License Mobility and CALs (Updated July 2016)

CALsThe Product Terms were updated in July 2015 with a new format, that is in principle, easier to navigate and has been well received by the channel. As an experienced licensing practitioner, I have seen the small nuances of terminology and interpretation impact clients in assessment of whether they require Software Assurance (SA).

I often illustrate to my clients the role of Software Assurance as a critical enabler of their business. The role of Software Assurance has extended beyond ‘New Version Rights’ and a package of soft benefits, to become a licensing vehicle for extended software use rights that are increasingly critical to how enterprises implement and maintain Microsoft solutions. The requirement to pay Microsoft every year to use software in the way a modern enterprise expects software to be deployed and maintained, often in a virtual infrastructure and highly available and resilient has become beholden to the requirement for SA.

I tell clients that they can often elect to license for enablement, or they can license for restriction. The answer for most customers who want to deliver on their business and technical requirements is usually somewhere in the middle, the balance of licensing optimisation and technical design can achieve the right business outcomes.

5 years ago, the expansion of Software Assurance was in it’s infancy. The decision to renew maintenance was still principally about whether the business would upgrade to the next version. It was a question of whether the new product offered new features that were required, and when that product would be upgraded.

To decide to renew was about commitment to the Microsoft technology roadmap. The decision to exit SA was about whether you ‘owned’ the perpetual license and were happy to remain on the then-current version. It was common for practitioners to assess a ‘holiday’ for a number of years and then forecast costs of buying back in later.

Last week, I came across some advice from a ‘big three’ consultancy that was advocating a complete exit of a Microsoft Enterprise Agreement (EA) as a driver of cost savings for a client. This set my alarm bells ringing, as I have tracked those small nuances of licensing enablement and restriction that can determine ‘lock in’ for renewal of Software Assurance across the Microsoft solutions and services stack. The decision to exit Software Assurance must be carefully assessed based on contract, license and maintenance entitlement and current and planned utilisation of Microsoft solutions and services.

Experienced practitioners are acutely aware of the role of licensing as a vehicle to drive consumer behavior. The old days of buying a perpetual license and ‘walking away’ have been systematically curtailed with the limitation of value in the perpetual license, enshrined within updated Product Terms and closer integration of cloud services. Redmond are aware that licensing drives increased revenues, and small changes and new licensing models are not ‘revenue neutral’ but drive the double-digit growth of strategic product groups.

One common topic of conversation is about whether an organisation can ‘exit’ Software Assurance as a driver of cost savings. I always stand by two principles a) don’t pay for what you don’t need b) If you need it, pay as little as possible. So in principle, I agree with the logic of the ‘big three’ consultancy, but as with the law, the devil is in the detail.

A common deployment configuration for applications servers like Exchange, Skype for Business or SharePoint Server is within a highly available virtual server environment. Microsoft support dynamic re-assignment of licenses within their virtual server environment under something called ‘License Mobility’ has been enshrined within the ‘safe harbor’ of Software Assurance (SA) for application server licenses.

Under License Mobility Across Server Farms  Software Assurance benefit, an organisation can reassign any of its licenses which are designated under as benefiting from License Mobility to any of its licensed servers located within their server environment dynamically, unrestricted by the default ’90 day rule’ that would be costly without the ability to re-assign licenses as often as needed. (Ref: Product Terms March 2016, Page 82)

Some organisations have been informed that Microsoft extended the ‘safe harbor’ of SA to Client Access Licenses (CALs). Accordingly, our clients have been concerned that active Software Assurance is required to continue deployment within a high availability virtual server environments. This interpretation could have a material impact to vendor ‘lock in’ as organisations are unable to ever exit Software Assurance for CALs as well as associated Server Licenses.

