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83. Why are licensing, security, and infrastructure so critical for Microsoft? With Mike Kowalski

August 23, 2023

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Today we jump deep into something everyone can relate to and that’s Microsoft licensing. We are joined by Telarus Engineering expert, Mike Kowalski as we talk licensing, security and infrastructure, specifically around Microsoft. Mike lays out some great detail about how this all works, along with how you can help make your customers’ lives significantly easier while uncovering their pain points!

Josh Lupresto: [00:00:00] Welcome to the podcast that’s designed to fuel your success in selling technology solutions. I’m your host, Josh Lupresto, SVP of Sales Engineering, at Telarus, and this is next level BizTech.

Hey everybody. Welcome to a new exciting track within cloud. Today we’re talking about licensing. So more specifically, why are licensing, security, and infrastructure so critical for Microsoft and beyond? And on with us today, we have the wonderful Mr. Mike Kowalski, regional sales engineer, cloud specialist here at Telarus.

Mike, thanks for thanks for coming on, man.

Mike Kowalski: Absolutely, Josh. Thanks for having me.

Josh Lupresto: Mike. So I, I wanna kick us off. You know obviously we know a little bit of your journey kind of as how you’ve got here. You’ve got a cool background in data center and cloud and, and, and, and all kinds of different things.

But maybe just kick us off with some, some life lessons, some business lessons here. So, as you’ve kind of evolved, you’ve learned a lot of things throughout your career. Gimme just [00:01:00] one or two lessons you’ve learned along the way, like I said, business or technical that, that you’ve learned that would be helpful.

Mike Kowalski: Really, I’ve been in this space for such a long time that I think the common thread is a lot of things used to be given away in technology, not thinking that they had much value. And what I’ve seen over time, and I, I think the story goes that Bill Gates wrote this operating system for a client and he went to sell it to ’em and they’re like, ah, we don’t want to just keep it.

And, and thus Microsoft was born, right? Nobody saw the value in it. And those early systems that they shipped, Had a CD on it, you could install it on your computer, you can install it on your neighbor’s computer. They just didn’t see the value in the actual licensing component. They thought they would just be selling more hardware, I guess.

More of a package. So through my career, I’ve seen businesses really try to streamline that monetization process from a business aspect. But I think also technically, They’re trying to [00:02:00] create more options that better fit how each business utilizes licensing. So it gets a little convoluted, I think.

We’ll, we’ll come across that a couple of times during this conversation, but I think in this day and age, it’s still not set. Things are still changing, things are still evolving, and some people might think it’s a good thing. Other, the other people who really have mastered the old program throw their hands up in the air, like, okay.

I just got used to this. Now what’s happening? So

Josh Lupresto: yeah, good point. We were talking about this before, right? It, it changes fast. And that’s, that’s part of the value. And, and, and actually speaking of that, right? Speaking about value, just a level set, right? People that know, you know, that your, your role is, is your regional engineering, right?

You’re there in California, but you also have a, a, a cloud focus as well. Give us a background for anybody that has not met you, your evolving role and, and, and how you help partners do what you do.

Mike Kowalski: Started in infrastructure, physical infrastructure. Customer owned computers, customer owned facilities.

And that’s evolved over time to obviously people pushing things [00:03:00] out into data centers and still owning their computers, and then even pushing that into customers owning their own equipment and then having somebody else manage those, and then completely just giving up all control over their infrastructure and moving it out to a cloud provider.

So I’ve been with it every step of the way, and funny enough, we still have people that are in each step of that technology lifecycle. They either refuse to give up their, give up their physical computers, or they just see such a great value in cloud that that’s the only way that they’ll run their business cloud first.

Companies are born that way. Right. So I, I really had a nice grasp through this process of understanding where people are, where they want to go, and just really trying to give them some. Different options. Maybe enlighten them with some education around how they can do things a little bit different or reinforce the way they’re doing it now, if that happens to be maybe a compliance or security issue for wrapping their arms around certain devices in [00:04:00] their environment, or you know, how they can move that out and reduce the workload on their IT team.

