Microsoft BYOL Licensing Change Affects Customers with Dedicated Hosting But No Software Assurance

Dan Whitefield, Technical Consultant, Certero


Microsoft recently enacted a cloud licensing change that is going to potentially cost some customers a lot of money.

As of October 1st, 2019 Windows licenses acquired without Software Assurance and License Mobility rights can no longer be deployed on services offered by ‘listed’ public cloud providers such as Amazon Web Services.

According to Microsoft: “The emergence of dedicated hosted cloud services has blurred the line between traditional outsourcing and cloud services and has led to the use of on-premises licenses on cloud services. Dedicated hosted cloud services by major public cloud providers typically offer global elastic scale, on-demand provisioning and a pay-as-you-go model, similar to multi-tenant cloud services.”

Why has Microsoft done this? Well, the cynic might argue that as Azure growth stalls, Microsoft is looking to promote benefits such as Azure Hybrid Use Rights to (re)gain a competitive edge over the likes of Amazon, Google and Alibaba.


Who’s affected?

The change will affect end user organizations that have a dedicated hosting arrangement with one of the listed providers, using a BYOL (Bring Your Own License) model without active Software Assurance. The impact will not be immediate, however any new instances, or when a version upgrade is required, will necessitate the purchase of new licenses with active Software Assurance.


Which products are affected?

The products most likely to be affected are Windows Server, SQL Server and any applications that may be required. A full list of products is available on the SPUR available on Microsoft’s website.


How much is it going to cost?

The cost impact is dependent on several factors – if the customers are using legacy licenses for their dedicated hosting environment, which type(s) of agreements they have (transactional, EA) and what price level they are entitled to.

If the customer organization has not fully covered their estate with active Software Assurance, then the cost will hit when they do an upgrade or buy new licenses (as Software Assurance cannot be retrospectively added to existing licenses).


What do I need to do?

Further changes to Microsoft licensing will inevitably make an already-complicated license management challenge even more difficult. To address this, you need to know what software you have deployed with listed cloud providers and what licensing you have to cover the usage. If you have Software Assurance and can prove that it covers all the appropriate deployments, you’re already in control.

If you can’t, or you wish to upgrade or deploy new instances within a dedicated environment then you have a new Compliance/Software Asset Management (SAM) gap that needs addressing.

If you’re not certain what Microsoft software you have deployed or how it’s licensed, it’s time to talk to a Microsoft licensing specialist at Certero.

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