By Derek Cahill, VP Pointivity

Microsoft Dynamics software-plus-services approach provides customers with the flexibility and choice in how they use, buy, deploy, and manage their business processes such as marketing, sales, finance, and operations. Microsoft Dynamics is a fast growing community built upon a strong partner and ISV (Independent Software Vendor) network.

Traditional Microsoft Dynamics Deployment
Traditionally customers purchase Microsoft Dynamics (AX, CRM, GP, NAV, SL, etc.) from certified Microsoft Partners. Microsoft partners will install, setup, and customize Microsoft Dynamics onsite with dedicated hardware and infrastructure. The most appropriate delivery model is dependent on the unique characteristics of each company and its industry. While the traditional deployment/licensing model might be attractive for some customers, it represents several problems for others, including large up-front capital expenditures for hardware and infrastructure (network, security, databases, backup, etc.), ongoing management of hardware and infrastructure (difficult for non-technical clients) and the full purchase of licenses that they may or may not use year over year. These expenditures are compounded with yearly software assurance agreements, hardware break/fix costs and unexpected licensing changes.

Microsoft Services License Agreement (SPLA)
Many customers and Microsoft Partners are not aware but Microsoft now offers Microsoft Dynamics (AX, CRM, GP, NAV, SL, etc.) on a hosted subscription model or Services Provider Licensing Agreement (SPLA for short). SPLA enables service providers with a hosted offering to license Microsoft products on a monthly basis to provide hosted applications to their end customers. In fact Microsoft offers Exchange, SharePoint, Office, Dynamics, Performance Point and many other products on a hosted licensed model. With SPLA you inherit the hosted model and leverage the IT expertise of hosting companies.

Advantages of SPLA Licensing
SPLA licensing has many advantages over traditional purchase of Microsoft Dynamics applications including:

• No Up-Front Capital Expenditures – Only pay for the hardware and software licenses you need. Pricing varies by partner, but a typical Microsoft Dynamics GP Business Essentials or Advanced Management module will be under $200 per user per month. Microsoft CRM is under $50 per user per month.
• Pay As You Go – SPLA licensing allows you to add or subtract users as you go along, only pay for the Microsoft Dynamics licenses you need. You can even mix and match Exchange, Office, CRM and GP licenses to match your company needs.
• Software Assurance Included – SPLA licensing includes all Microsoft Dynamics product updates year over year for the lifetime of the agreement. You’ll always have the latest product version under SPLA licensing.
• Boost Employee Productivity – IT or department resources can focus on business operations and not on IT issues or application problems. Many companies often designate one or two internal resources as their main point of contact for all Microsoft Dynamics problems. These resources quickly lose productivity and focus from their core responsibilities.
• Access Microsoft Dynamics over the Internet – Through SPLA licensing you inherit the ability for application hosting and can access Microsoft Dynamics applications over the Internet. This way your entire organization can work on Microsoft Dynamics and other Microsoft products while on the road, at home or from any office location.
• Eliminate Hardware Issues – Hosting Microsoft Dynamics eliminates the need to have in-house experts on servers, infrastructure, security, networking, backup, etc. Most Microsoft partners and application hosting companies have staff with experts in each of these areas, plus 7/24 help desk, redundant Internet and power systems, high-end security systems and backup systems that your company may find difficult to afford.
• Integration with 3rd Party Products – Many ISVs now support running their product on a hosted model with similar licensing terms to SPLA. Ask your ISV about a hosted solution instead of paying a large up-front licensing cost for their product.
• Partners & ISVs – SPLA licensing is a win/win for customers, partners and ISVs. Partners and ISVs can focus more on customer services, minimize hardware and setup issues, and offer Microsoft Dynamics at a lower price point to their customers.
• New Customers or Existing Customers – SPLA works great for new or existing customers especially customers who are upgrading to the latest version of Microsoft Dynamics or new customers who do not have the capital or the technical resources to support an onsite Microsoft Dynamics installation.

SPLA Licensing – What To Watch Out For
SPLA licensing is a great solution for most companies, but beware of these pitfalls when working with a partner on a SPLA agreement.

• Data Center / Hosting Facility – Make sure your Microsoft Dynamics partner works with a leading application hosting company and has the staff, resources and policies in place to support your needs.
• Public Companies – Make sure your data is stored in a SAS 70 Type II compliant data center which meets all SOX compliance guidelines. Also, make sure your data can be backed up for 7 years which will be a requirement starting in 2009.
• 3rd Party Products / ISVs - Make sure your third party products or ISV products are licensed or work in a hosted environment.
• Virtualization – Hosted Microsoft Dynamics is currently not supported in a virtualized model only on dedicated servers. Make sure your hosting company provides dedicated servers and equipment for both the application servers and SQL database servers otherwise Microsoft will not support your installation.
• SPLA Licensing – Microsoft reserves the right to change SPLA licensing once a year. But as this market expands and the industry battles over market share for the software- as-a-service market, I anticipate SPLA licensing to go down. As an example, this year the SPLA licensing for Microsoft CRM went down by more than 50%.

The IT environment is quickly evolving. New terms such as virtualization, software-as-a-service, utility computing and cloud computing are evolving into solutions. Just as a company may outsource their payroll services, legal services or other business processes, companies are now turning to IT companies to outsource their basic IT services. There is no way a company can keep up with the changing IT market and all the specialties such as networking, security, hardware, software, operating systems, databases, backup, software applications and more. That is why companies can benefit from Microsoft’s Software Plus Services and licensing products via Microsoft’s SPLA licensing program. Using SPLA licensing, companies can eliminate up-front capital expenditures, pay for only the licenses they use, eliminate IT hardware issues, boost employee productivity and access Microsoft Dynamics products over the Internet.

Microsoft Dynamics & SPLA Licensing – Links and Notes
http://www.microsoft.com/dynamics/softwareplusservices.mspx 
http://www.microsoft.com/serviceproviders/licensing/default.mspx