Gartner Research

Understanding the Impact of Microsoft's "Cloud-First" Strategy on Licensing

Published: 17 March 2017

ID: G00315027

Analyst(s): Stephen White


Microsoft's transition to a "cloud-first, mobile-first" strategy under CEO Satya Nadella spawned new trends in cloud licensing. Sourcing and vendor management leaders must review the impacts and adapt strategies to deliver flexibility, while maintaining the lowest sustained cost of licensing.

Table Of Contents
  • Impacts


Impacts and Recommendations

  • Licensing Microsoft cloud-subscription-only offerings leads Microsoft contract negotiators to increasingly replace perpetual license rights and optional maintenance with perpetual expenses
    • Subscription-Only Offerings Increase Lock-In
    • Online Services Only Enterprise Enrollment Waives Enterprisewide Purchases
    • Microsoft Has Rewritten Its Rule Book With Azure
    • Cloud-Only Innovation Limits the Business Benefits of On-Premises Solutions
    • Cloud and Subscription Policies May Drive Microsoft Clients to Alternative Cloud Solutions
    • Increasingly Competitive Landscapes Impact Partner and Client Relationships
  • Microsoft incentivizes cloud adoption by offering initial discounts, which contract negotiators must reconcile with the risks of declining negotiation leverage and rising long-term costs
    • Enterprise Online Services Introduce New License Rights — With Limitations
    • One Customer's Carrot May Be Another's Stick
    • Secure Productive Enterprise Addresses Issues, but Not All
    • Winning Hearts and Minds to Attract New Clients and Next-Generation Users
    • Infrastructure and Platforms as a Service Race to the Bottom

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