Tuesday, May 26, 2020

Microsoft Cloud Subscriptions

Note: please may attention to the publication date of this article. Microsoft is always changing the rules!

Deciding how to start using Azure,  Microsoft 365, and Dynamics 365 can sometimes be a daunting experience. What is confusing is a whole lot of people competing along-side of Microsoft to sell you the same Microsoft-hosted services, and not a lot of explanation as to how this is organized or what is best for you.

This figure shows the four options end-users are presented with, ordered by functionality and price descending. I will address the benefits and cost of each of these.

Cloud Infrastructure

Two common question revolve around the Azure cloud infrastructure: do I have to move everything to the cloud, and what about the Microsoft Windows and other software licenses I have?

First of all you do not have to move all or even some of your on-premises operation to the cloud. All Azure scenarios allow for an all-Azure or hybrid configuration.

If you have licenses that are paid for under the Software Assurance program, those licenses are transferable to virtual machines provisioned in the Azure cloud. This is true regardless of if you purchase services through a reseller, a CSP, or do it yourself.

Indirect Reseller

If you are a non-technical person looking to move operations to the cloud indirect resellers are much more likely to be your first point of contact with Microsoft cloud services . That is because they have the most targeted advertising selling you their user-friendly services, while Microsoft focuses more on selling the cloud to technical people: cloud architects, etc.

Indirect resellers often offer the most help; they can provide anything from just selling you services to helping you architect your cloud environment and administrate if for you. Of course, all of that comes at a price so expect to spend more money with a reseller to get their help. You may choose to go with a reseller just because they are the only source of a proprietary (non-Microsoft) application that you need.

I strongly suggest that you do your research: look at the track record for resellers you are considering, investigate the certifications the staff that will be assisting you hold.

Also, it is worthwhile to note that indirect resellers do not have a direct relationship to Microsoft. They purchase services to resell from an Indirect Cloud Service Provider who purchases services from Microsoft. Many resellers use this model, because the requirements for being a CSP with Microsoft are intense: minimum purchase requirements (currently $15000/year), the need to provide additional applications for sale, etc. This is not necessarily a bad thing, because of their size indirect resellers can often provide you with the best personal attention at a high skill level!

Cloud Solution Provider

CSPs are often referred to as a Microsoft partner. There are three kinds of CSPs: a CSP that sells to the public, an Indirect CSP that sells to resellers, and hybrid of the two.

A CSP that sells direct to the public fills the same role as the indirect reseller, except that they have a direct relationship with Microsoft. The advantage is because of the direct relationship they can offer better prices. The possible disadvantage is that they are so big the personal attention may not be as good.

An indirect CSP sells to indirect resellers, not the general public, so they are not of interest to you and me. My gut feeling is there are actually many more indirect CSPs than those selling to the public, but I don't have any metrics to back that up.

One group that may be of more interest to you is the hybrid provider: they meet Microsoft's volume requirements by selling to indirect resellers, yet are still focused enough on their direct customer base to give you the personal attention you need.

Researching performance, attention, and certifications applies to choosing a CSP as well.

Personal Free Account

Microsoft really pushes trials, and for Azure this is the Personal Free Account. Free is somewhat of a misnomer:
  • Twelve months of a select group of free services, then the "free" part goes away and you have to pay for everything. The full list of what is free and the limits for twelve months can be found at Microsoft here. Note that it does include storage and some levels of virtual machines.
  • Pay-as-you-go model for purchasing more advanced services. You can pay for them, and then turn them off when you don't need them. This is good for testing things out!
  • $200 credit for thirty days to try out some of the services not in the "free" list: you get thirty days of service, but there are limits on traffic, etc. in addition to exhausting the $200 credit. This is really good for testing things out!
  • Just be aware: Microsoft offers the $200 credit for two reasons. The first is that they do not have to put logic into the service billing to allow for trials, they just allow the trial by giving you free money. It isn't real money, it just fools their billing system. The second reason is that people forget to turn off the service before the thirty days is up. So they immediately make a profit while you are scrambling to turn it off!

The most important thing to be aware of when purchasing Microsoft directly is that you are on your own for designing and managing your own cloud infrastructure. Because of that you get a better price, but you have to bring your own management. Watch what you do: Microsoft makes a horrendous amount of money off of people forgetting to turn off virtual machines, or release storage that they really do not need anymore.

The trial account is considered the second best tier for pricing, because it is pay-as-you-go.

It is entirely possible that a CSP could offer better pricing than this model when you are just interested in purchasing cloud services and not their design and management. You have to do your research: they receive volume discounts from Microsoft and it just depends on how they price the Azure services they resell. Or, you can get your own discounts with the Enterprise Agreement...

Enterprise Agreement

Finally Microsoft also sells the Enterprise Agreement (EA) directly. to consumers So, again you are responsible for configuring your own cloud services.

The only real difference between this and the personal free account is that you have to make a commitment to purchase a minimum volume of services throughout the year. Currently this is $100/month which works out to $1200/year. But, what you are purchasing is a considerable discount over the pay-as-you-go model, maybe as high as 50%.

You can get up to 70% discounts when you bring your own license (BYOL), but of course you did pay for the license so it really isn't a discount. It's just an effective way to reuse on-premises licenses when you move that infrastructure to the cloud.

The discounts in this model pretty much negate looking to a CSP to just buy services without help. You are better off buying from Microsoft directly.


This post should have helped you understand the model that Microsoft uses to sell services, and the best place for you to purchase from that model given your organization's budget, skill set, and other needs. Good luck!

No comments:

Post a Comment