← The Directions on Microsoft Briefing Podcast
Loading summary
Transcript42 lines
- [00:00]
A
Foreign.
- [00:20]
B
We have been hot on the trail of all things Microsoft 365, E7 and Agent 365. Related E7 if you need a refresher is Microsoft's coming bundle of Microsoft 365, E5 Copilot, the Entra Suite and the Agent control plane that's called Agent365. Now GA Day for E7 and Agent365, which is May 1st, is upon us. So we've got a list of some of the things we think customers need to know but may not about these two new offerings. We're going to share this list plus some early and intelligence about what customers already are hearing from Microsoft and partners about this pair in today's podcast. Welcome to the Directions on Microsoft Briefing podcast. I'm Mary Jo Foley, the editor in chief here at Directions. I'm your host for this series of podcasts for those interested in the Microsoft Enterprise IT ecosystem. My guest today is Lane Shelton. Lane is the Director of Product Development and Advisory Services lead here at Directions. Hi Lane. Thank you so much for doing another podcast with me today.
- [01:32]
A
Thanks, Mary Jo. Glad to be here.
- [01:35]
B
Okay, let's just go right in and start with pricing because this comes up a lot already. It seems to me at least that discounts on E7 are already baked into Microsoft's equation for E7 and maybe also Agent365. So the list price for E7 is $99 per user per month and you can purchase this on a one month, one year or three year license. I'm curious, is anyone actually going to pay that price, that full price for this?
- [02:05]
A
I mean like it's like all things Microsoft. It depends, it depends on the purchasing channel, like csp. You know, that's a, that's a, a cost that's set by, by the, the reseller. But when it comes to like the Enterprise Agreement channel, I, you know, we're already seeing some pretty aggressive, you know, some pretty aggressive moves by Microsoft really trying to get customers to early adopt E7. So I would say, you know, like, like whenever Microsoft introduces a new suite that's like the, you know, if you're, if you're in the early adopter mindset, that's the time to, to maximize your gains. Let's say when it comes to the
- [02:41]
B
pricing, like how aggressive? When you're saying it's pretty aggressive, like
- [02:46]
A
really aggressive, you know, like, like, like it should be an option. Like even what we're starting to see is, even if you are not really sure it's an option for you may be it could become a distraction. So handle with care. But it, but it may be that you're going to end up with an E7 deal that's superior to you, like an E5 deal. Let's say, you know, things like that. So really, you know that. Not saying that's, you know, always going to be the case. Not saying that's possible. But let's just say that, you know, when it comes to, you know, when it comes to looking at your options, don't rule it out.
- [03:22]
B
Yeah. Okay. Wow. Good to know. Okay. From what I've been reading and hearing, it seems to me like Microsoft's pitching E7 as something they would like to see purchased by companies for every user in the company. Not surprising, but it's also positioning Agent 365 as something more for IT admins specifically. But we've heard from some customers that they're feeling pressured to buy Agent365 for everyone in their org already, at least for now. It seems like not all agent usage triggers the need for that kind of a license since only those using agents that rely on premium features that, that operate on behalf of users are going to need an A365 license right off the bat. So I'm curious, with all these different things that are possibilities, what are you telling customers who are looking for guidance on this?
- [04:19]
A
So it's interesting, I feel like we're in the, what I call the power platform conundrum. Like there are so many companies out there that would love to go deeper with power platform, but the licensing is so confusing and changes and they've heard horror stories about, you know, a customer that got really into it. Then there was a change and all of a sudden it became, you know, 5x more expensive, you know, overnight and it became a horror story. And I feel like the early, the early push around, oh, you're going to need it for all users may have been based on the assumptions everybody was making, but then again maybe not. Because acting. Again, this is the part that confuses me. Acting on behalf of. If you go down that route, the first thing you're going to start doing is things that are going to be in common for every employee. Managing inboxes, managing calendars, managing meetings. Things that are relevant to knowledge, to 100 of your knowledge worker community. So in, in theory, if Agent365 is only needed to be licensed for the agents that are, you know, that are acting on behalf of, why did they make it a user based license and why did they put it in E7, you know what I mean? Like that it doesn't quite add up. So I think Microsoft may be licensing ahead a little bit. Meaning like they know that it's not going to start there, but it's going to end there.
