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When Rightsizing Your Microsoft Agreement, Beware of the Consequences of Firstline Worker Licenses
In March 2020, Microsoft updated its Firstline Worker licensing options. Firstline licensing per Microsoft’s definition are for “Users without a Dedicated Device. A Dedicated Device is a computing device used for work with a 10.1 inch screen or larger, used by the user for more than 60% of the user’s total work time during any 90-day period.” These are effectively licenses for users in a shared device environment. While Firstline Worker licenses may be beneficial to many an organization, for some there may be an unintended consequence.
To examine the impact, we must understand that Microsoft has two product categories in its Enterprise Agreements (EA): Enterprise and additional products. Enterprise products consist of M365 E3s and E5s, as well as O365 E1s, E3s and E5s. Additional products, consist of, well, as the name reads, everything else. Historically, Firstline licenses, or K1s as they were previously named, fell into the additional product category.
While Enterprise licenses have typically cost more and provided enhanced functionality than historical Firstline licensing, the new M365 F3 is as close to an Enterprise equivalent product as there can be. It includes an O365 license, similar to the O365 E1, a Windows 10 Enterprise license, and an Enterprise Mobility Suite license.
Herein lies the issue: the number of users licensed with an Enterprise product has two implications. Primarily, it dictates the ability to meet the minimum user count in an Enterprise Agreement (minimum 500 enterprise licenses), and furthermore, the discount level tier within the agreement and the Server and Cloud Enrollment (SCE).
Using two common examples, organizations who are moving to cloud licensing or had O365 licenses previously and are now moving users to the M365 F3, this could disqualify them from an EA (minimum 500 enterprise licenses) or reduce their discount level.
Should the M365 F3 really be considered an additional product or should Microsoft convert it to an Enterprise product?
- Should this impact your organization, raise the issue and provide feedback to your Microsoft reseller. The more cases raised, and feedback provided, the higher the likelihood of an impactful change in the future.
- A decision will have to be made on which licensing method should be chosen. In attempts to save money or right size, Microsoft could craft a proposal that makes licensing through the Firstline Worker format equally as expensive as license everyone at an Enterprise product level. This can be done by manipulating discount percentages, and while not fair, has been seen.
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Given that the cost involved with an EA is significant, organizations need to carefully evaluate their options prior to renewal time so that they make the right decision. This has become increasingly important with cloud subscription solutions that will factor in long-term consequences.