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Microsoft Licensing Quick Guide 2015


Microsoft provides some of the most complex licensing models faced by organisations. There are a number of different licensing metrics for the desktop environment, virtual environment, datacentre and also now the cloud. The aim of this Licensing Quick Guide is to provide you with an idea of the license metrics, and the different types of agreements that are available to customers. We are not claiming that anyone will be a black belt or a Microsoft licensing ninja, but we hope that it will be useful for you.

Microsoft License types

There are a number of different license types based on the environment that Microsoft software is installed within. We have created a number of quick reference tables that highlights the license metric and a brief description below. Organisations need to be completely aware of their rights, so for full clarification of your organisations rights with Microsoft licensing you must check your license agreement with Microsoft and the PUR (product use rights).


Device Software is licensed by hardware device
User Software is licensed per user
Cloud Subscription Per user for a set period of time. At the end of the agreed period the user is no longer allowed to use the software
Font Microsoft provides a number of font licenses that allows customers to use Microsoft owned fonts for websites and for official organisational use
Freeware Free software that Microsoft may provide. May only be free to existing customers
OEM (Original Equipment Manufacturer) Pre-installed software that comes with hardware. May not be transferred or licensed anywhere other than the original device


Client Access License (CAL) License that provides a user a right to access a certain server. Come as either Device CALs or User CALs
Per Virtual Processor A virtual processor is a processor in a virtual (or otherwise emulated) hardware system. Virtual OSEs use virtual processors. For licensing purposes, a virtual processor is considered to have the same number of threads and cores as each physical processor on the underlying physical hardware system. [source]
Per Core Under the Per Core licensing model, each server running SQL Server software or any of its components (such as Reporting Services or Integration Services) must be assigned an appropriate number of SQL Server core licenses. The number of core licenses needed depends on whether you are licensing the physical server or individual virtual Operating System Environments (OSEs). [source]
External Connector License A license type for when an organisation wishes to provide access to their servers to an external user

Datacentre licensing is the most complex element of Microsoft licensing. There are a number of important facts to remember.

  1. License every processor on the server.
  2. Even if you use Microsoft Datacentre licenses, you still need Client Access Licenses
  3. You CAN store any number of copies of the software without the need to purchase more licenses
  4. Stacking licenses within this environment is allowed
  5. You may not mix Standard and Datacentre licenses on the same server.


As we are sure you are aware, Microsoft now offers a form of cloud-based subscription licensing. A prime example of the software that is offered through this license metric is Office 365, which is a user-subscription model with individual cloud storage. It is important to point out that the only elements that are cloud based are the storage and updates from Microsoft; the user will still have to physically install Office 365 to use the software.

There are a number of different options for business when it comes to Office 365 and cloud subscription. These include;

Office 365 Business Essentials Office 365 Business Office 365 Business Premium Office 365 Enterprise E1 Office 365 Enterprise E2 (Pro Plus) Office 365 Enterprise E3
User Max. 300 300 300 Unlimited Unlimited Unlimited
Full Office application for up to 5 devices
Office on tablets/phones
Online versions of Office
File storage with 1TB storage per user
Business class email with 50GB inbox
Unlimited online meeting’s, including Skype
Intranet site for teams
Corporate social network
Corporate Video Portal  
Personalised search and discovery across Office 365 using Office Graph
eDiscovery Centre and tools to support compliance

As you can see from the above table, there are a number of different features depending on what package your organisation subscribes to. However, if your organisation decides to migrate your Office to Office 365, then it is important to remember that it is available on up to 5 different devices, including mobile and tablets. Therefore, it is vital that your organisation has a SAM or Licensing solution that will provide you with the visibility and data required to manage these licenses effectively.

Licensing within the Virtual Environment

Products Licensing
All products in each of the Microsoft server licensing models in the Volume Licensing PUR. For example, Windows Server 2012 R2 and Exchange Server 2013 Use terms for each software license specify the number of instances of software that you can run on a particular server at a time, rather than the number of copies of the software that you can install and use on your server. Each software license allows you to create and store any number of instances of the software on any of your servers or storage media to make it easier for you to run those instances on any of your licensed servers.Before you use the software under a license for a server product, you must assign that license to a server. Each hardware partition or blade is a separate physical hardware system, and, therefore, a separate server.In general, you can reassign software licenses for server products, but not on a short-term basis (that is, not within 90 days of the last assignment).You cannot separate software to run it in more than one OSE under a single license, unless expressly permitted—even if the OSEs are on the same server.
Products in the Microsoft Processor/CAL and Microsoft Server/CAL licensing models of the PUR. This includes SQL Server 2012 Standard Each External Connector license allows any number of external users to access any number of instances of the server software on a particular server, even if those instances are run under multiple licenses for the software.Each Client Access License (CAL) allows any number of OSEs on a particular device (for example, client device) to access licensed instances of the corresponding server software. You do not need a separate device CAL for each OSE on a device.
Products in the Management Servers licensing model of the PUR. This includes SCCM 2012. Each device or operating system environment (OSE) that will be managed requires a Management License (ML). Included with the ML are the rights to run the corresponding management server software.Separate management server software licenses are NOT required. 
System Center 2012 R2 server management licensing maximizes your private cloud value while simplifying purchasing. All server MLs include the same components and the ability to manage any workload. System Center 2012 R2 server MLs are available in two editions differentiated by virtualization rights only:Standard: Each license permits management of up to two virtual OSEsDatacentre: When properly licensed, permits management of unlimited virtual OSEs


