What partners working with the software giant's products need to know.

Channel Partners

February 5, 2014

6 Min Read
The 5 Hidden Costs of Microsoft Licensing

By Kris Barker

Most IT professionals yearn for the days before Client Access Licenses (CALs), when they could calculate the number of software licenses needed simply by counting the devices on which the application was installed. While CALs, or licenses to “access” a product, have been a staple for some time, and more traditional software licensing models remain in place, licensing complexity continues to rise as organizations shift to new technology platforms and delivery models.

Unfortunately, a CAL lacks both physical software presence and easily measurable usage metrics, and remains the chief culprit.

A more recent trigger of greater difficulty is Microsoft’s introduction of cloud options that co-exist with more traditional, on-premises software delivery models. Each method of accessing the application is subject to its own licensing agreement, even if the product the end user sees is the same in both instances.  While the strategy of enabling organizations to move to the cloud at their own speeds is (theoretically) laudable, a licensing environment that was already difficult for customers to navigate has grown more complex. To compound this, Microsoft appears to be pushing changes in licensing models at a rapid pace as a matter of policy, another factor that makes it difficult to get a complete handle on your customers’ licensing postures—or anticipate costs.

What we end up with are instances where the intricacies of Microsoft license agreements can serve to extract new or “hidden” fees from users. Here are the five principal curve balls to dodge:

1. Client Access Licenses (CALs): Cost on Top of Cost

CALs are a brilliant way of making companies pay more for software licenses. CALs can be either user- or device-based and vary according to a variety of factors. They can apply to applications, users, user habits, or circumstances, such as the location from which software is accessed. For example, if a device connects to a Windows server and that server has Exchange and SQL installed, the device needs a Windows Server CAL, an Exchange CAL and an SQL CAL. Or, the user may need to buy a user CAL to give specific users the right to access an application. It’s not exactly intuitive.

BYOD environments are a breeding ground for additional CAL complexity. The number of devices, access methods, and locations from which an application might be accessed, multiply the ways in which the CAL rules apply.

2. Windows Server Licensing Characteristics: An Increasingly Elaborate Game

As servers became more powerful, Microsoft responded with license terms based on machine specifications (i.e., the processor count) rather than the machine itself. Specific licensing terms in many instances now depend on whether deployment is physical or virtual, and on issues such as how many processors are on the server, how many cores are in the processor and how many physical cores are in the server.

For example, if you buy MS Windows Server Standard Edition (2012), and install it on a machine with four processors, you must buy two copies of the software.

Per-seat licensing is the trickier issue here, even though it isn’t specifically new. Organizations need to ensure they have a crystal-clear understanding of per-seat licensing because, as the quantity of devices accessing the network increases, there’s a correspondingly greater risk of falling out of compliance.

3. Citrix or Windows Terminal Server Implementations

There are three software license types to consider in Citrix or Windows Terminal Server (WTS) environments, each of which requires a different approach to license management.

Some organizations using Citrix or Windows Terminal Server to publish software to their users choose the safest route: purchasing expensive site licenses to cover all connecting devices for all users.  Alternatively, they may choose per-user licensing, which is based on a maximum number of distinct users. In this instance, the organization’s software asset management (SAM) technology must be able to prevent additional non-licensed users from running the software.

The third option, and the one most prone to attracting hidden costs, is per-seat licensing. This is based on a maximum number of client machines permitted to access the software. Software license management solutions must prevent additional non­licensed machines from launching the application. Make no mistake. The software that isn’t running on a known and authorized device still consumes a seat.

4. BYOD Implementations

CALs aside (see No. 1 above), access to the employer network from a BYOD device can trigger additional licensing costs and raise compliance flags, even if the device is harnessed to or “companioned” with another licensed device.

It all depends on multiple, somewhat obscure factors. These might include the type of Microsoft licensing secured by an organization and the ownership of the device used. For example, employee-owned BYOD devices (unless they are running Windows RT) are not covered by the roaming use rights available under Microsoft Windows Software Assurance.

5. Hiring Licensing Expertise

Paying for expertise can be costly, but is one way of making sense of Microsoft’s licensing policies. While a license expert could be regarded as a solution to the four points above rather than a hidden cost, this measure often is an afterthought rather than a planned element factored into the original software budget. 

And expertise is expensive. The complexity of Microsoft licensing has spawned an entire industry devoted to helping unravel its mysteries. Some organizations invest in a licensing consultant to optimize their IT assets, negotiate agreements, and/or help prepare for audits. Others may hire an in-house specialist, or develop the expertise by funding employees to receive licensing training or attend periodic “boot camps.” 

But it may not be necessary: A good SAM application can go a long way toward tracking activity, enforcing internal policies, and ensuring compliance. Admittedly, the cost of implementing SAM processes and supporting technology are not inconsiderable. However, this is one of those happy instances where the “hidden” element is actually a long-term cost saving that ensures improved ROI, rather than just an extra expense.

Setting aside the costs of failed audits or non-compliance fines, the average organization overspends on software by around 20 percent. A good SAM tool saves on licensing and related support costs by identifying unused or underused applications — savings that in some cases can even outweigh the initial technology investment.

Technology is in a state of perpetual change, and a simpler, more transparent Microsoft licensing model is long overdue. Exactly when this will actually happen remains the question. Meanwhile, the best defense is to understand where the pitfalls lie, and make use of the best available human expertise and asset management technology to stay confident and compliant.  

Kris Barker is cofounder and CEO of Express Metrix, a provider of IT and software asset management tools, and curator of the Software Audit Forum. Before founding Express Metrix in 2000, Kris worked in both software development and management positions at WRQ, DEC and Boeing. He holds a BS in aeronautical engineering from the University of Washington.


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