How does the True Up Process work?

Over the term of your Enterprise Agreement (EA), you can equip additional hardware, devices, or users with software and online services that you’ve already licensed, and then account for these changes through an annual reconciliation process known as “True Up”. If you have an Enterprise Agreement Subscription  (EAS), this process is known as an Annual Order, through which you can increase, or decrease your license subscription counts.

Once a year, you are asked to reconcile your Enterprise Agreement (EA) license quantities to account for the total number of licenses you’ve added in the previous 12 months. This effort culminates in an order you place (or an Update Statement you submit) that reconciles all the qualified devices, users, and processor/cores added or used by your organization over the course of the year.

Your annual reconciliation order (or Update Statement) are normally due 30 to 60 days prior to your Enrollment anniversary, supporting Microsoft and your LSP to provide eligible license transitions, but also both with annual commercial forecasts [Ref: Enterprise Agreement True-up Guide for more information]

A principle impact to organisations will be in the approach to the annual True Up. Updated wording in the 2014 contracts could significantly impact customers that have seasonal or other annual deployment fluctuations to impact the total cost of ownership (TCO) of a Microsoft Enterprise Agreement (EA). This new approach, effective for customers signing the more recently revised contracts is defined as follows for the Enterprise Agreement enrollment (This wording is reflected in the 2014 and 2016 Enrollments, but please refer to your organisations binding documentation):

“True-up Requirements. Enrolled Affiliate must submit an annual true-up order that accounts for any changes since the initial order or last order. If there are no changes, then an update statement must be submitted instead of a true-up order.

(i) Enterprise Products. For Enterprise Products, Enrolled Affiliate must determine the number of Qualified Devices and Qualified Users (if ordering user-based Licenses)at the time the true-up order is placed and must order additional Licenses for all Qualified Devices and Qualified Users that are not already covered by existing Licenses, including any Enterprise Online Services.

(ii) Additional Products. For Additional Products that have been previously ordered under this Enrollment, Enrolled Affiliate must determine the maximum number of Additional Products used since the latter of the initial order, the last true-up order or the prior anniversary date and submit a true-up order that accounts for any increase.” 

For the counting of Enterprise Products, the wording in the enrollment does have an apparent conflict, that accounts for “any changes” over the term or since the last anniversary, but later also under the term Enterprise Products “at the time the true-up order is placed”. The common perception of many IT professionals was that the Enterprise Agreement offered some seasonal adjustment or allowance for temporary duplicate deployments, the revisited wording would clearly indicate a departure from a ‘trust based model’.

Taken in a wider context for customers renewing other enrollments, this tactical editing of the November 2014 Agreement Pack also extend to the Server Cloud Enrollment :-

“(ii) True-up order. Enrolled Affiliate must determine the maximum number of Products used since the latter of the initial order the last true-up order, or the Enrollment’s prior anniversary and submit a true-up order that accounts for any increase.” [Ref: Server Cloud Enrollment 2014]

This approach has been reflected in other guidance, including deployment of the Microsoft Assessment and Planning Toolkit (MAP):

“The Microsoft Assessment Planning (MAP) Toolkit features an IT-based Software Usage Tracker functionality that provides usage reports for the following server products: Windows Server, Exchange Server, SQL Server, SharePoint Server, and System Center Configuration Manager. This automated software asset management–related functionality is designed to be used by Microsoft Volume Licensing customers. The Software Usage Tracker provides you with a view of your actual server usage, which can be valuable for comparing with your purchased CALs, or for True-up and agreement renewal discussions.” [Ref: EA Program Guide]

Microsoft have also been advocating adoption of Software Inventory Logging Aggregator (SILA) which uses features within Windows Server 2008 R2 SP1 to Windows Server 2016 to collect licensable data from your environment on an ongoing basis. This will collect the following information over a period of time (not point-in-time).

  • CPU, Core and vCPU
  • Model and Type of CPU
  • Hyper Threading Enabled/Disabled
  • High Water Mark of Simultaneous Running VMs
  • High Water Mark of Simultaneous System Center Managed VMs
  • Host Locations of SQL VMs
  • Software listed in Add/Remove Program

This information is all incredibly important for capturing licensing metrics for SQL and Windows Server, and System Center. This could have a material impact of ESX Clusters do not have sufficient licenses assigned to support VMs across a cluster. It is strongly recommend you independently assess the impact of licensable VM distribution to identify any commercial risk for your organisation.

This change in written terminology may incentivise Microsoft to request metering of use over the contract term, or final year of a contract, to ascertain ‘maximum use’ therein driving revenues from final year True Up and subsequent renewal; underwriting the business case to move workloads to Azure. 

This audit centric adjustment to the contracts, is further extended under the MBSA (Microsoft Business and Services Agreement). The MBSA enables Microsoft to verify compliance with a third party auditor. If the auditor identifies more than 5% non-compliance, the organization will have to pay for the cost of the Audit, and 125% of the license price, based on the then-current price list a the customer price level (A-D) and not the agreed pricing of the relevant agreement(s). This can be problematic, not only due to the unbudgeted spend, but that non-compliance could be identified on non-strategic software. (For example, a ‘technical’ shortfall of Project or Visio deployed on a Citrix Environment, secured under AD Security Groups, which could impact the budget for strategic spend on Azure of Office365).

Recommendations

  • Check the terms of your enrollment(s), and any contractual amendments for your enterprise.
  • Microsoft expect either a ‘Zero True Up’, or a True Up declaration 60-30 days prior to the Anniversary.
  • The EA can become expansive when incorporating ‘managed devices’ and MDM and BYOD policies could extend the number of licensable devices under the Enterprise Agreement. So check the managed devices definition within the enrollment.
  • Please work with your existing toolsets, but I would strongly recommend both MAP and RV Tools for your SQL and Windows Server environment.
  • Optimum assignment of your Windows Server, System Center or Core Infrastructure Suite (CIS) CPU licenses can support with eligible core license grants for your subsequent renewal. There is some complexity in assessing the optimum license model(s) between CIS Datacenter and Standard Edition, or Individual Components, so I recommend soliciting specialist advice.
  • SQL Server remains a principle driver of unbudgeted spend, so I would recommend soliciting specialist advice to ensure optimum assignment of license assets, available license model(s), and ensure all optimum licensable metrics and licensable exclusions are covered. 

Thanks All


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Tony Mackelworth is Head of Microsoft Advisory Services at SoftwareONE

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