Dynamics 365 Licensing Changes (Effective October 1, 2019)

Dynamics 365 Licensing Changes written and researched by Lee House and Debbie Altham, respectively

DISCLAIMER All information contained herein is based on information provided to its partners as of July 2019. Information is subject to change based on conditions and business decision of Microsoft. Sikich has no control over this information and can only state that it is accurate as at the day of publishing.

Microsoft Announced in July 2019 that there will be Microsoft Dynamics 365 licensing changes effective October 1, 2019. This pricing will have an immediate impact on any clients that are currently on month to month agreements through a CSP agreement. For any account that is on a yearly or multi year agreement, these price changes will be of impact at the time of contract renewal.

What does all of this mean for existing clients?

1. Microsoft is doing away with the Dynamics Plan and Unified Operations Licenses. Both Licenses types were bundles of functionality.
2. Clients will now license each application separately, based on a specific Base Application.
3. If a Client User uses multiple Applications, then they will license the Base SKU plus any applicable Attach SKUs.
4. It’s important to understand a couple of Microsoft Definitions associated with this change.
   1. Base license: the first Business Application purchased at the standard price. When purchasing multiple Business Applications, the Base license must be the higher priced license. Each user must have one Base license and may require a second Base license if, for example, Talent or Project Service Automation (not available as an Attach license) are required.
   2. Attach license: Application(s) licensed incrementally, purchased after the Base license. Users may have as many Attach licenses as needed. Each Attach license can only be assigned to a user with a qualifying prerequisite Base license. If a user doesn’t have the required Base license, the admin will not be able to assign the Attach license.
   3. “Better together” price: the price of the Attach license which is available at a lower than the standard Base price for the same application.

The table at the following link represents Base and Attach License fee SKUs (all information contained in this is based on published Microsoft License Fees).

For your convenience, we’ve also compiled a table comparing the Licensing Models before and after October 1, 2019.

Detailed FAQs

What is changing?

Microsoft is moving from selling Dynamics in plans (bundles) to an a la carte selection of apps.

Currently customers have the option of purchasing the Customer Engagement Plan, Unified Operations Plan, or Dynamics 365 Plan licenses, receiving all the associated Business Applications for one price per user per month. Effective October 1, 2019, Customer Engagement Plan, Unified Operations Plan, and Dynamics 365 Plan SKUs will be removed from all price lists. Additionally, Finance and Operations will be split into individual applications – Supply Chain Management and Finance. All remaining Business Applications will continue to be available. This change will enable customers to purchase suitable core workload application(s) for individual user needs going forward. Core workload Business Applications are Sales, Customer Service, Field Service, Project Service Automation, Supply Chain Management, Finance, Retail, and Talent.

Will the Customer Engagement Plan, Unified Operations Plan, and Dynamics 365 Plan be removed from all channels for all licensing segments?

Yes, effective October 1, 2019, the plan SKUs will be removed from Volume Licensing (EA, EAS, EES, SCE), Microsoft Products and Services Agreement (MPSA), Microsoft Online Subscription Program (MOSP/Web Direct), and Cloud Solution Provider Program (CSP) price lists.

Why is this change happening?

Microsoft continues to evolve its offerings with the introduction of Mixed Reality and AI products (Sales Insights, Customer Insights, etc.) with the goal to empower customers to customize (mix and match) their licensing. What this means to the customer is “choice,” customers are encouraged to evaluate their business requirements, determine their specific needs, and purchase only those applications required.

What is a qualifying Base and Attach license?

The Base license is the first Business Application that is purchased at the standard price. Every full user must have a Base license and, may require a second Base license if, for example, Talent (not available as an Attach license) is required. When purchasing multiple Business Applications, the qualifying Base license must be the higher priced license.

Attach licenses are the additional license application(s) purchased at a flat price of $20 per Customer Engagement application or $30 per Unified Operations application. Each Attach license can only be assigned to a user with the prerequisite Base license. If a user doesn’t have the required Base license, the admin will not be able to assign the Attach license

Base and Attach licenses are identical in their core capabilities and are only differentiated in price. For example, if the customer wants both Sales Professional ($65) and Customer Service Enterprise ($95), they will need to purchase the Customer Service Enterprise SKU as their Base license and the Sales Professional SKU as their Attach license.

Which Business Applications can’t be purchased as Attach licenses?

Core workload Business Applications:

• Project Service Automation
• Marketing
• Talent

Non-core workload applications:

• Customer Insights
• Microsoft Relationship Sales solution
• Sales Insights
• Marketing Additional Application
• Customer Service Chat
• Resource Scheduling Optimization
• comprehensive hiring
• Order Lines
• Forms Pro
• All capacity add-ons

Can all core workload Business Applications be mixed and matched?

Except for Talent, Project Service Automation, and Marketing, customers may mix and match Customer Engagement (CE) and Unified Operations (UO) Business Applications to meet each of their users’ departmental needs. The only restriction is that customers must purchase the higher priced Business Application as the Base license. For example, if a user needs both a Customer Engagement and Unified Operations application the Unified Operations license must be the qualifying Base license as it is the higher priced license. Note, customers who require Project Service Automation and multi-applications, may purchase Project Service Automation as the Base license and add qualifying Attach licenses as needed.

How does this change impact customers?

New customers: No impact. They will be buying from the new price list.

Existing customers: There is no change to customers’ existing agreement. They can true up seats at anniversary as required. At renewal (beginning October 2019), customers must renew on the new Attach construct. They must have a qualified Base license for each user and assign the additional Attach licenses to their multiple application users as required.

What are the options of CRM Online customers?

Existing customers: There is no change to customers’ existing agreement. They can true up seats at anniversary as required.

At renewal (beginning October 2019), customers must renew to on the new Attach construct. They must have a qualified Base license for each user and assign the additional Attach licenses to their multiple application users as required.

What are the options of on-premises customers renewing to the Dynamics 365 in the cloud?

At renewal (beginning October 2019), customers must renew to on the new Attach construct. They must have a qualified Base license for each user and assign the additional Attach licenses to their multiple application users as required. Base and Attach license will be offered with a From SA SKU.

Will there be volume discount SKUs?

No, since programmatic volume discounting was only available for Customer Engagement Plan, these SKUs will cease to exist once Customer Engagement Plan SKU are removed from the price list effective October 2019.

What if the customer cancels their Base license?

A Base license is a prerequisite to have multiple applications for a user. If a customer’s Base license is cancelled, that user’s Attach license(s) will stop working. To be able to use the existing Attach license, customers will need to:

• Reactivate the original Base license or purchase a new Base license, or
• Re-assign the Attach license to another user with an active qualifying Base license.

What options do customers have if they don’t maintain a qualified Base license for each of their users?

Only users with a qualified prerequisite Base license are eligible to have an Attach license(s). However, if a customer purchases an Attach license for a user by mistake, they have three options:

• Customer purchases a qualifying prerequisite Base license for the user, or
• Customer return the Attach license and purchases the corresponding Base license (e.g., cancel the Sales Professional SKU ($20) and purchase the Sales Professional SKU ($65), or
• Admin reassigns the Attach license to another user with a qualifying prerequisite Base license

Will Unified Operations (D365 Finance & Operations) Applications continue to have minimum purchase requirements?

Yes, Supply Chain Management, Finance, and Retail have a 20-user minimum purchase requirement.

Do Customer Engagement licenses count towards Unified Operations minimum purchase requirements?

No, the following combinations may be used to meet the minimum purchase requirements for Unified Operations.