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Microsoft formalizes cloud computing enterprise licensing

Microsoft licensing will try and catch up to cloud computing; buy Software Assurance and get "license mobility" for your volume licenses.

Nearly two years after enterprise customers were given sanctioned Windows Server virtual machines to run in Amazon Web Services, Rackspace Cloud and other services, Microsoft has adjusted its enterprise volume licensing to allow for "license mobility."

We're trying to do this in a way that's very straightforward to let people know where they are.

Andrew Wolfe, worldwide licensing project manager for Microsoft

Microsoft applications bought through volume licensing agreements -- such as SQL Server, Exchange, SharePoint, Microsoft Lync Server, System Center and Dynamics CRM -- can now move to dynamic virtual environments like Amazon Elastic Compute Cloud if enterprises purchase Software Assurance (SA) for those licenses.

There are also updates to Service Provider License Agreements (SPLA) for Microsoft. The company said the licenses will provide "confidence" when contemplating using cloud services. Customers call it playing catch-up.

"I think that the punch line is that [Microsoft] should have done it two years ago and now it's a 'feature'," said Bob Shear, CEO of IT solutions provider Greystone Solutions. Shear said enterprises expressed confusion over licensing Microsoft software right away. It's a constant thorn in his side.

Shear said his first brush with licensing issues happened years ago, when a customer intrigued by Amazon Web Services (AWS) wanted to move some assets onto virtual machine (VM) instances on EC2. Neither Microsoft nor AWS provided guidance on what was or wasn't allowed, although Microsoft had already adjusted licenses to accommodate virtualized servers.

In each case where a customer wanted to use Microsoft products, Shear had to resort to email, backchannel communications and guesswork on a case-by-case basis.

"Everybody's on this big treasure hunt," he said.

Shear said there are no technical limitations to run licensed Microsoft products in cloud environments. A cloud customer can simply install the software on an instance, enter a valid license key and go. It has been unclear, however, whether or not this complies with Microsoft's terms of use. Now, for a fee, users can get that guarantee.

Amazon's support forums are littered with licensing questions that go back years.

"It is technically possible to use your own SQL Server license and Amazon wouldn't care, but I could not find anyone saying either way whether you are legally allowed (by Microsoft) to use your own license," said one poster in 2009.

IT shops with pricey SA are set with Microsoft licenses
Licensing for Microsoft products listed above already offered some flexibility; every 90 days, a license holder can shift SQL Server or Exchange from one physical or virtual machine they own and remain in compliance. The 90-day rule will now hold for online cloud environments -- changes go into effect July 1 -- provided that licenses holders purchase SA.

SA is a premium support package for software from Microsoft that includes training days, software upgrades and access to support. Andrew Wolfe, worldwide licensing project manager for Microsoft, said that SA is typically around 25% over the cost of an existing volume license, though that varies by how much users purchase. He said it's an effort to clarify cloud computing, which is new, and buying Microsoft via partners and hosters, which is not.

"While [online licensing] was available through kind of an outsourcers arrangement, this brings it into more of a shared hardware environment," he said, meaning that Microsoft will officially view a self-service, automated environment like AWS as the equivalent to a virtual machine personally operated by the customer. Wolfe said it's meant to help existing licenses holders with cloud choices, but he suggested that IT shops looking at new licenses should look for partners and hosters that handle licenses for them.

"If it's a brand new setup where they're going to stand up a new SQL server [for instance], it may make sense for the host to stand it up for them and cover that license," he said. Wolfe said that changes to SPLA terms were aimed at improving outsourcer efficiency. According to the official notice, Microsoft will eliminate the Outsourcing SKU as well as workload restrictions on "non-outsourced" SPLA licenses.

Wolfe could not comment about customers already using the affected products in cloud environments, as he said he'd need the particulars in any situation to say anything meaningful. He said the licensing changes should put everyone on firm footing to know they can buy SA and safely move Microsoft server products in and out of the cloud.

"We're trying to do this in a way that's very straightforward to let people know where they are," Wolfe said.

Anticipating the reaction to Microsoft's cloud licensing
Will Microsoft's attempt to clarify its licensing terms via a price premium go over well?

Everybody's on this big treasure hunt.

Bob Shear, CEO of IT solutions provider Greystone Solutions, on Microsoft licensing in the cloud

"I think [Microsoft] sees the writing on the wall," said John Cullen, an analyst at Directions on Microsoft, a Kirkland, Wash.-based consulting firm. Cullen downplayed the significance of Microsoft's recent licensing updates, saying it only formalizes a pilot program that Microsoft has put in place more than a year ago with SPLA partners like AWS.

Cullen said he believes that, with regard to cloud licensing, Microsoft has tread carefully while it watches how its own online services will shake out. The changes aren't seamless, as IT managers and licensing specialists will have to account for how and when they move an instance to a cloud provider, so it's another area for license management.

And while there are some IT managers that may be operating Microsoft's servers in uncharted territory right now, most enterprises have not yet made large shifts of licensed software to the cloud.

"The pilot was ahead of the curve," Cullen said.

Other IT vendors, such as Oracle, IBM, and Citrix, have entered partnerships with AWS and other cloud providers to allow users to run their software; Oracle partnered as early as 2008. VMware, on the other hand, has attempted to foster a network of cloud providers exclusively using VMware technology to cater to users and bypass licensing issues in favor of service fees.

Carl Brooks is the Senior Technology Writer for Contact him at

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