The reason for this concern some new wording added in October 2015 Product Terms:

With the exception of New Version Rights, benefits available for Server Products requires coverage for both Server License and access Licenses, if any (e.g., CALs). […] Customer’s access and rights to use their SA benefits, generally expires upon expiration of their SA coverage, unless otherwise noted below or in the Product Entries. The benefits are subject to change and may be discontinued at any time without notice. Availability of benefits varies by program, region, fulfillment options and language”

(Ref: Product Terms, March 2016,Page 72)

However, looking more closely at the respective product entries, the License Mobility SA benefit is stipulated as pertaining to the ‘server license’ and no other licenses associated with the license model for the product are listed:

  • Skype for Business Server
    “License Mobility: Server licenses only
    Product Terms, March 2016,Page 33
  • Dynamics CRM
    “License Mobility: All editions (server licenses only)”
    Product Terms, March 2016,Page 25
  • Exchange Server
    “License Mobility: Server licenses only
    Product Terms, March 2016,Page 30
  • Project Server
    “License Mobility: Server licenses only
    Product Terms, March 2016,Page 30
  • SharePoint Server
    “License Mobility: SharePoint Server and Office Audit and Control Management Server (server licenses only)”
    Product Terms, March 2016,Page 32
  • Visual Studio Team Foundation Server
    “License Mobility: Yes (server licenses only)”
  • Product Terms, March 2016,Page 43
  • UPDATED The July 2016 Product Terms:

    License Mobility: The terms for SA benefits for server products were updated to restore the License Mobility across Server Farms rights to allow Customers with SA on Servers but not CALs to continue to invoke License Mobility across Server Farm rights, provided their CALs are appropriately licensed to access the version of server software being used. 

  • It would appear Microsoft have responded to the market (i.e. upset customers) and clarified their position. This was repeatedly invoked by some Microsoft Account Managers to drive SA renewal on CALs…. something not necessarily supported by the Product Terms. This is great news that Microsoft have not extended the ‘lock in’ of Software Assurance even further!

Key Considerations

  1. Maintain Software Assurance for applications servers deployed in virtual server environments to support dynamic re-assignment of server licenses.
  2. Updated Product Terms wording will likely extend the requirement for active Software Assurance (SA) for CALs for products eligible for other principle server Software Assurance benefits like Fail-Over Rights and Server Disaster Recovery Rights i.e. for SQL on Server/CAL.
  3. As Microsoft migrate customers under a ‘Per Core’ licensing model for SQL Server, Windows Server and System Center, the impact to renewal of CALs should be increasingly limited.
  4. Organisations that do leverage the limited Server Disaster Recovery Right for application servers like SharePoint, Exchange, SfB, should assess the true cost of three years renewal of Software Assurance for CALs, before taking advantage of reducing their licenensable server footprint under disaster recovery benefit.
  5. Should your organisation license application servers under commercial vehicles like the Core CAL and ECAL suite, then a wider critical assessment of contract and contractual amendments, technology roadmap, current and planned feature utilisation, failover and DR configuration, and adoption of cloud subscription services are required to ensure appropriate due diligence of commercial and technology considerations.
  6. UPDATED The July 2016 Product Terms:

    License Mobility: The terms for SA benefits for server products were updated to restore the License Mobility across Server Farms rights to allow Customers with SA on Servers but not CALs to continue to invoke License Mobility across Server Farm rights, provided their CALs are appropriately licensed to access the version of server software being used. 

  • It would appear Microsoft have responded to the market (i.e. upset customers) and clarified their position. This was repeatedly invoked by some Microsoft Account Managers to drive SA renewal on CALs…. something not necessarily supported by the Product Terms. This is great news that Microsoft have not extended the ‘lock in’ of Software Assurance even further!

With these licensing considerations in mind, and the business demand for cost savings and mitigation of commercial risk, the requirement to develop an optimum software licensing strategy are increasingly complex. This includes, but is not limited to,  price increases and licensing updates, new licensing models and metrics, complex desktop, application and virtual server environments and adoption of cloud have seen critical changes in licensing and commercial pricing models. The utilisation of licensing as a driver of global renewal and new technology investment behaviours, pricing and increased audit activity require a systematic considered approach to respond to Microsoft’s bold commercial strategy.

The logic of the ‘big three’ consultancy to advise their clients to simply exit an EA is an established renewal and/or negotiation  strategy, but with the current rapid release and license update cadence it requires an accurate, structured and holistic approach.


About

This website is a way to give back to the licensing community and as an information resource for all customers that work with Microsoft software and licensing. I hope you find it of value.

Tony Mackelworth is Head of Microsoft Advisory Services at SoftwareONE

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Disclaimer

  • This article is not intended to replace the Product Terms
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