So infrastructure. It contains a lot of moving parts.

Josh Lupresto: Well, and I, I think from, from what I’ve seen out of you, right, not of the engagements that you’ve done, the reality is partners are at different phases of their business, different knowledge levels, different comfort levels, and some just don’t wanna be the experts in some of these things.

And so It seems to me that there are some partners that I watch leverage. You just say, Hey, gimme a, gimme a recommendation. Who do you thinks, who’s doing this well, who’s hot in the portfolio right now, and others? It seems like you’ll do a lot of the discovery work, right? Do you, do you care where that falls?

Is there a, you know what’s, you know, what’s your preference there?

Mike Kowalski: Obviously, I always like to add value to that engagement, so what I like to see best out of that is I’m either going to reinforce the decisions that the client is already making, or I’m going to give them an understanding of how they could do it so much more efficiently and effectively.

And, and it’s, that’s really kind of the fun, right? I don’t mind spending time [00:05:00] working with the client that’s willing to share all of the moving parts within their organization as it comes to it. Because it shows that they really are genuinely trying to accomplish something. And with that, if I’m able to go in there and it happens, very rarely mind you, but just reinforce it the way that they’re doing it, that opens us up to opportunities with that client going down the line.

We just didn’t try to slide in and say, oh, you’re on-prem. You have to be in the cloud. And then just sell them cloud. We are able to meet them where they are and if they choose to stay where they are, I think that’s a very valuable thing. To be able to build that relationship and be available to that client moving forward with God knows what other types of opportunities and projects they have come, come down the line.

So it’s been it’s very fun. I know that’s a weird way to say technology. Everybody’s a little bit different and really trying to understand the differences between those clients is, I think, something that I, I really excel at.

Josh Lupresto: Yeah, yeah. Yeah. [00:06:00] You bring up a good point. I remember one of the deals that, that, that we worked on early on years ago was a deal that we walked into, and it was an ex, it was a really sharp customer, really well thought out infrastructure and, and that, and that.

It becomes a challenge, right. Well, Geez, this, this, this guy’s dialed in. It’s sharp. He’s got great infrastructure. He’s modern. Where can I help him? And we, we look here, we look here, we look here and, and we came across this one where we just, we couldn’t find anything. Yeah. To essentially we’re, we’re looking around for a rubber stamp so we can say, you did a good job.

Call us if you ever need anything. And, and we kind of left that. With the partner feeling like, geez, maybe we didn’t add a lot of value, but the partner also equally felt, geez, sorry, I wasted your time. And we go, no, my gosh, no. Usually there’s a place that we can help 1% of the time is when that happens.

Yep. And then come to find out a few weeks later, This guy brought us back in because he respected the honesty of that. We weren’t forcing a product down his throat. We weren’t trying to sell anything, and that turned into one of the largest cloud deals we’ve ever done because I [00:07:00] think you become a trusted source, right when you’re, when you’re just, Hey, if it’s great, it’s great.

If it’s not, we’ll show you a way to optimize it. So great points.

Mike Kowalski: It’s a little confusing for partners to look at it that way, but certainly the ones that look at the long game see that as a huge value. The ones that are looking just to jump in, make a quick score, get out, not support that partner or that client, that’s, that’s not really going the strategy that works well for this type of a business, just too many things can happen within an environment, but also that client that we’re speaking to at a very deep.

Staff, very knowledgeable staff, probably very expensive staff. Yeah. To support all of those endeavors that he was doing. So it wasn’t just a one man band. Fair.

Josh Lupresto: Let’s talk about, let’s talk about misconceptions for a second. So, Are there any misconceptions, you know, as you’re getting into these customer conversations when you talk about cloud infrastructure, migrations, security any, anything that you want to call out?