- [05:33]
B
Yeah.
- [05:34]
A
And they're going to just bridge that, call it that function gap with, you know, with aggressive pricing. Like that would be a legit strategy because you know, then you're going to sort of ease your way into it. But just I still feel like there's not a lot of practical scenarios that are not going to quickly spin you up to the level where you need agent365 which is then going to spin you up to the level where you need, you know, the entre pieces and you're going to spin up to where you need E7. Like if it's not that heavy yet, it will be.
- [06:07]
B
Yeah. That's a good way to look at it, I think. Yeah. What I've been hearing about from different people I've been following and reading is there are these things called like we're talking about them now on behalf of or obo agents. Right. Those are the agents that use your identity. So if you have one of these agents, you don't need things like the agent doesn't need its own exchange email teams account, OneDrive account. Right. But what we're hearing or guessing here kind of is once these other kinds of agents come along that do need that, agents that are more complex and multimodal and can do more multi step kinds of things, maybe then you will need Agent365 at least or E7 to govern and keep those agents from sprawling. Does that make sense?
- [06:57]
A
Yeah. And also for security purposes too.
- [07:00]
B
Right.
- [07:01]
A
Again, I'm not a security expert but I feel like the on behalf of piece is fraught with peril where a truly managed identity, even a digital one. I could be wrong on this, but that feels more secure to me than it seems like a really bad attack vector. If you have AI agents acting on your behalf and then your account gets compromised and now a bad actor's inside your environment with the power of AI. That doesn't sound good to me.
- [07:27]
B
It doesn't. And a lot of people are already kind of sketching out those doomsday scenarios and Microsoft is trying to head that off. Right.
- [07:35]
A
I almost feel like on behalf of is going to be like an evolutionary dead end. Like it's going to, it's going to come and go quick because the agentic worker is the more long term viable product.
- [07:49]
B
Yeah. Yeah, that makes sense. All right, let's take a quick break from our speculations and thinking here so that I can talk about why you should make it a priority this year to attend one of our directions on Microsoft licensing boot camps. So our next boot camp is is happening next week in Washington D.C. from April 28th to 30th. So here's the bad news. It's sold out. But never fear, we have more boot camps coming up later this year. You should really think about sending your IT procurement and ITAM leaders to these boot camps so they can learn how to deal with the new Microsoft licensing realities. You'll learn how to control your Azure consumption costs so that you can cut your largest Microsoft cloud spend component will help you master the strict licensing rules for high cost products like CoPilot and Microsoft 365 add ons to ensure that compliance and maximizing of organizational ROI without over buying is how you operate. And we'll help you craft a tailored framework for your next renewal strategy to help secure concessions that will offset lost volume discounts. To secure your spots for one of these upcoming boot camps today go to directions on Microsoft.com training. You'll get to talk to our directions licensing experts like Lane at these boot camps. And if you are not going to D.C. in April, we have virtual boot camps coming up and another in person one this year in September in Chicago too. Okay, back to Lane and all things E7 and A365. So Lane, when we were first hearing rumors about E7 we kept hearing there were likely some kind of consumption costs that were going to be part of this licensing and pricing picture. But for now there aren't, at least not readily apparent ones. I think though Microsoft seems to be headed in that direction because of how they're pitching this thing they call Agent Factory. So Agent Factory are these new comprehensive pricing plans for running agents in all in all different Microsoft products in all different ways. So what do you think? Is there still a consumption based pricing shoe that's going to drop here?
