Microsoft license management can be challenging thanks to a constantly evolving environment. It pays to work with an organization like Opkalla because we make it our business to stay knowledgeable about all licensing changes in real time. A recent change we are accounting for involves Microsoft's new definition of 'external users'. Are you aware of this change?

Microsoft has relied on the same definition of external users for years. But in a blog post published back in June, they explained the need to update their definition in order to keep up with "the evolving landscape of hybrid and remote work."

For the record, the new definition doesn't go into effect until October of this year. It also does not affect existing agreements with Microsoft. It only applies to customers who sign new enrollments or agreements on or after October 1, 2024.

The Current and New Definitions

The way Microsoft defines external users right now is pretty routine. Here's how they explained it in the previously mentioned post:

"Currently, the term "External Users" refers to users that are not employees, onsite contractors or onsite agents of Customer or its Affiliates."

It is an easy enough definition to understand for licensing purposes. But as Microsoft licensing evolves, the definition is inadequate in its ability to account for hybrid and remote work. As such, Microsoft has decided to update the definition in order to eliminate any confusion regarding employees or contractors who do not work exclusively at the office.

Microsoft's new definition classifies external users as any users who do not meet one of the following three criteria:

1. Employees of the customer (Microsoft's customer) or its affiliates.

2. Contractors or agents that work for the customer or its affiliates for more than 30 hours per week, on average.

3. Contractors or agents working on-site for the customer or its affiliates on each working day.

The new definition of external users is likely to affect Microsoft licensing for new customers relying on a combination of conventional and remote/hybrid work. It is critical to Microsoft license management that IT leaders involved in licensing issues understand this new definition.

A More Detailed Definition

As Microsoft licensing support specialists, we see this new definition as a more detailed definition that eliminates much of the ambiguity around licensing for hybrid and remote scenarios. For example, the 30-hour threshold offers pretty clear guidance for contractors and agents – even if those contractors and agents work completely off-site.

The threshold also provides clear guidance for contractors and agents in a hybrid environment. The long and short of it is that contractors and agents are not considered external users if they put in either 30 hours per week, on average, or typically spend the time they do work for the customer on-site on regular workdays.

Affected Microsoft Products

Microsoft says the new definition will apply to all products that currently include "External Users use rights in product terms." This includes products like:

• Microsoft Teams

• SharePoint Online

• Windows Server

• SQL Server

• Exchange Server

For a complete list of affected products, we recommend contacting Microsoft or trusted IT advisors with demonstrable Microsoft experience. The change in definition shouldn't be a big deal for most customers. However, it still pays to know where your organization stands with software licensing.

In closing, we want to remind readers that Opkalla offers complete Microsoft 365 licensing support and managed services. Many of our IT solutions are geared around Microsoft products, demonstrating our commitment to helping clients get the most out of their Microsoft licenses and solutions. Get in touch to get started on improving your Microsoft license usage.