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November Update: Microsoft 365 Copilot, System Center, ESU Licensing Insights

Hello, everyone! In our latest Microsoft licensing news update, we delve into some significant changes that Microsoft introduced in November.

Microsoft Copilot Availability in MCA and CSP

The first significant update concerns Microsoft Copilot. It has been eagerly anticipated, and there's been a lot of buzz around its availability. It's now finally available via the Microsoft Customer Agreement (MCA), but contrary to expectations, it's not yet available in the Cloud Solution Provider (CSP) channel. This has led to confusion, with conflicting information circulating among Microsoft partners. We will keep you updated on this development.

Microsoft Copilot – The Entry Barrier

Currently, the minimum requirement for Copilot licenses is 300 seats, representing a significant investment, particularly for smaller businesses. This limitation is a critical point of discussion, especially for small and medium-sized enterprises keen on leveraging Copilot but unable to meet the seat requirement. The minimal cost is at least $100k per year. When will it be dropped? There is no information, even plausible rumours.

Microsoft Copilot – Licensing Prerequisites

An interesting point in the licensing prerequisites is the inclusion of Microsoft 365 Business Standard and Business Premium as eligible packages for Copilot. Regardless, smaller businesses with fewer than 300 seats still face challenges accessing Copilot. Effectively, as 300 is the maximum number of licenses you can get for M365 Business, you must license every user on such a subscription, and it must be for 300 users, no less.

System Center Server Management Licenses

The other major update is regarding System Center Server Management Licenses. This update is particularly relevant for those using legacy products. After years of ambiguity, Microsoft finally clarified the licensing System Center on Azure and SPLA (Service Provider License Agreement). The key takeaway is that these are subscription licenses that adhere to flexible virtualisation rights. The licensing model is now clearly defined for individual virtual operating system environments, simplifying the process for users.

Extended Security Updates

It's rather controversial, if not to say messed up. But it's not all doom and gloom, either. Microsoft included Extended Security Updates in the CSP channel but hid the price from the partners' price lists. Nevertheless, the price is known, and you should not have problems estimating the costs. Microsoft promised many positive licensing changes regarding ESU in a blog post in September but did not update Product Terms in November, which remain years old. So, if you are, for example, in Germany, where following the rules by the letter is fundamental, you, perhaps, will not be too excited about it. However, unofficially, Microsoft representatives send messages like, "If your Windows Server license is legitimate, usage of ESU is legitimate too, regardless of where it is deployed – SPLA provider, outsourcer, Azure, or on-premises."

There are two ways to procure ESU: annual subscription and PAYG via Azure Arc. Honestly, there are so many cost benefits to doing it via Azure Arc that it's a no-brainer unless you are concerned about privacy. Some MSPs say that Azure Arc shares too much with Microsoft. We cannot independently verify that and probably won't even try.

And another tip. If ESU is deployed for a VM on a hosting provider, Azure Arc is the most reasonable procurement path. Why? Because of the old licensing rules in Product Terms, as we mentioned above. Even if your VM uses Windows Server Standard, ESU must correspond to the Service Provider license assigned by them to the host in their Cloud environment. And it will most probably be a Windows Server Datacenter. Via Azure Arc, all ESU is Standard, i.e. much cheaper.

In summary

While Microsoft has made strides in adding Copilot to the MCA, it remains out of reach for smaller enterprises. On the other hand, the clarification on System Center licensing is a significant step forward, simplifying the licensing process for virtual environments.

Stay tuned for more updates, and remember, licensing doesn't have to be a headache. Keep your heads up, and let's navigate these changes together. We are always one message away: