Microsoft recently introduced new cloud-optimized software licensing and access options that will exist side by side with their more traditional, on-premises software-delivery models. Although the new programs are touted as ways of simplifying licensing options for enterprises, understanding their implications is anything but simple, and some organizations may find they’re actually paying more for applications and infrastructure than they did under previous licensing programs.
In spite of the promises of “simpler” options, Microsoft’s move is part of a broader trend in the software industry toward increased licensing complexity as technology platforms and delivery models evolve. It’s no longer realistic for organizations to think they can stay on top of their licensing requirements by simply counting the number of devices on which an application is installed.
My advice to enterprises affected by Microsoft’s evolving licensing programs can be summed up in two words: due diligence. Carefully examine the details of any new agreement you’re considering. Microsoft license agreements are intricate and nuanced, and in some cases they appear to be designed to apply new or “hidden” fees to the enterprises that use them. With that caveat in mind, here are some areas that often carry unanticipated costs if not thoroughly understood or accounted for:
Client Access Licenses (CALs)
For licensees, the term CAL (client access license) is basically synonymous with “surcharge.” The CAL model, which grants “legal permission” for client devices to connect to Microsoft server-based software, while not new, presents an increasingly difficult aspect of licensing thanks to the proliferation of connecting devices.
Depending on several variables, CALs can be based either on the number of users accessing an application or the number of devices. The terms of a CAL can apply variously to applications, users, user behavior, types of devices, what those devices are running or even certain circumstances—for example, the location from which the application is accessed. That might mean, for example, that a device connecting to a Windows server that has Exchange and SQL installed will require a Windows Server CAL, an Exchange CAL and an SQL CAL. It’s easy to see how complexity—and costs—can quickly increase in that kind of scenario. In fact, you might also be required to purchase a user-based CAL to ensure specific users have the right to access the application.
Windows Server Licensing
Over recent years, as servers have become more and more powerful, Microsoft has introduced license terms that are based on the specifications of the hardware rather than the number of machines—successfully exploiting the trend for its own financial gain. Specific licensing terms can vary depending on whether deployment is physical or virtual, the number of processors that are on the server, the number of cores in the processor, and the number of physical cores associated with the server. So, for example, when you purchase MS Windows Server Standard Edition (2012) and install it on a machine with four processors, you’re required to buy two licenses.
Citrix or Windows Terminal Server (WTS) Environments
If your organization is delivering applications using Citrix XenApp or Windows Terminal Server, you need to consider several different licensing options, each of which requires a different approach to license management. The “safest” option for organizations that fear an audit nightmare is to purchase site licenses to cover all connecting devices for all users. For obvious reasons, this model can be very expensive. Another option is per-seat licensing, which is based the number of client devices permitted to access the software. This license model often triggers additional costs, however, when users access applications running on Citrix from other devices. A final alternative is per-user licensing, which is based on the number of individual users. On the surface, this option might seem like the safest and most economical model, but to avoid license exposure, great care must be taken to prevent non-licensed users from running the software. And remember, whether you are licensed per device or per user, compliance is based on whether machines or users are capable of using the software (not whether they actually do).
Bring Your Own Device (BYOD)
Although BYOD may bring productivity gains, it may very well both increase licensing costs and increase the risk of drifting out of compliance. This is true even in cases where a device is harnessed to or “companioned” with another licensed device. Once again, it all depends on the details of your Microsoft licensing agreement. It also depends on who owns the device that’s being used. Here’s an example: an employee-owned device, unless it happens to be running Windows RT, is not covered by the roaming-use provisions under Microsoft Windows Software Assurance.
Licensing Expertise
Make no mistake: one way or another, you are already paying for someone to try to understand, make the most of and, at times, address issues related to Microsoft’s licensing policies. It can be expensive to bring in software licensing expertise, but for some organizations, depending on their level of licensing exposure and/or potential opportunities for savings, the investment might very well pay for itself. The fact that an entire industry has emerged to help companies navigate the Microsoft licensing maze speaks volumes about the complexities of compliance in today’s enterprise environment. Consultants can help you in a number of ways: they can provide assistance in minimizing risk, identifying opportunities for savings, negotiating agreements or preparing for an audit. On the other hand, some organizations will find it more cost-effective to invest in more-intensive licensing training for existing employees. But all too often, expertise is developed only after a licensing disaster has occurred; rarely is it part of the original planning or budgeting process, leaving the organization exposed to much greater financial risk.
The complexities and hidden costs of Microsoft licensing are unlikely to go away soon. Enterprises will need to remain diligent in their approach to licensing, carefully analyzing the implications of their agreements, using best practices in asset management, hiring competent and experienced staff, and deploying robust SAM technology to ensure full compliance and audit readiness.
Leading article image courtesy of MIXEvent under a Creative Commons license
About the Author
Kris Barker is CEO of IT asset-management software vendor Express Metrix. Before cofounding the company in 2000, Kris held development and management positions at WRQ, DEC and Boeing. Owing to his background in both the technical and business issues relating to IT asset management, Kris is frequently invited to speak at leading industry conferences, including IAITAM’s and ECPWeb’s annual summits.
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