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Licensing in Virtual Environments – Six Steps to Containing Costs

In licensing terms, virtualisation can be an untamed beast.

Yes, you can save money with virtualisation, reduce power costs, air conditioning overheads and floor space in expensive data centres – but the licensing bill for a virtual environment can be horrendous if not configured appropriately.

I spoke with Andrew Harcourt managing consultant at Holme Rose Consulting who specialise in Software Asset Management programs for large organisations. Here he offers his advice for companies looking to license virtual environments appropriately and offers six steps to containing costs;

“Companies need to take into account licensing at the outset”

1. Seek Advice – Don’t shy away from virtualisation as a strategy but make sure you pass the project through a SAM sanity check before proceeding. There are significant benefits to virtualising large parts of the data centre & desktop over and above the direct cash ones mentioned in your introduction. In a large enterprise the move from rigid physical environments to more agile & flexible virtual environments is very significant.

However, project teams need to think about how they are going to manage and maintain the virtual environment on an ongoing basis and whilst software licensing is but one part it is one that could push any virtualisation programme from cash benefit to cash liability.

The worst case scenario is for an organisation to re-buy original unconsolidated hardware because the virtual environment ends up being so expensive in licensing terms. An effective SAM program will help an organisation assess which applications are worth considering for easy virtualisation and those that will require commercial support from Procurement teams to deliver the most cost effective licensing terms. A simple factory production line for applications that are to be virtualised is the best solution.

2. Double Check Inventory – Many discovery tools quite simply fail to inform adequately what is happening in virtual environments, they are not as good as they should be. Tools need to get under the hood of a virtual host and find out not only the configuration of the physical host but also the configuration of the virtual machines themselves. Many existing tools simply state ‘This is your hardware and you have VMware installed’. You need to be more thorough and check the configurations of the virtual machines.

3. Soft or Fixed Partitions – You also need to be very careful about whether the virtual machines have soft or fixed partitions. What are the boundaries of the resources being made available by the hypervisor to those virtual machines / servers?

A large engineering client we have worked with recently focused all of their efforts on making their virtual environment work, with no consideration of the licensing implications. The client used soft partitions, which means the virtual servers in use contract & expand based on demand. The applications that they had deployed had licensing models based on what hardware COULD be used rather than actual usage and the client ended up having a very expensive solution. On this occasion we engaged successfully with the publisher to obtain some flexibility in their terms, however it is much better and cheaper to do this work at the start of the project.

Similarly for Citrix, not only do you need to know the hardware & software profile to establish that Citrix is installed but you also need to know what applications are published to the user. How many users are applications published to? Can they have more than one session of the application open at a time? How is access to groups restricted?

4. Expect Greyness From Software Vendors – Software vendors have anxieties about loss of revenues in the current climate so expect more audit activity. However the growth in the economy is limited and companies are looking to do more with less. Any ambiguity regarding licensing in virtual environments is in the vendors favour enabling them to exploit uncertainty and maximise revenue.

5. Be Pragmatic – No company is ever going to be 100% compliant in a virtual environment, it is about putting the right portfolio of management tools in place, having the right information to hand, managing a pool of licensing and reviewing it regularly. With some applications, set boundaries rather than fixed levels, a pool of entitlement that can flex with the business and importantly discuss via vendor / supplier management teams your medium and long term infrastructure plans with your key publishers.

6. ROI – Software Asset Management is unfortunately mainly seen as just protection from vendor audits, but it IS very much more than that. Deployed properly it WILL deliver significant savings. In January this year Computer Weekly detailed seven strategies to survive the recession, Virtualisation was at number one and Software Asset Management was at number two….

What other advice would you recommend for managing licensing in virtual environments?

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.


  1. Sepa says:

    Virtualisation is a significant source of license leaks, particularly during that period before it is officially approved as

    a technology but when IT is still playing around with it to determine its potential in the organisation.

    At this stage often even

    naming conventions for VMs haven’t been confirmed and I’ve had instances where ill-thought out VM names have caused havoc with the

    accuracy of my discovery tools.

  2. Or lack of VM

    names…. An example from history…. A client was migrating large numbers of servers from a physical platform to a virtual platform, to

    consolidate servers in a hub. It was a straight forward migration. No IP addresses changed, no machine names changed. To the techies this

    seemed like an ideal solution, as all the clients that connected to that server required no adjustment…. The problem…?


    naming convention of the servers was a concatenation of base OS, hardware profile and physical location with a numeric suffix for good

    measure…. Other departments, that relied on this data, found themselves crippled…

  3. Thanks for exploring this topic – it’s one that’s often overlooked as

    companies move toward virtualized environments.

    One other point that’s important to be aware of: Microsoft licenses its OS’s in a

    variety of ways, each of which have very different implications with respect to software compliance. It’s therefore important to

    thoroughly research and understand your specific license agreements (and stay up-to-date on them, as MS continues to change/update their

    agreement terms). For example, as it stands today:

    * A MS Windows Server Datacenter license provides for unlimited virtual OS


    * A MS Windows Server Enterprise license provides for five licenses — one physical, four virtual

    * A MS Windows

    Server Standard License offers only two licenses — one physical, one virtual (Note: this is the case for 2008 Server; 2003 Server only

    provided for a single physical license)

    * And so on…

    Microsoft is definitely putting the onus on their customers to

    figure out how to manage all this from a licensing perspective.

    For anyone interested, we recently published a column regarding

    software license management in a virtual world, and tips for staying compliant. You can find it here:

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