Right? I mean, the, [00:08:00] the point of this is for when partners listen to this, things to be ready for things to help navigate the conversation with, with their customers. Give us some misconceptions that you’re seeing out there.

Mike Kowalski: I, I think there’s three really big, big misconceptions. I think the first one is, Hey, I’m all cloud, so I don’t need Dr.

It’s just gonna be there. It’s operating on a trillion dollar infrastructure, and it will always be there. That, that is incorrect. If you have workloads out in the cloud, no matter what the infrastructure is, you are fully responsible for Dr. And if you don’t take care of that and you have, you know, everybody goes down, right?

Then you will be hard down. So that’s a huge misconception. Another one is everything is backed up and safe. The easiest comparison is Microsoft 365. Hey, my emails, my email box is, is in the cloud. Microsoft’s got it. It’s being backed up, not the case. It is up there and it is actively storing that data, [00:09:00] but if you’re not backing that up and you have some form of security breach and the that data is eliminated, maybe even encrypted and held for ransomware or whatever that may be, then it’s gone.

It’s absolutely gone. And then I think not accounting for maybe the mobile user. We have a big mobile workforce these days. Is the licensing that you’re currently implementing, is it cloud ready? Is it able to be available on all the different platforms that your, your customers and clients want to access?

That, that application or that server or that work, that workflow? Is it, is it licensed? Because the biggest word for Microsoft is just compliance. If you’re not in compliance, you pay more money. If you’re in compliance, then you get to, you’re, you have some entitlement to use those licenses because you’re supposed to use what you pay for and nobody wants to get hit with either.

Not being able to support those remote. [00:10:00] Workforce, remote clients. And then certainly they don’t want really big bills saying, Hey, you were audited and you’re not entitled to use this. Here’s, here’s a bill.

Josh Lupresto: Let’s talk about licensing. Speaking of confusing, I think this is something that a lot of people struggle with.

I mean, across the board you know, Partners, customers, e everybody, all, all of us, right? Because it changes so often and what, what might’ve been bundled with this license before is now an extra add-on, right? But it was the last time anybody heard about it, which might’ve been a week before it was sold this way.

So, yeah. So what’s your thought on, I mean, give us maybe some of the misconceptions around licensing itself and then I wanna dive into to Azure

Mike Kowalski: after that. Well there’s a ton of acronyms. We could talk about the CALS on your EA or if you’re running an M S P A. It’s, there are so many different aspects to the licensing today.

I really feel like Microsoft is trying to simplify that I. The way that they simplify that is they come up with the [00:11:00] highest enterprise tier possible, and that is really their focus on supporting and selling. And then there’s everybody else, which they would say, not really worth supporting. We care about you, but we don’t care about you enough to dedicate a support team to you.

But we will give you support. It’s only gonna cost you $500 per phone call. And there’s no guarantee or resolution. They wanna get everybody elevated up to this level. Recently they just took that elevation and they moved it up even higher. So if you’re an independent business and you’re running with these EA licenses, they’re making thresholds to get those discounts and that support higher and higher and higher.

Whereas if you look at the other side of the board and you look at a company that provides infrastructure and Microsoft licens licensing, that would be an M S P A, where you can go and buy one. You might be able to get those discount levels of actually buying 500. So there’s a little bit of a trade off if our clients are really focused [00:12:00] on cost, efficiency and utilization of their budget for it.

Taking a look at their licensing, if they’re doing it all themselves, they might find some huge gaps and they’re paying for a lot of things they’re just not using versus when you go to a cloud hosting company, They take on all of that requirements for compliance on their side. You buy a server, you buy a license.

Here’s the per seat, here’s what it costs. You can access it from anywhere. Maybe it costs a few dollars more per license because there’s a different form of support that’s built into that. It’s their 24 hour 7, 24 by seven knock. It’s their engineers that are manning the desk versus the other side. Right over the other.

