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At the end of last year, Microsoft confirmed what many had believed for some time—it will be transitioning its Windows Server operating system from the once simplistic device based licensing model to the now slightly more complex core based license metric sometime in Q3 2016. (See this article in ComputerWorld. Also, Microsoft has provided a Licensing FAQ here.

Why has Microsoft done this?

Opinions are divided on this. Cynics will argue that licensing changes are solely aimed at raising revenue. Others will say it reflects changes in technology by aligning with products such as SQL Server and BizTalk, whilst aligning with the licensing model for Microsoft’s public and private cloud offerings.

Either way, customers will need to review a number of areas in order to effectively negotiate new volume licensing agreements and to determine whether hardware purchases meet the growing technological processing requirements without exceeding the software licensing budget.

What is different?

Windows Server 2012 Standard and Datacenter editions were technically identical. The differentiator between the two was the level of support for virtualized systems (Standard = support for 2 Operating System Environments (OSE’s) and Datacenter = support for unlimited OSEs). Windows Server 2012 licenses were also sold based on a physical processor metric. Each license provided entitlements for up to two processors per license.

Windows Server 2016 will be sold in two-core packs (like SQL Server). Each pack is expected to cost approximately 1/8th of a current Windows Server 2012 license. It must be noted that the minimum number of core licenses required for a server is based on the larger of:

8 cores per processor, or 16 cores per server.

Windows Server Blog Graphic May16

Figure 1 – Windows Server 2016 vs 2012 Licensing Requirements

Assuming a Windows Server 2012 license costs the same as 8 cores for Windows Server 2016, a quick cost analysis suggests that customers that have hardware with 16 or less cores should see no increase in licensing costs. Servers with more physical processors and more cores per physical processor can expect to see a spike in license costs from what they are paying today. For example:

Under the previous licensing model, a server with two physical processors and 12 cores per processor (24 cores in total) would be licensed with a single Windows Server 2012 R2 license. Converting this into the 2016 licensing model gives an entitlement that is equivalent to 16 core licenses. However, this configuration requires 24 cores to be licensed via 12 two-core license packs. This therefore represents an increase of 50% in the Windows Server licensing cost.

What remains the same?

What does remain the same is Microsoft customers will still be required to purchase client access licenses (CALs) for end user or device authentication. CALs can be licensed by device, by user or, in some circumstances under a hybrid model of the two depending the nature of the business and profile of the user.

What do you need to do?

All customers should look at their Microsoft licensing agreements. Microsoft is helping customers transition to the new licensing metric by granting customers with active Software Assurance (SA), 16 Windows Server 2016 core licenses for each Windows Server 2012 R2 license entitlement. For some customers however, this grant will not be sufficient to cover them for what they already have deployed. To accommodate these customers, Microsoft are extending to customers with active SA (when Windows Server 2016 becomes generally available) the option to document and claim additional license ‘credits’ beyond the 1:16 grant. The benefit of doing this is when renewing SA at the end of the agreement, customers can claim entitlements based on these credits. By failing to act here, any shortfall in license coverage will need to be addressed in the form of additional license purchases.

Practical steps to take now

Take stock: look at the physical configuration of your hardware. Ensure that the numbers of processors and cores of the hardware can be identified. Software Asset Management (SAM) tools that collect hardware asset inventory data can be used to help define this quickly.

Look at demand: Windows Server Standard and Datacenter editions will have technical differences as well. Infrastructure teams should look at what features will be required.

Communicate: with indicative demand and server strategy known, SAM teams can model the licensing impacts. IT managers can use this to review the total cost impact of doing nothing against licensing optimized infrastructure arrangements.

In summary

You need to try and be as vigilant as possible and take the necessary steps to:

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IT Asset Management

It all starts with knowing what’s in your IT ecosystem. Flexera One discovers even the most elusive assets whether on-prem, SaaS, cloud, containers and more.

  • Identify the system specifications of the hardware in your environment using management toolsets
  • Conduct analysis of your current Microsoft license agreements and assess whether the license editions and program types will best suit your needs moving forward (product features, license use rights re: virtualization etc.)
  • Communicate the commercial ramifications to the infrastructure, procurement and project teams (if possible) of the move to core based licensing

Information on how FlexNet Manager for Microsoft can help automate this analysis can be found on our website. Microsoft has published extensive Windows Server 2016 pricing and licensing information on its website.

Gartner just published the Critical Capabilities for Software Asset Management Tools report, and our FlexNet Manager Suite for Enterprises scored highest in the Intermediate SAM Functionality and Advanced SAM Functionality use cases!

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