- [10:09]
A
Well you know when you look at like they start talking about like agent pre purchase plans and as soon as I saw Agent commit units like that, that was when it kind of the, the light bulb went off for me because that's a in the under the umbrella of Azure when you have a technology with a lot of complex moving parts, it's definitely better suited for an Azure environment because you can monetize it with these commit units that are then applied across a multitude of meters and then you Just monitor the meter usage and it's much easier to manage system than trying to deal with reservations and true UPS and user based licenses. Like I feel like that's a better, that's a better long term solution because there's, there's so much complexity to this and it changes so often. Right. So with under, you know, under the aegis of a, of a commit unit, the plumbing can change all you want. You just have to stay on top of watching your cost. But you won't. But you only have one sort of unit of measure which is the, you know, which is the commit unit and the dollars that are associated with it. So I feel like that's ultimately the best place for this kind of technology because that means that things that change under the hood don't necessarily disrupt the, you know, the monetization or the logistics of it makes it a lot, makes it a lot simpler and maybe that's why they threw Agent365 into E7 knowing that right now it's not going to be relevant to 100% of the users thinking that it probably will be at some point. So it's easier to just toss it in than to try to like, you know, bake it in later. Because in a user based license and an enterprise agreement functions totally different than you know, than Azure spend does in like an Azure MCA or an Azure server cloud enrollment.
- [12:00]
B
Right. I can't help but feel like this whole announcement From Microsoft, the E7 A365 was A, was kind of a rush job. Right. It feels like, wait, what about the pricing and licensing consumption piece? And it was weird to me that didn't come out when they announced it. What do you think? Was it kind of just rushed out?
- [12:18]
A
Well, you know what to give a shout out to directions own Stephen Kelly, he was the first one to really say that. Like he took a look at it. You know, we were all having our internal, you know, our internal conversations and he was the first one to throw out, you know, this feels a little rushed and you know, and it turned out that was prophetic because I do believe he's right. Like it's starting to rationalize. We're starting to get him, you know, starting to get some answers, but we're also getting more questions. Again, I call it the power platform conundrum. It's like really cool technology but the licensing is so convoluted and nobody can understand it. So you kind of just sit there waiting for it to get easy and hopefully they move faster on this than they did on Power Platform because it was confusing when it started and it's still confusing today. And customers are still sitting there going, gosh, I could do like 900 things with this technology if only I could predict my licensing costs.
- [13:10]
B
I love your connection of this to Power Platform because I'm like, oh, yeah, it is just like that, isn't it? There's just so many moving parts and you're like, wait, I thought I understood this last week, but now I don't feel like I understand it anymore.
- [13:21]
A
Yeah, exactly.
- [13:23]
B
Okay. I want to go back to pricing again, though, because I feel, I feel like this keeps coming up. When you, when you talk to people about E7, everybody's like, okay, 99 per user per month, though. That's a lot, right? I, I'm curious. So you've been talk, you've been out there, you've been talking to customers, you've been talking to partners since Microsoft announced this a couple months ago. Do you now feel like there's any way this price makes sense and won't be seen as completely ludicrous?
- [13:50]
A
You know, I'm actually running into some customers now that are not running away from it, but at the same time, they also know that they're on, they, if they did go in, they'd be on the early adopter train, which they know that, you know, that that's going to play a big role in what they ultimately pay for the technology. So, you know, but that being said, like, you know, I was very dismissive of it in the early, early phases, but I've run into enough customers now that are, you know, further down the AI train. And you know, they, they, they have a vision that they see with Microsoft Stack. And so it doesn't seem like ridiculous to them. And, but also it's colored by the fact that they know that they're going to be, you know, that they're going to be driving a hard bargain because they're early, their early adopters. But, but yeah, it's not a wholesale retreat from it or, you know, some, some customers absolutely dismiss it because they're not there yet and they're not even close to being there yet. And, you know, there's something to be said for, like when you look at the power of these different AI technologies that are arising, like, you know, like, look at, look at Claude, look at, you know, look at Enterprise Chat, GPT, you know, in some ways, like some pundits would tell you, Microsoft's falling behind in this race. Like, you know, the power of some of these technologies off the charts when it comes to enhancing the, the abilities and the capabilities of a knowledge worker. Right. So you know, companies that, what I would encourage, companies that are thinking about early adoption is be very wary of count lock ins. You know, Microsoft loves to do that thing where they give you a great, a great deal on something they're like, but you can't reduce your accounts below a certain amount for the life of the contract. I, at this stage in the game I would avoid that like the plague just because I feel like there's some real seismic shifts happening, happening in the AI world. I never write off Microsoft, you know, because they, they are, they are, they are whip smart just like the others. But I don't know if this is like a time to lock in for a three year period, you know?
