Microsoft Cloud Adoption can Absolve Sin

Unfortunately your organization has just been through a Microsoft audit which found it has been using more software than it has licenses.  If we went back five years in time the only choice would be to purchase licenses for the shortage.  Fast forward to today and let’s say the shortage happens to be the Microsoft Office suite.  Do not be surprised if Microsoft offers you the opportunity to resolve the shortage by transitioning from your current on premise license model to the new cloud based user subscription license (USL).  Since the USL provides for five installs of Microsoft Office on a PC or Mac, your shortage has most likely been solved.  And for Microsoft they have also achieved the goal of moving another customer to their cloud based subscription services.  This same scenario could play out with SQL Server or Windows Server, with moving those unlicensed workloads to Azure.

Don’t get me wrong, I think highly of Microsoft’s cloud services.  If I ran Microsoft I would want to find a way to completely move every customer to cloud based subscription services.  Once customers are dependent on cloud based subscription services, the renewal process becomes much simpler.  I suspect over time Microsoft can reduce their cost of sale, and thus reduce the number of direct sellers.

It is clear that customers who wish to continue with a perpetual license model will see less innovation and higher costs over time versus those who move to cloud based subscription services.  The question remains “What will be the future of Microsoft perpetual licenses?”, we will have to wait to see how it plays out.