Getting a grip on licensing within your organisation

Mark Cutting Budgets, Compliance, Contracts, Licensing, Management 2 Comments

One of the most challenging aspects of IT Operations is licensing. Whilst this subject sounds familiar to anyone within the technology industry, it is rarely understood properly – more importantly, the task of keeping costs low yet remaining compliant from the legal perspective is not a simple one. Before you begin reviewing the subject of licensing, it is vital to gain an understanding of your estate – how many users do you have, and how many machines ? What are the business requirements ?

Licensing pitfalls

One of the biggest pitfalls of licensing is the per user / per device model. There’s a misconception that the per device model is sufficient – for a small business, this could well be the case. Admittedly, this licensing type is usually always cheaper, but comes with the limitation that it is over license only – and that is tied to the device you are using. Want another device ? You’ll need another license. You can typically find this scenario with Windows licenses (Client Access License), where you need a license for each device that will be connecting. A cheaper method in the long run is to opt for user based licensing. It always carries an elevated cost when compared to per device, but the added benefit is that the licensing model becomes per user.

This means that you are covered regardless of how many devices the user has (or actually uses), as the user themselves are licensed rather than being limited to single device. This provides more freedom and greater flexibility in multi device environments. If you think about it, having multiple devices these days is the norm, hence the per user model is preferred. Several organisations are considering a move away from traditional physical data centres to cloud based operators such as AWS or Azure. The main benefit is to reduce the cost of “tin” (an old term coined for use within the technology sector that refers to physical servers). The main reasons​ for adopting this model are flexible computing, significantly reduced hardware costs (with no need to factor in physical replacements), and a reduction in licensing. Large vendors such as the above often carry a SPLA (Service Provider License Agreement) meaning that they pay for, own, and simply the license to use their services from the Microsoft perspective – provided you use one of their machine images and do not provide your own. Doing so invalidates this license agreement and effectively makes the machine BYOL (Bring Your Own License) – meaning you are liable for its licensing.

Another caveat to watch for here (particularly AWS) is that if you device to change to dedicated licensing further down the line, you can no longer leverage the SPLA agreement, and have to provide the licences yourself. Several organisations have been bitten by this, and it’s an easy mistake to make – albeit a costly and embarrassing one – particularly when this is exposed during a license audit. Whilst a move to the cloud still remains an unattractive prospect for various business types due to a number of reasons (mostly privately owned entities), the overall cost for licensing is increasing. With Microsoft increasing the cost of an Office 365 agreement by 22% over the last 3 years, and now considering scrapping the “E” based agreements altogether, owning your own licenses is becoming less attractive from the cost angle alone.

If you decided to run everything in house, your licensing model would need to comply accordingly.

Such an example footprint could look like the below

  • Microsoft Windows 10 Professional
  • Microsoft Windows Client Access License (per user / per seat)
  • Microsoft Windows Server 2016 (per user / per seat – you typically get 5 CALS free with each server you license, but this is aimed more towards small businesses)
  • Microsoft SQL Server 2016 (standard / enterprise)
  • Microsoft SQL Server Client Access License (there is a significant difference between standard and enterprise)
  • Microsoft Exchange Server 2016 (standard / enterprise)
  • Microsoft Exchange Client Access License (there is a significant difference between standard and enterprise)
  • Oracle Enterprise / Standard server (typically licensed per CPU core although this model is changing with SE2. There is also a limitation on the maximum number of threads between standard and enterprise)

Whilst you could remove either SQL server or Oracle, the typical business would usually run one or the other. Another option often considered by IT managers is to move databases to platforms such as MySQL which is both scalable, and high performance if configured properly. The downside of this is the inevitable migration path and regression testing, although if developers used raw SQL, most of this would run without any modification. However, convincing in house developers to move away from more traditional stacks based on SQL / Oracle and IIS with C# to LAMP or WAMP is never a comfortable discussion – good luck with that one. I learned to write code that conforms to accepted industry standards a number of years ago, and chose the LAMP stack owing to the nil cost factor to the business. This meant I could provide quality applications for my department to use with no cost – just my time from the development perspective.

What should your licensing model look like ?

Based on the above, your licensing model could work out very expensive indeed – particularly if you choose to opt out of software assurance. In this instance, you’d pay for the licenses upfront meaning direct ownership – but with no head room. If you decided to upgrade (let’s say from Windows 2008 to 2012 or 2016) and did not purchase software assurance (SA), you would have to buy these licenses all over again. The ones you have are effectively written off along with the initial cost. This is a very bitter pill for any incoming IT Manager to have to swallow, and it’s made much worse by having to explain the cost and justification for a new set of licenses to the board or CFO. I personally believe that opting out of SA is an extremely bad business strategy, and do not recommend it for a variety of reasons.

Virtually every business these days is focused on making operational cost as low as possible. Typically, IT is always in the firing line (see this article), and can be called to account at any point. When considering an upgrade for your infrastructure, it’s a sensible choice to at least consider cloud adoption. For example, moving to Office 365 provides a dramatic reduction in cost from the licensing perspective (you also get access to the latest Office software depending on your agreement), and also significantly increases your disaster recovery and business continuity capabilities. Admittedly, most migrations from legacy on premise Exchange to Office 365 are cost neutral for the first year when you consider the cost in terms of effort to migrate versus potential savings (think storage and backup costs), with the savings being realised in year 2, but it’s also another platform you no longer need to feed and water (and recover in a disaster). The licensing for the platform is also covered in the agreement, so no need to purchase Office suite licenses or Exchange CALS.

Other products that are notoriously difficult to track and control in terms of cost are the Adobe site of products. Thankfully (well, maybe not), Adobe have changed their licensing model over the years as they were obviously fed up with their software being continuously pirated. That now means a cloud agreement like Office 365 making it possible to rent per month rather than purchase. For smaller organisations, this is appealing – even small subscriptions are competitively priced for the standard offerings. However, Adobe are notorious for being one of the most expensive applications when it comes to licensing software outside the realm of pdf manipulation. The other somewhat undesirable trait is being one of the most vulnerable software vendors in history (next to Java of course), so from the cost and security perspective, it could pay to look elsewhere. There are a number of alternative applications on the market that provide similar functionality for a fraction of the cost. If you are using products such as Illustrator or Photoshop, the cost can begin to climb rapidly. My personal view is that the license cost from Adobe is disproportional to the need to use the basic elements – I tend to use alternatives where possible.

There are other ways to save on licensing costs. Previously, the express version of SQL was limited to 4Gb databases. With SQL 2016, that figure rises to 10Gb making it more plausible to use this platform for smaller production systems.

Ultimately, it pays to shop around for the best deals. If you are willing to do this, it certainly pays dividends.

About the Author
Mark Cutting

Mark Cutting

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Mark Cutting is the founder of and He is a network, security and infrastructure expert with more than 27 years service in the Information Technology sector. Mark has a significant eye for detail, coupled with an extensive skill set. Having worked in numerous industries including trading, finance, hedge funds, marketing, manufacturing and distribution, he has been exposed to a wide variety of environments and technologies alike.

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licencing add extra security to application and it ensure you are safe from attackers too because the apps you are licensing are directly from manufacturers and not from hackers. I have downloaded a crack version of an application so that i can avoid licensing it but at the end, my PC got damage and it was injected with malware. Licencing is cheap as admin said, it mustn’t be overlooked. Great article here!