- [15:53]
B
Yeah.
- [15:54]
A
Think about three years. Do we even have chat? Well, I guess we did three years ago. The world looked very different than it did now. And I have a feeling it's going to look way different three years from now. So you know, I'm, I'm nervous about, about anything that would force me to spend money on something for a long period of time that's that related to AI. So I would be careful with that kind of stuff.
- [16:14]
B
Yeah, that's good, good, good advice. What about Agent365? Okay, that's priced at $15 per user per month. Do you think that is going to be a deal breaker? We've talked about Microsoft possibly making it mandatory for everyone once agents start to become more agentic, if I can even use that term. I know also I've heard some people saying, and Microsoft's also pushing Agent365 as a way to hedge against shadow agent. Like, almost like shadow it, but shadow agent risk. Right?
- [16:49]
A
Yeah.
- [16:49]
B
Does that make sense? 15 bucks per user per month for Agent365.
- [16:54]
A
It's a, that's, you know, I'm genuinely kind of like, I'm genuinely confused on that one because if, if, if it, if it's limited on what you have to purchase then maybe, but the problem is I don't, I. Why would they have thrown it into the E7 suite then? Like if, if ultimately it wasn't something where it's like, okay, you know, it's the equivalent of the Azure of the, of the AI commit unit. Like we're going to have it in E7 because not everybody necessarily is going to need it, but eventually they will. And, and we'd rather you pay now, get it into your budget flow now than to be where, okay, I pay this now, but then I. Oh, now later I need this add on and later I need this add on. We know from the last five years, customers hate that. You know, they hate paying for, you know, remember E5. Like E5 intune suite. Nope, that's not in there. Copilot. Nope, that's not in there. Like customers don't like spending these big monies on these big suites and then later feeling like they're getting nickeled and dimed on the add ons. So I think maybe Microsoft was taking a playbook and being like, let's just rip the band aid off, get it in there and then, you know, and then you'll thank us later.
- [18:01]
B
Yeah, yeah.
- [18:02]
A
But, but that being said, so en masse at $15, probably not. But, but as a limited thing. Yes, but then I don't think it's going to stay limited for long.
- [18:14]
B
I agree. I feel like they definitely are planning ahead with this one.
- [18:20]
A
Yeah. Because think about it, they can always bridge that gap.
- [18:23]
B
Yeah.
- [18:24]
A
By reducing the price. You know what I'm saying? Like they, that like that's the lever they have to make up for any technology gaps in the stack. So.
- [18:34]
B
Yeah.
- [18:34]
A
And the, the mechanics of customers that are coming up on these renewals with these giant fiscal cliffs because there's no more volume discounts. They're, you know, the discounts they got on E5 have expired. There's been price increases. Like it does set up a scenario where E7 could become the path of least resistance under the right circumstances. Like that is a major setup. We're already seeing that right now, even in weird places where you wouldn't expect it to pop up. Oh, there it is. You know, so I don't think they did that on purpose, but, but it, it's being set up to where E7 could look viable, you know, when you're dealing with in the context of these big EA renewals.
- [19:19]
B
Okay, I am going to let us end on that note because that's perfect. Thank you so much, Lane, for your perspective. It's always really good to hear what you're hearing out there talking to customers and partners. So I appreciate it.
- [19:32]
A
Always happy to help.
- [19:34]
B
Thanks. I want to remind our listeners they can find lots more coverage of all things Microsoft related on directions on Microsoft.com. thank you so much for listening. If you have questions, comments or any topics you would like to hear the directions analysts cover in one of these podcasts, please do not hesitate to contact me via X or BlueSky. Directions on Microsoft also is on LinkedIn, so make sure you follow us there and give us a follow at DirectionsMSFT on X or directions on Microsoft on BlueSky to keep us up with all of the latest Microsoft Enterprise product and licensing information. Thanks again.