It just really depends on where the business is, the business side, how much time they’re investing in management of their licenses. There’s so many different ways we could peel back the onion on this. It’s,

Josh Lupresto: yeah. Let’s let’s, let’s dive into this for just a sec. So, so if I’m a, if [00:13:00] I’m a partner out there, right?

I wanna understand this a little deeper. So, so if I’m a business, if I’m an enterprise of a certain size, then I’m forced into what Microsoft Deems is an enterprise agreement. Right. I’ve, I’ve, I’ve got a limited subset of people that I am forced to do my EA through. And, and then I can get support. I can get management, I can get migration, I can get help from wherever I want, but I’m forced to buy the licenses through there.

Right. That’s your upper echelon from an employee count size. Now, let’s talk about everything else, right? Everything else falls under the c s P side, correct? Correct. And so, so from a C S P side, I think that’s what we see a lot of. I mean, we do see some of the enterprise side, but they’re relegated to a certain subset of vendors.

But from a, from a C S P side, where are you seeing some of these areas come in and help? Is it, you know, deals you’re brought into? Is it migration? Is it still licensing itself? Where are some of those areas that, that you’re able to help partners and, and, and help customers not do this alone? [00:14:00]

Mike Kowalski: It’s it’s, it’s kind of a double-edged sword because I’ll be working with clients that have their ea ea their enterprise agreement in place, and they want to move the cloud infrastructure, but they don’t have the right software assurance that would allow them to port those licenses over.

And they’re like, wait, wait, what a second we’re, we’re paying for this. Why can it not be just moved over to the cloud? Well, in a multi-tenant environment, it, it goes against the licensing. They may not know that. Now if they’re taking down dedicated physical servers within a fully managed private environment, they may not need software assurance because it’s gonna be single tenant on one side that they still have control over.

So where we try to walk that fine line is what’s most beneficial to the business? Obviously depreciating and utilizing spend that they’ve already had in place and they don’t have to throw that money away. How can we best utilize that in a different platform that is better suited to host their business?

Versus [00:15:00] all of this stuff is old. And if we can move you over to a a cloud solution provider that takes care of all the auditing and even most cases would take care of compliance issues like PCI, high tech, HIPAA, we have some providers that go into the, the FedRAMP territory. Right. That is, that is a very valuable piece of the business because, The, they don’t have to cool the servers anymore.

They don’t have to manage the patching anymore. It, the licensing is exactly the same. You’re going to pay for the drink that you’re getting ready to take versus I’ve got all of these scattered licenses that I don’t know if I’m utilizing properly. Please, please help me figure this out. So CSPs have been amazing.

Yeah. Because of that particular model, simplifying the licensing behind Microsoft specifically. There are others, but Microsoft specifically,

Josh Lupresto: so, so if you look at, if you look at the, the customers that you talk to, is there any. Common theme? Or [00:16:00] is it one or two things? Is it, is it, and I’m just gonna throw out a couple, right?

Is it I, I need help with my, my licensing costs are too high. Or we’re trying to do a migration, or, or I need more support, or, I’m not getting the support that I, what are, what are the biggest things that you see customers and customers struggling with?

Mike Kowalski: It’s kinda like people that walk down the street and they pass up the dimes.

It’s. It’s, it’s just a dime. Is it worth my time picking up? I think licensing for a majority of our customers is the same way. If you walk past 10 dimes, you’ve just passed up a dollar. When they’re thinking about managing costs, it’s usually on sprawl. It’s usually on, Hey, I’m in this environment where I have no governance and I have 50 servers that are spun up and it’s costing me hundreds of dollars per server.

What they don’t really understand maybe appreciate is part of that cost is also the licensing that they’re paying for, that they’re not using. I think we can address that just simply by getting their sprawl under control with either building [00:17:00] a more unique and purpose-built footprint for their workflow, their workloads.