Volume Licensing

Small Business

The ‘small business’ volume license program allows organisations that require less than 250 licenses to have flexibility and also discounts on their Microsoft licenses. Within the small business volume license offering, Microsoft has four separate options for customers:

– Open License
– Open Value
– Open Subscription
– Microsoft Online Services.

Open License

Open Licenses allow organisations to purchase initial five or more licenses to open their account. After that, organisations can purchase products as and when they are required for the term of the agreement.

 It is important to note that Microsoft offers this form of volume license to organisations that are not commercial:

  • Government organisations
  • Healthcare organisations
  • Education establishments
  • Qualifying non-for-profit organisations

Open Value

Open Value is aimed at small to midsized organisations with five or more desktop PC’s. Open Value also provides software assurance (which we will explain later) with provides these organisations with access to training, deployment planning, upgrades and product support for any Microsoft products that they purchase.

Open Subscription

Open Value Subscription provides organisations with the lowest up-front costs for Microsoft licenses. This also allows organisations the ability to reduce the total licensing costs throughout the agreement (true-down ability). The Open Value Subscription allows organisations to run Microsoft products throughout the estate, but only during the time frame of the agreement. Organisations will also have the ability to add single platform option to the Open Value Subscription agreement.

Microsoft online Licenses

Online Services relates to cloud computing and Office 365. This is how Microsoft allows customers to extend the functionality of existing services, and consolidate them into the Online Services function.

Mid-Large Businesses

This is aimed at organisations with 250 plus seats. There are three different options for mid-large sized organisations and how they license their Microsoft products.

Enterprise agreement 

The well-known Enterprise Agreement (EA) is designed for organisations that want to license their Microsoft software and cloud services over a minimum of three years. The EA offers savings ranging from 15%-45% built in, however a strong SAM team can negotiate that further. EA payment can either be done up front for the entirety of the agreement, or it can be spread out for each year of the EA contract. The EA also includes a subscription options that also helps reduce the initial licensing costs as the organisation subscribes to use the software, and doesn’t actually own anything. The subscription model allows organisations to increase or decrease (true up or true down) their license entitlement on an annual basis.

Enterprise Platform

Through the Enterprise Enrolment, organisations can get further discounts if they make an organisation-wide commitment to using the Enterprise Platform. This platform offers Office Pro Plus, CAL Suites and Windows Enterprise Editions.

Enterprise Cloud Suite

Enterprise Cloud Suite (ECS) is available as part of the Enterprise Enrolment function. This brings together Office 365 plan E3, Enterprise Mobility Suite and also Windows SA per user. This allows users to access a number of applications and systems while on the move via tablets or phones

How does ECS work?

ECS is available as a User Subscription License (USL) or as an add-on license for the Enterprise Platform

Enterprise Cloud Suite USL = For users who are not covered by an existing Enterprise Platform or who would like to migrate to full user-based licensing at renewal. The USL lowers initial licensing costs because organisations subscribe to the rights to use Microsoft products and services instead of purchasing a perpetual license.

Enterprise Cloud Suite Add-on = For users who are covered by an existing Enterprise Platform. The Add-on is a subscription that supplements any existing Enterprise Platform license position.

Microsoft Products & Services Agreement

Microsoft Products and Services Agreement is an agreement for online services, software and software assurance purchases across an organisation.

Specialised Organisations

The only organisations that are eligible for this form of volume license are those that meet a specific criteria set by Microsoft. Examples of volume license and the type of organisation accepted are the following.


There are a number of options for small to mid-sized government organisations:

Open License for Government One time transaction where SA is an optional extra
Open Value for Government Spread payments made over a set period. Again, SA is an optional extra
Open Value Subscription for Government Lower up-front costs. Provides access to Microsoft software for the term of the contract through a subscription license metric.

