CIO Multicloud Strategies for Microsoft License Lock-In Image creation by Geralt at Pixabay.com

CXO Research Insights + Vision© Newsletter; April 2022: Microsoft’s CIO Cloud Lock-in

Forward-looking ideas from leading research for executives

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April’s 2022 Issue of CXO Research Insights + Vision© Newsletter offers SME executives with 250 to 8500 employees actionable insights for fast-read impact notes:

Microsoft’s 365-Cloud Monopoly: CIO Lock-in Accerates Multicloud O&M Costs – provides CIO insights on how Microsoft’s “cloud licensing mobility rights” will hit their multicloud O&M budgets requiring a defensive playbook.

Here are CIOs’ insights for reshaping Microsoft’s cloud playbook.

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Microsoft’s 365-Cloud Monopoly: CIO Lock-in Accerates Multicloud O&M Costs

Most CIOs don’t realize or are just now experiencing how Microsoft 2019 services “Licensing Mobility Rights” changes will hit their non-Microsoft cloud O&M budgets over the next three years. Microsoft (MS) locks in existing customers with favorable Azure cloud services by restricting “mobile rights” with higher fees to host other cloud services. This year, 48.08% of businesses worldwide that use office-automation technology will use MS 365 platforms. It creates an office automation-cloud monopoly position. Thus, MS renewed licenses discourage non-Azure Hyperscale Cloud services over AWS, Google, Alibaba, and others. 

CIO Takeaways

  1. Track Microsoft’s US and EU anti-competitive behavior actions for new regulations, restrictions, and lawsuits
  2. Leverage large customers rebelling against MS cloud pricing lessons
  3. Re-evaluate and replace Microsoft’s marginal value-add services
  4. Reduce Azure cloud footprint and scaleup multicloud architecture

CIO Challenges: Microsoft’s Cloud Licensing Lock-ins 

  • MS increased unnecessary cloud licenses for non-Azure services
  • AWS plus VMware Cloud and Google O&M will be more expensive
  • 365 Premium Cybersecurity requires extra cost for the E5 services
  • 365 Business products use bundling; you can’t buy single apps
  • Cloud Virtual Desktops user cost increases for non-Azure users

1. Microsoft is under scrutiny by the US and EU for anti-competitive behavior 

First, Microsoft’s Board and CEO must remember critical US and EU lawsuits in the late 1990s. DOJ won for monopoly-like tactics to destroy competition for trying to monopolize the PC market. DOJ used the Sherman Antitrust Actwhich included laws to ensure fair competition in the market.

Second, this year, Microsoft should face the same high-impact legal risks as the DOJ and Federal Trade Commission on antitrust pricing. According to the Financial Times, an EU French antitrust expert and new EU inquiries into Microsoft’s cloud behavior and product bundling pricing are in play. This outcome should speed up the EU’s new Digital Market Act for expanding powers for digital gatekeepers to cover antitrust business behavior.

2. Flagship Large Customers Rebel Against MS’s Cloud Pricing

MS has a growing list of complaints from its flagship and large companies outraged about non-Microsoft cloud services licensing costs. In some cases, MS offers delayed license increases and one-off deals.

While large corporations can renegotiate for better licensing deals for cost deferments and savings with tremendous buying power and top legal teams, SME CIOs require a “Defensive Cloud Lock-in Playbook.” 

3. Re-evaluate and Replace Microsoft’s Marginal-Value Add Services

Over time numerous CIOs have acquired MS bundled products, significantly when new/upgraded services are over-hyped by IT analyst market leaders. It’s time for an SME Defensive Playbook to reduce the Microsoft ecosystem to maintain multicloud architecture, especially using AWS. CIOs should re-evaluate utilization and user satisfaction on enterprise MS business services. Just replace them where appropriate. 

For example, 365 Business Apps could be cost-effective over its other 365 Business packages, including apps with lower value with challenging customer satisfaction, such as Teams, Publisher, Access, Service Manager, and SharePoint. Consider  Google AppsMS’s Video Conferencing is another IT analysts’ overhyped solution where Cisco, Google, and Zoom (1) are much better and more customer-friendly apps in most cases.

In the future

Microsoft appears to be primarily targeting AWS, which continues to be the globally best-in-breed cloud service and with its award-winning cybersecurity. US and EU regulations should punish Microsoft’s behavior over time. MS’s Corporate Board would be well-advised to take action before US and EU huge fines.

“What is changing as organizations emerge from early stages of cloud adoption is that companies want to reclaim higher orders of control, rather than remain beholden to a single cloud vendor. That is leading to a multi-cloud approach” – MIT Technology Review: Custom Report, 11/2021.

CIOs should continue to leverage a multicloud strategy appropriate for the SME requirements, scale, and security. Enterprises should use the accepted global business standards in office automation, such as MS Word, Excel, and PowerPoint. That makes sense but consider leveraging a best-in-breed approach and be cautious of MS enterprise bundles and architecture apps/clouds/tools for vendor lock-in with high implementation and O&M costs.

End Note and Selected Research

(1) Zoom should be considered a national security risk and inappropriate for governments, military, and IP/research divisions.

MIT. MIT Technology Review, in association with Intel. “WITH 5G, AI AT THE EDGE PROMISES A COMPUTE-EVERYWHERE FUTURE,” March 13, 2022.

Copyright @ 2022, STEVE HAWALD CEO CIO ADVISORY LLC and CXO Research Insights + Vision© Newsletter©. DISCLAIMER: These articles are entirely the author’s opinion without financial payments and engagements. 

Disclosure

The views and opinions in this analysis are my own and do not represent positions or opinions of The Analyst Syndicate. Read more on the Disclosure Policy.