Business Central on-premise: System admin. users are no longer free

Right before Christmas I saw a blogpost by Jeremy Vyska which got my attention. It highlighted some changes in the December version of the Business Central on-premise licensing guide

In the October version a new license included a free CAL for an External Accountant user and one CAL for a System Administrator user. In the November version only a free one for the External Accountant. In December no free users are included!

Jeremy also contacted Microsoft and got the answer that this was no mistake on their side:

We don't offer free licenses for perpetual on-prem licenses. The mentioned text in the licensing guide, speaks to SAL which is used for subscription access license not perpetual.

I was just as "surprised" to read this. So, I tried to figure this out on my own. With the help of the internet, it was quite easy to find the same versions for the licensing guides for Business Central. And they just confirmed what I already knew from Jeremy's website. It has been removed!

But it's not something Microsoft has been trying to hide. It's in the change long on the last page (Appendix D). The external accountant/system administrator has been removed and is only included in subscription, non-perpetual on-premise licenses.

The Subscription Economy is coming

Despite my initial response to this licensing update, then, when we think about it, this move makes a lot of sense.

Microsoft is no longer just a software company.

Sure, they are stilling developing some the best software in the world. But as a company they are moving away from making most of their money selling software towards making them on selling services through subscriptions. That be Xbox, Office 365, Dynamics 365, Azure or one of the many other services you can buy from Microsoft.

Microsoft are not alone. They are part of global trend called the subscription economy. Not only the software industry, but almost all industries are trying to go from selling products to sell services. You don't buy you car, you lease it. You don't buy a phone, you get it as part of a subscription. You continue, the examples are plenty and more keeps coming. The global subscription economy index has grown from base 100 in 2012 to almost 300 by Q2. The US retail sales index only grew from 100 to 130 in the same period.

The trend is clear, we are going to see much more of this in the future.

How long can we buy perpetual Business Central licenses?

With Microsoft's goal of getting as many customers on subscriptions, then it means making subscriptions more attractive than buying a license.

One way would be to make subscription licenses much cheaper than what they are now. But that would mean less profit to Microsoft. So not the ideal way to a business.

Another way would be to simply stop selling perpetual license, but that would most like also mean less profit to Microsoft, if the market, as I believe, is not ready yet. I had seen that this would have happened when Dynamics NAV became Dynamics 365 Business Central back in October. But luckily it did not. We can still buy BC licenses in 2019.

One user at the time

The way it seems that Microsoft are taking is to gradually make the perpetual license more expensive than the subscription license. They expect that doing it in small slices will not scare off too many partners or customers). One user at the time, so to say.

We must be ready for a future where perpetual licenses are not available. A future which may be here sooner than we expect. How many had thought Microsoft would announce the retirement of C/Side in only 1-2 years?

The external user problem

This recent license change means that the cost of a Business Central On-Premise Perpetual (non-subscription) license has gone up with the cost of at least two CAL's. That's not peanuts, if we compare to the Dynamics NAV days.

The problem is not so much the external accountant CAL, at least not if this user is doing the actual accounting. If they used the system to enter data etc., then they also took up a concurrent user here.

That's not the case with typical Dynamics NAV customers, who have their own accountants in-house. Instead they need to be able to give access to employees from external auditors and employees from NAV partners, often multiple consultants, developers and supports from multiple partners.

With NAV's concurrent licenses it was never really a problem to give the external accountant, auditors or partners a user access. Most companies have a small pool of extra logins, they can use for both external partners and their own employees who only use the system part of the time. And even if all CAL's where in use, then we could load our partner license temporarily in C/Side and still access the system.

Business Central is more expensive than NAV

The only reason why this is a problem is because BC count number of named users, not concurrent users. It typically makes all BC licenses much more expensive, than a similar NAV license. Not only because of the external users, but because all companies have users who only uses the system a small part of the day or maybe just a few times per month. Even if some users would be able to use team/limited licenses, then more full licenses would still be required.

I have worked in companies where we had about 1200 named uses, but less than 300 concurrent licenses and (almost) never had a problem. Team/limited licenses would not change much here.

Previously concurrent licenses were the standard in most of the IT industry. Today everybody, not only if sold as subscriptions, sells their CAL's as named. Not only Microsoft. NAV were one of the few remaining concurrent licenses in Microsoft.

I do not believe that train can be stopped now. Named users are here to stay.

And as long customers feel that they are actually getting "something" for their CAL money, then I also believe that named users is not that bad.

Subscription Economy and Named Users are technical excuses

While the subscription economy, named users etc. all makes full sense when it comes to actual users, then not when it comes to require customers to buy more licenses, just allow them to get support, either from partners or accountants/auditors. That's basically a just a technical excuse to make the license more expensive.

I say it's a technical excuse because it could be solved technically if they wanted.

In the cloud version of BC Microsoft have solved the "external user" problem, despite named users. Here access is managed. Accountants via the accountant portal and partners via the partner portal. Except if the customer has more partners supporting them. Here Microsoft have the control over the users.

On-premise installations of Business Central are outside of Microsoft's control, including their users. That means that technically it is not possible for Microsoft to control if the users are external or internal. If external users where free and everybody could create them then what would prevent customers from creating all their new users as external?

I understand the dilemma Microsoft is in. I don't think they are doing this to make a lot of profit.

They need a way to ensure that named user accounts for partners are not used by users who should pay. The easy way is just to make them all count.

A technical solution

If Microsoft wanted, then I am sure that they could find a technical solution to this technical problem.

Something like having a "partner key" which had to be "imported" when creating (and using) a "partner account". Like we had to do in C/Side, where we could import our Partner AL-key temporary. If Microsoft could issue named keys to partner employees, then I'm sure their BC developers easily could come up with a way to authorize such accounts. Eventually using the same personal Microsoft account used by the user everywhere else.

Ideally the same solution could be used in the cloud too. Instead of having "one named" account for the partner, this would allow for more partners to access the same tenant.

It would also give Microsoft to know more about both their partners and customers, and prevent "un-authorized" partners access.

I am just afraid that even if this would not take up too much time to do, then it is primary for the on-premise version and will therefore be low on their list of priorities. I'm sure they have plenty of things on that list already.

What will customers do?

If customers will have to dedicate a user for the partner, then I'm sure that this is going to be a "company account", a single user account to be used by all the employees from the partner. And that there will be lot of enabling/disabling users.

From a security perspective that has always been bad practice. GDPR may even make this practice illegal, but I still think that it's the path most will chose. Cost over security or best practice.



Please Microsoft, let us know your reasoning behind this policy change

Are you out to make more money on partners? Is on-premise supposed to "die" soon anyway, so no reason to prioritize it? Or what is the reason?

Comment List
  • >>
    Are you out to make more money on partners? Is on-premise supposed to "die" soon anyway, so no reason to prioritize it? Or what is the reason?
    Well, the answer is obvious, isn't it? MS spent billions on creating their "Cloud infrastructure & services" - a thingy that nobody wants, simply because it sucks big time (I spare the details here). But MS wants/needs a Return Of Invest, so they are doing everything to push NAV partners and customers into their "Cloud world" - with ultimate force they want to get their "data leech" going ...
    Thus: yes, they want to make money; yes "on premise" is sentenced to death (actually long time ago).
    I'm in the NAV world for more than 2 decades and it makes my heart bleeding when I see how MS is more and more f*cking up this formerly great product NAVISION (@MS:  yes, it is called NAVISION, you can stuff your "Dynamics 365 BC" where the sun is not shining)

  • Good read, Thanx for sharing, Eric. Keep it flowing.