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Microsoft Licensing Quick Guide

This Quick Guide is available in PDF format here.

This Quick Guide to Microsoft Licensing has been provided by Matt Marnell of Holistics Inc.
Quick Guide To Microsoft Licensing

Introduction

Volume licensing is a more affordable and generally much easier way to purchase and manage software within all but the smallest organizations.

Some of the concepts in volume licensing can be intimidating, and the practical considerations of some licensing models can confound even the best of us. Keeping up with the changes in licensing rules can be like trying to hit a moving target.

The IT industry is always in flux, and licensing tries to keep pace.  But, the basics tend not to change. Microsoft is no exception.  With a little upfront effort, a solid foundation can be laid from which an understanding of even the most sophisticated licensing rules can be achieved.

The aim of this article is to help those who want to lay that foundation for Microsoft, those who want to understand the basics of the various Microsoft specific licensing models and volume purchasing programs.  It is not intended to capture every detail or exception to every rule, so please don’t take it as the holy grail of licensing.  It surely is not.  But I do hope to provide an overview of the more common product use rights along with some practical examples for each.

Matt Marnell, Holistics Inc

Matt Marnell, Holistics Inc

So let’s begin.  Before jumping into the various volume license purchasing programs it’s important to understand the common license models and corresponding products.  Most of the rules Microsoft uses to license its products follow neatly, more or less, from 9 basic models.  If you can master them be confident that you are well on your way to becoming your organization’s very own Microsoft licensing guru.

Most Common Microsoft License Models

Desktop Operating Systems

The way Microsoft licenses desktop operating systems is about as simple as it gets: one license is required for each device using the software, and you can install only a single copy per license.  One license is required for each physical, virtual, and thin client that uses the OS.  However, there is one important caveat: in volume licensing the desktop operating system license is an upgrade, not a valid “base” license.  That is, similar to other upgrades, you must have already licensed a qualifying operating system in order to apply a volume licensed desktop OS license.  But since the OEM licenses that likely came with your new computer purchases are generally considered valid base licenses, this is not as troublesome as it sounds.

It is worth noting that Windows Enterprise is available as a complementary upgrade to Software Assurance (SA) customers with Windows Professional licenses.  This also permits licensees to run up to four additional copies or instances on each licensed device while enrolled in SA, in contrast to the single install normally allowed.  This is a useful benefit for environments experimenting with virtualization.  Also, many people are aware by now of the right to downgrade from OEM or shrink-wrap (FPP, or store bought) Vista Business or Ultimate licenses to XP Pro.  But, this is not the norm.  While downgrade rights are granted to licenses purchased through volume licensing, or those enrolled in SA, most licenses of any kind acquired as OEM and FPP purchases are not granted downgrade rights.

Desktop Applications

Volume desktop application licenses are a touch more complicated than operating systems.  A single license is required for each physical device either running or accessing the software.  So feel free to install multiple copies of Office on your properly licensed computer.  Are you running virtual machines on your desktop, each installed with their own copy of Office or Office Project?  No problem, as long as your host desktop is licensed.  But, you will need to make sure that all devices that access the software remotely, such as in a thin client environment, are each individually licensed for Office.

There is one more catch.  When Microsoft says properly licensed for remote access, they mean licensed for the same or higher (1) edition and (2) version. So, remotely accessing Office Professional Plus 2007 on a server from a machine licensed for Office Enterprise 2007 is allowed.  Accessing Office on that same server from a machine licensed for Office Standard 2007, or any version prior to 2007, is not allowed.

Further, downgrade rights apply to desktop applications and allow a machine licensed for one version of Office to use any prior version – but not any lower edition, as these are actually treated by Microsoft as separate products! So you can license the current version of Office Pro and install Office Pro 2007, 2003, or even XP if you like, but not any version of Office Standard without another valid license for that product.  These same basic rules apply to MapPoint, AutoRoute, Office Mobile, the individual products within the Office suite, and just about any other standalone product you could also purchase in shrink-wrap that’s not a development tool or OS.