Mid-sized to large government organisation options

Enterprise Agreement for Government Single agreement that is paid off over a specified period of time. SA is included.
Enterprise Subscription Agreement for Government Lower upfront costs as you are subscribing to use the software and wont own anything. Licenses only useable during the agreement period. SA is included.
Microsoft Products and Services Agreement Provides organisations with the ability to consolidate all existing purchases into a simplified agreement. Provides more flexible options for how licenses are purchased. SA is optional.
Select Plus for Government Purchase licenses as and when they are needed, with no set end date. SA is an optional extra.
Cloud Services for Government Online services and purchases that can be added to an existing agreement. Helps make the transition to cloud based licensing.


There are two options for Academic organisations that are both covered under the Academic Volume Licensing program. They are either perpetual or subscription options.

Subscription Subscription to use various Microsoft software. You can only use the software during the period of the agreement. SA is included.
Perpetual Organisations purchase and own the license. Organisation has the rights to use the software when the licensing term expires. SA is optional

The following types of educational entities are typically eligible to purchase through Microsoft Academic Volume Licensing programs:

  • Educational institutions
  • Administrative offices and boards of education
  • Public libraries and museums


Volume Licensing programs are tailored to your organization’s size and needs, making it simple to predict and manage license purchases. This includes health establishments and offers a reduced cost for purchasing Microsoft licenses.

Office 365 is available to commercial, government, and academic health organizations through the Enterprise Agreement and Open Programs, and to non-profit organizations through Open License.

Non for Profit

For eligible non-for profit organisations, there are a number of different options for them when licensing Microsoft products. Licenses for non-for profit organisations are considerably cheaper than commercial licenses.

Open License Must purchase five or more licenses. Future orders can be as and when required, with a minimum of one license. SA is an optional extra.

Software Assurance

Software Assurance is the program offered by Microsoft that helps organisations take advantage of optional extras offered by Microsoft. This includes training and support that will help users make the most out of their Microsoft license. Microsoft have listed the following advantages to purchasing SA:

Reduce software and services costs with rights to new software releases and cost-efficient upgrades.
Use consulting services to plan new, on-premises and cloud-based deployments.
Improve operational efficiency through access to unique technologies and licensing rights.
Increase overall user productivity with instructor-led technical training and online end-user training.
Maintain an available and responsive IT infrastructure with around-the-clock support”.

How do I get Software Assurance?

SA is only available through Volume Licensing programs and can be purchased when you buy or renew a VL agreement. It is included as standard in some agreements (check your contract!) or as an optional extra (for extra money) in others.

Checking your Organisations benefits of SA

The benefits that your organisation has through using SA all depend on any existing VL agreements, such as an EA. Depending on your agreement with Microsoft, you may have two ways in which to check your benefits:

Volume Licensing Service Centre (VLSC)

This allows organisations to view and activate any SA benefits that they may have. Your organisation MUST be registered to make use of the VLSC.

Microsoft Volume Licensing Centre (MVLC)

This is available to Microsoft Products and Services Agreement customers. This allows organisations to view and activate any SA benefits that they may have. Your organisation MUST be registered to make use of the MVLC.

SAM Managing SA Benefits


  • New products and unique license rights (for example New Version Rights, Windows Virtual Desktop Access Rights, Microsoft Office Multi-language Pack)
  • Deployment resources and tools (for example Planning Services, Microsoft Desktop Optimization Pack (MDOP), License Mobility through Software Assurance)


  • Support (for example, 24×7 Problem Resolution Support, Extended Hotfix Support, Back-up for Disaster Recovery


  • Technical training and learning resources (for example Training Vouchers, E-Learning)
  • Home Use Program (HUP)
  • Online learning for end users (E-Learning)


We hope that you have found this Microsoft Licensing Quick Guide useful. We are not expecting you to become Microsoft licensing ninja’s, nor do we expect that we have covered all of the Microsoft licensing challenges or issues that you may face. If you think we have missed anything, please let us know by contacting us here or by leaving a comment below.

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About David Foxen

David Foxen is a Software Asset Management expert and enthusiast. He had a vast experience of successfully implementing SAM, SAM tools and also made huge cost savings. A member of the ISO Standards WG21, David is a massive ITAM geek, so uses any opportunity to talk about the subject to who-ever will listen. He believes that the industry needs to share its knowledge and success stories to help the SAM industry mature and become more effective. Always willing to help, his primary goal is to make a difference to organisations and the SAM industry so everyone will know how epic SAM is!

One Comment

  1. R. Ward says:

    This is a great summary of some of the high level aspects of the complicated and ever changing land of Microsoft Licensing – great resource for those that are new to the game and a good resource to refer to for those that have a little experience and just need their memory jogged. Thanks for taking the time.

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