Microsoft Licensing With a Hosted Service

Dos And Don'ts

Dos & Don’ts for Microsoft Licensing Within a Hosted Service

Many organizations are currently investigating the possibilities to purchase a hosted service. They want to realize savings on hardware and management as well as great scalability and flexibility potentials. Such a move raises some questions: "We will soon post our server environment to a hosting partner. How does this affect our current Microsoft licensing? Can we use it the same way?", "We are investigating whether it is possible to make a move to Microsoft Azure. What about our licensing investments? Are they lost?" These are the questions we are currently getting by a lot of our customers. Some organizations underestimate the (license) consequences of a transition to services such as Microsoft Azure, Amazon Web Services or a local hosting provider. In many cases, it is more complex than previously considered. Through this blog, I try to clarify by explaining some examples and scenarios for Microsoft Licensing within a hosted service.

Hosted Service: Dedicated or Shared Environment?

If an organization would like to use a hosted service where the dedicated hardware is assigned to the organization, there are just few changes with regard to the Microsoft licensing. Existing volume licensing agreements can essentially be used to purchase a hosted service.

However, if it’s an environment, where virtual machines (VMs) are shared with third parties, it is not possible to take volume licenses and adapt those. This, for instance, is the case in a hosted Exchange service.

Below is a brief overview of each scenario for Microsoft licensing in relation to a hosted service:

   Hardware  Virtual Machines  SPLA Volume Licensing
 Scenario 1  Dedicated  Dedicated  Available  Available
 Scenario 2  Shared  Dedicated  Available  limited
 Scenario 3  Shared  Shared  Available -

While the options for the scenarios 1 and 3 are clear, scenario 2 is complex. Here, the options depend on the product. This is the situation, which we most often encounter at our customers. That's why I will treat this scenario by product category within the Microsoft licensing spectrum: server OS, server applications, client OS and client applications.

The Server OS

Windows Server is always licensed on the physical layer. That is also true in a scenario where there are only Windows virtual servers involved and the physical host instance is present as an ESX layer. Since this is a case of shared hardware, volume licenses cannot be deployed. The host must report the Windows Server through the Service Provider License Agreement (SPLA) program. So for users accessing Windows servers respective Windows Server Client Access Licenses (CALs) are not required.

The server applications

For the majority of the server applications licenses are already being held in a hosted environment. These can be re-used under the condition that Software Assurance is added to the licenses.

In general, subscription licenses are seen as products with Software Assurance, which automatically satisfies the above mentioned condition as long as the subscription is valid, of course. The same applies to the licenses in the online portfolio (Office 365, CRM Online).

The Client OS

It is not allowed to offer a virtual desktop based on a Virtual Desktop Infrastructure (VDI) technology. However, there is a way to provide users with a desktop look-and-feel: the Remote Desktop Services (RDS) technology. By offering users access to a Windows Server-based Graphical User Interface (GUI), the user experiences the virtual desktop as a full Windows client.

The Client Applications

The traditional desktop applications such as Office Professional Plus, Project and Visio cannot be licensed from a volume licensing agreement. MS Office , Project and Visio applications should therefore be purchased and provided via SPLA.

An exception applies to the Office 365 apps: Office 365 Pro Plus, Visio Pro for Office 365 and Project Pro for Office 365. These apps may be installed in a shared environment as long as the hosting provider is a so-called Shared Computer Activiation (SCA) partner.

Microsoft Licensing with Cloud Solutions

Microsoft's Cloud Solutions (Exchange Online, SharePoint Online, Skype for Business Online and CRM Online) are provided through personal subscriptions. A major advantage of these services with regard to Microsoft licensing is the so-called Dual Access Right*. Dual Access Right means that users who are assigned to an online subscription may also access the equivalent on-premise server. This may also be a virtual server running within a shared hardware / dedicated VM environment. Below is a list of the most common dual access rights.

* Dual Access Right is not available within the Office 365 business plans

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Christiaan Hendriks

Christiaan Hendriks

Microsoft License Consultant

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