Developer Tools

Did I say that desktop operating systems were about as simple as it gets?  In truth, that honor is reserved for developer tools.  Simply put, one license is required for each user that accesses or uses the software.  It does not matter how many copies are installed on how many devices.  All that matters is that each user is licensed individually and that the software is only used to design, develop, test and demonstrate programs.  MSDN, bundled with Visual Studio, is the most common developer license I encounter in the environments in which I work.  But, other options with other benefits are also available such as Expression and TechNet subscriptions, and even some standalone developer licenses for BizTalk and SQL are available for almost nothing.  Most organizations I encounter don’t have trouble managing their developer licenses, but keep in mind that your test users must also be licensed, one way or another, to use the systems they are testing.

Here’s a tip for MSDN licenses: While the bulk of rights that accompany an MSDN license are design/development/test environment limited, there is one often overlooked use right that can be quite valuable to organizations with large amounts of developers.  MSDN Universal and Premium subscribers also have the right to use one copy of Office Ultimate, Visio Pro, Office Project, and several other desktop applications – for any purpose.

Servers – Server/CAL

Many servers sold by Microsoft are licensed using the server plus Client Access License (CAL) model.  First, it is important to note that Microsoft considers a hardware partition or blade a separate server.  Second, Microsoft defines a CAL as a license that gives a user the right to access the services of a server, for example, file and print sharing. CALs come in several flavors, including User, Device, and External Connector – and they are specific to the server and version for which they allow access.

You may choose depending upon the nature of your environment to purchase all Device CALs, all User CALs, or a combination of both.  Officially, once you pick you cannot change a Device CAL to a User CAL, and vice versa, without Software Assurance (and even then only upon renewal of an SA agreement).  But, I have known organizations to be successful at negotiating a change in CALs.

The External Connector License (EC) is technically not a CAL but a serves the same purpose for any number of external users that need sophisticated access to your internal network.  These are never required – you could just purchase regular CALs – but are a cost effective way to license unlimited access to your network by lots of contractors, partners, suppliers, or customers.  Also, if you’re running a publicly accessible website, or another anonymous service, you probably don’t need an EC.  Even if you do, the good news is that you only need one EC license per server regardless of the number of external users or number of instances running on that server.

Two of the most widely understood examples in the Server/CAL category are Exchange and SharePoint.  So to run either of these services, each operating system instance running the service – including any virtual machines – must have a Server license and each user or device must have a CAL.

Server Operating Systems

Windows Server operating systems, including Small Business Server, are licensed in the Server/CAL model.  So, if you’re on the hook for CALs anyway, why buy Enterprise Edition when Standard costs so much less?  The difference is in the extras, of course.  5 CALs come with Standard, but 25 come with Enterprise.  And let’s not forget that the extra virtualization rights incorporated into the higher priced editions can be an important factor in reducing the overall licensing costs of a large-scale deployment.  Products licensed under this model do come at significant discount compared to those licensed Per Processor, but the price of CALs will start to add up as your organization grows.

As just mentioned, some server operating systems aren’t licensed using a Server/CAL model.  Windows Datacenter Edition, which comes with unlimited virtualization rights, and Windows Server for Itanium systems, a 64-bit processor built especially for efficient operation in enterprise servers, are licensed using a Per Processor model – which we’re about to discuss.  For now, let’s just remember that in these special server OS cases CALs are still required.

Finally, downgrade rights are also available to Windows Server licenses purchased as OEM or shrink-wrap, just like those purchase through volume licensing and/or enrolled in SA.  Full details are available on Microsoft’s website.

Servers – Per Processor

The Per Processor license model works just like it sounds: one license is required for each processor that supports a service.  The main benefit licensing under this license model is that most processor-based licenses don’t require CALs.  For instance, SQL Server is probably the most prolific example in this category, as it should be.  Stellar databases like SQL Server are obviously good at managing large amounts of data, especially in those cases where coordination between many users is a must.  The Per Processor licensing model is far more cost effective than the Server/CAL model in those and similar situations where large numbers of CALs would otherwise eat up budget.

One of the more critical points to understand about Microsoft processor-based licensing for servers is the difference between cores and processors.  A processor can contain multiple cores that share execution resources, but two separate processors generally have separate execution resources that translate to better performance.  Many software vendors consider cores in their licensing models. Microsoft does not – just processors – and this can be a licensing advantage over its competitors.

When licensing servers under the Per Processor model, you can choose either to acquire a license for each processor running an instance of the software, whether it be a virtual or physical processor, or you can acquire a license for every physical processor on that server.  While this is often presented as a choice between two options, for the purposes of this discussion it might be more helpful to think about the model as having an upper limit instead.  The maximum number of processor licenses ever required is the number of physical processors on a server.  At that point, you can run any number of instances you desire.  Our example, SQL Server, has some other special licensing considerations that should be understood before making a purchase, so be sure to do your homework.