Then we can get those costs under control. Or if they really are just licensed focused, which again is a very small piece of it, we can bring in specialists to do an audit of their environment. A, you’ve got these servers that are spinning. They’re not just costing money to spin them up, but you’re paying for all the licensing that’s on it too.

Shut ’em down, recoup that money. Now you also have to be purchasing those licenses in a very specific way, because even if the licenses or servers turned off, the license is still allocated. So you’re still paying for that. So you may not have compute on it, but you’re still paying for that license to sit there and it’s not being functional to the business really.

Josh Lupresto: So what what’s a, maybe let’s go through an example. Walk us through a deal that you got brought into and, and sometimes what I like to call out on these is that, The, the deals don’t always look, [00:18:00] you know, they, they don’t look in the end how they did in the beginning. So I’m, I’m curious, from your perspective, walk us through a deal.

What were some of the problems that you got brought into? What was the initial, Hey, I need your help because this, and then really, what did that transpire to and how did you help?

Mike Kowalski: I may have told this story before and it’s, it’s a funny story that I can share here. Again, for those that haven’t heard it, We had a client that was fully in a w s and just a little tidbit of information about five years ago.

If you were a brand new company and you wanted seed money, investor, investor money, you’d have to be in a w s. I don’t even think Azure was at that place yet, where they’re saying, go to Azure. I believe that’s changed now, but you have to be in a w s. We know what we’re gonna get for. And they went with a $40,000 a month spend launched the business wildly successful.

Then the next month is 45,000. Then it was 50,000 and it was 60,000, and then it got up to about half a million dollars a month before. They said, we have no [00:19:00] understanding of why this is happening. We came in because cost and sprawl was completely erratic. They had no way to visualize on where the servers are, what they’re doing.

So we came in with our team. We looked at the environment. We found 1500 idle servers. And they were, they were running nothing except for licensing and resources that they’re paying for on a permanent basis, right? And then we saw this light go off in one of the engineer’s head. We just had one of our engineers come in here a week ago and resign and said that he’s mind enough bitcoin that he never has to work again.

Now it’s a funny and not funny story at the same time, there are businesses out there doing legitimate work on this infrastructure, but without having that capability of keeping the licensing under control, if you have a fixed environment and you have AE licensing, you can only go as big as the infrastructure you have in place will support it.[00:20:00]

That’s also limiting because you’re a gaming company and you need to support 2000 more users at that time. You have to find out some way to be able to support that, or you’re gonna break and you’re gonna have a poor experience and your game’s gonna tank. But on the other side, with this Bitcoin operator, right, quote unquote, we, we can’t validate that when you’re in a cloud and it’s so easy to work with a cloud solution provider where they can just turn on and off different services for you.

If you don’t have a governance in place, that is going to turn into somewhat of a nightmare. If you allow that to happen over time, you’ll see it in the form of a bill. Why did it go from 30 to 40 to 50 to $60,000 per month? We have a lot of resources in place that can help protect the protect against that, so you get the benefit of having fixed infrastructure, fixed cost.

But having that burst ability, and that’s from a licensing and infrastructure [00:21:00] standpoint, the C S P is really the best way to go. Fits a lot of business models to this days. Love it.

Josh Lupresto: All right, well, I’m gonna go turn off my minors, but we’ll do that after the podcast. So last, last couple questions here.

I, I, if I’m a partner and I’m listening to this and maybe I haven’t really gone into licensing, I haven’t gone into infrastructure, maybe I’ve focused on something else or a different product set that I’ve been successful in, what would you give partners what would you tell partners that are not comfortable yet in selling this or talking to the customers in this?

Some of the things that we’ve talked about.

Mike Kowalski: We have a lot of, as you know, Josh, we have a lot of partners that really focus on the telephony side of things. Maybe they’re branching out into call center and CX and they, they hear AI and, and they’re really diversifying from their ucas platform, which I think is, is a very logical step.

