasing more can lead to better discounts.
3. Software Assurance: While optional, Software Assurance can reduce costs in the long run by covering updates and offering additional services that would otherwise require separate purchases.

Example: A business purchasing Office licenses through Open License must decide whether to add Software Assurance. While this increases initial costs, the value of updates and support over three years can lead to overall savings.

Practical Examples and Licensing Scenarios

Scenario 1: Small Consulting Firm

• Situation: A consulting firm with ten employees needs access to Microsoft Office.
• Recommended Option: Open License, allowing them to own the licenses outright without annual renewals.

Scenario 2: Non-Profit Organization

• Situation: A non-profit organization is looking to minimize costs while providing productivity tools to its staff.
• The Recommended Option is an Open-Value Subscription, which offers lower upfront costs and access to the latest software versions.

Scenario 3: Growing Tech Company

• Situation: A tech company plans to expand its operations over the next three years and needs regular updates for Windows and Office.
• Recommended Option: Open Value with Software Assurance, enabling them to spread costs and benefit from updates without repurchasing licenses.

FAQ: Microsoft Open Licensing

What is Microsoft Open License? Microsoft Open License allows businesses to purchase perpetual licenses for popular Microsoft software with a minimum requirement of five licenses.

How is Open Value different from Open License? Open Value provides additional benefits like Software Assurance and flexible payments over three years, unlike Open License, which has a one-time payment.

What is Software Assurance in Open Licensing? Software Assurance offers added services such as software upgrades, training resources, and 24/7 support. It can be included in Open Value or added to Open License.

Is Open Value Subscription a perpetual license? No, it is not. You must renew it annually to continue using the software.

Can I add licenses during the Open Licensing agreement? Yes, you can add additional licenses anytime during the agreement, making it flexible for growing businesses.

Which businesses should use Microsoft Open Licensing? Microsoft Open Licensing is best suited for small and medium-sized businesses with at least five PCs looking for flexible licensing options.

Does Software Assurance cover software upgrades? Yes, It includes new version rights, allowing access to the latest software without additional purchase costs.

What happens if I don’t renew the Open Value Subscription? You will lose access to the software. Subscription-based models require license renewals annually.

Can I purchase fewer than five licenses under Open Licensing? No, the minimum purchase requirement for Microsoft Open Licensing is five licenses, ensuring it is primarily aimed at SMBs.

How do payments work in Open Value? Open Value allows you to spread payments annually over a three-year agreement, making it easier for organizations to manage costs.

Is Open Licensing available for non-profits? Yes, non-profit organizations can benefit from discounted Microsoft Open Licensing, making it more affordable to access essential software.

Can I upgrade from an Open License to an Open Value? Yes, businesses can move from Open License to Open Value to take advantage of additional benefits like Software Assurance and more flexible payment options.

What are the benefits of Software Assurance for IT teams? Software Assurance provides access to training, support, and new software releases, helping IT teams stay up-to-date and maintain efficient operations.

Do Open Licensing programs offer cloud services? Microsoft Open Licensing primarily covers on-premises software. For cloud services, businesses should explore other licensing options like CSP (Cloud Solution Provider).