Other Microsoft Licensing Models

Online Services

Microsoft’s online services are subscription-based, and so are the licensing models for these products.  In this case, whether the license is user-, device-, or organization-wide really depends on the type of subscription.  There is even a licensing model to cover only a single server or even just an amount of storage space.  As an example, Forefront Protection for Exchange is available either in a Per Device or Per User Subscription License to match your Exchange licensing model.

Other Servers – Management/Specialty

Management Servers, like SCCM, are used to manage the other devices in a large environment.  These systems can provide detailed hardware and software inventory, and in the right hands enable more effective IT Asset Management.  These products are licensed roughly in the Server/CAL model, except that in this case the CAL is referred to as a Management License. And, Specialty Servers, like Dynamics CRM, are licensed per instance, whether inside a virtual or physical machine.  If you are more interested in these products and the corresponding license requirements, the product pages at Microsoft’s website are a great place to start.

Software Assurance

There is one last item to cover: Software Assurance (SA). This is Microsoft’s comprehensive maintenance offering.  Too long a list of benefits to completely list here are available to SA customers, but I would be remiss not to list a few: downgrade rights, new version rights (aka upgrade rights), 24×7 support, training vouchers, and the employee home use program, among many others. You can even acquire SA for certain licenses acquired through as OEM or shrink-wrap, such as Windows OS, if you purchase SA through a qualifying volume licensing program within 90 days of your non-volume license purchase.  Although the benefits are substantial, so is the cost, so it is obviously important to understand the value that specific benefits of SA will bring to your organization before signing up.

Wrap up

I hope you have found this quick guide to Microsoft licensing useful, but as is often said there are exceptions to every rule and Microsoft licensing is certainly no different.  Much like each snowflake, each organization is different and has a different set of needs.  As a natural result, the optimal combination of license types for each organization will vary.  If you have questions, don’t hesitate to get in touch with a licensing specialist.
Matt Marnell, of Holistics, is a licensing expert and IT Asset Management professional responsible for the development and implementation of licensing and ITAM solutions for clients all over the world.

“Holistics provides global research and information solutions. Our specific expertise is in Software Asset Management (SAM), a discipline we’ve helped to revolutionize through technical innovation and best-practice development. Holistics’ services can be tailored to meet your specific IT challenges and are provided in the strictest of confidence.”

About Martin Thompson

Martin is owner and founder of The ITAM Review, an online resource for worldwide ITAM professionals. The ITAM Review is best known for its weekly newsletter of all the latest industry updates, LISA training platform, Excellence Awards and conferences in UK, USA and Australia.

Martin is also the founder of ITAM Forum, a not-for-profit trade body for the ITAM industry created to raise the profile of the profession and bring an organisational certification to market. On a voluntary basis Martin is a contributor to ISO WG21 which develops the ITAM International Standard ISO/IEC 19770.

He is also the author of the book "Practical ITAM - The essential guide for IT Asset Managers", a book that describes how to get started and make a difference in the field of IT Asset Management. In addition, Martin developed the PITAM training course and certification.

Prior to founding the ITAM Review in 2008 Martin worked for Centennial Software (Ivanti), Silicon Graphics, CA Technologies and Computer 2000 (Tech Data).

When not working, Martin likes to Ski, Hike, Motorbike and spend time with his young family.

Connect with Martin on LinkedIn.

4 Comments

  1. Niall says:

    One quick correction; where a development environment is covered by an MSDN subscription, User Acceptance testers do not

    require a license to access those systems for UAT purposes.

  2. Emma says:

    Another small correction, Downgrade Rights are not an SA benefit they are a benefit of

    Volume Licensing in general

  3. Matt Marnell says:

    Niall, you are correct that UAT is allowed by the MSDN license. However, the testing

    rights do not allow for staging – a nuance I was trying to avoid in a “quick guide.” Thanks for your input!

  4. Matt Marnell says:

    Emma, I suspect you’re referring to the section on SA where it is listed as a benefit.

    In that case I am referring to OEM licenses enrolled in SA as occurs with OSes. I did state in several places that downgrade rights

    apply to licenses purchased through volume licensing, but it is definitely a good idea to make that point 100% clear. Thanks!

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