You’re very still familiar with the infrastructure, the way that it operates, the way that users interact with it. So it’s, it’s kind of a natural progression. [00:22:00] I would like to challenge partners to get a little uncomfortable and ask some of these other questions. If you’re just on that telephony side of the business, there is someone else in there that is working on the infrastructure side of the business.

The overlap between the two would be network, so maybe use that to bridge the gap between the two. Hey, you talk about network. You’re familiar with network because you’re running the phones off of it. What? What is running on the other side of the business? They may get scared for a couple reasons. They don’t know how to handle that next question, or they’re afraid that maybe their contact that they’ve worked with for 10 years isn’t responsible for that.

I think if you’ve had a really good relationship with your customer for 10 years, ask for the introduction and then get a question to ask about their infrastructure and be unafraid of the answer. Because if they’re willing to give an answer and they have some curiosity, Book a 30 minute conversation with myself or someone on my team, and let’s dig into that a little bit more.[00:23:00]

Hey, Mr. Customer, I know I haven’t talked about infrastructure, but you know, what workloads are you supporting right now for your clients? Where are they located? Geo geographically doing any international business? Do you get any complaints that your application is running slow? It, it could be any number of these.

And he says, actually, yeah, I do. Don’t freeze up, just say like, great, I’ve got purpose built engineers that would love to have a conversation with you so we can learn more and we can dig into this. And that’s where we’ll step in and. Dig into it.

Josh Lupresto: Love it. Oh. Okay. Final question. So we got a lot of stuff cooking out there.

We got open ai, we got G P T, we got the copilot flavory that so you got a lot of answers to pick from here of what’s Mike’s vision for what comes next in this space and, and, and how do we. Maybe I’ll couple that with not just what comes next in this space, what should we look for and what should we do to be ready for it?

What what’s your thoughts there as we wrap this up?

Mike Kowalski: Yeah. We’ve come a long way. We’ve come a long [00:24:00] way from physical infrastructure saying we’ve got to build our capabilities for these three months out of the year. So we build, we bought, build a wall eight feet high because that’s, that’s how high the tides rise when you know, 90% of the year it’s at four feet.

That has been a very cost ineffective model to support infrastructure. Now we’ve moved into APIs, auto scaling, putting in instances when you just need to do some bursting. It’s proven, as I mentioned with the Bitcoin story, it is not perfect by any stretch of the imagination. I really see a layer between infrastructure and burst stability coming into play here.

I think that we’re going to see some. Fancy technology that is going to look very, very simple. That’ll overlay on top of your business and it will best understand where you need to put workload, when you need to put workload for how long you need to put it there. It’s going to predict your patterns of your business model, whether it be seasonal or everybody logs on at six in the [00:25:00] morning with their cup of coffee.

It’s going to predict that it’s going to be ready and it’s going to grow it, and then it’s going to shrink it. It’s going to put it not just in one platform, it’s going to put it in multiple platforms. They may start utilizing different types of platforms or technologies within each of the service providers, and it will be a very easy to interface with application.

I think that’s probably within the next five years, if not the next two years. That people will be subscribing to this as a service so that they can keep their sprawl under control. They can keep their customers happy. They get visibility into how applications are running in Sydney, Australia, and Chicago all at the same time.

And this AI level, if you want to call it that, this AI layer will adjust for everything that’s necessary for the end user that’s coming.

Josh Lupresto: I love it. We’re gonna be embattled with the, the productization of large language models and the best one wins. I, I love it. Great points. That’s right, a [00:26:00] hundred percent.

Awesome. All right, Mike. Great stuff man. I that’s all I got. I really appreciate you coming on. I.

Mike Kowalski: This was fun. Thanks a lot, Josh.

Josh Lupresto: Okay, everybody that wraps us up. I’m your host, Josh Lupresto, SVP of Sales Engineering, Mike Kowalski from Telarus. We’re talking cloud. We’re talking licensing and infrastructure.

Until next time.