In October 2022, Microsoft quietly introduced key amendments to licensing requirements for Windows Server/CIS. These changes were a conscious deviation from Microsoft’s stringent approach to licensing products in cloud and virtualized environments. At the time, Microsoft had been criticized by enterprise customers for its lack of flexible licensing policies. That sentiment had spilled over into accusations of anticompetitive behavior. In response, Microsoft issued two major Windows Server licensing changes that introduced much-needed flexibility.
The first was the ability for customers to license Windows Server via virtual cores instead of the previously required physical cores. As we covered in a previous post, Microsoft used to require you to license all the physical cores in the server. While this made sense for some customers, it wasn’t an ideal situation for all – particularly those considering purchasing large hosts for virtualization that may include non-Microsoft virtual Operating Systems on the server. The second change was a decrease in the minimum cores per VM running in Azure from 16 to 8 core licenses.
Cost Implications of Changes to Microsoft Windows Server Licensing
The cost implications of Microsoft’s adjustments to Windows Server licensing are noteworthy. Some enterprise customers now require significantly fewer Windows/CIS Datacenter licenses since they don’t need to license the entire physical cluster leading to on-shelf deployments.
Additionally, Microsoft’s restrictive stacking rules do not impose penalties at a per-VM level. That means enterprises now can use the Windows Server/CIS Standard SKU, which is considerably cheaper (usually four times less costly) than the former mandate to deploy Datacenter at the cluster level.
New Windows Server Licensing Changes Present Rare Opportunity for Savings
Over the past year, NPI has witnessed the real-world impact of Microsoft’s latest Windows Server licensing changes on enterprise customer spend. As we’ve helped clients optimize their Microsoft Enterprise Agreement renewals, as well as through our work helping clients with software audit defense and readiness, we have noticed a remarkable decrease in the number of required Windows Server Datacenter licenses. Furthermore, we have uncovered significant cost savings opportunities for clients that rebalance ongoing Software Assurance with cheaper Windows/CIS Standard.
It’s not often that changes to Microsoft’s licensing rules work in favor of the customer. In most cases, new licensing updates mean higher costs. This is a rare exception. NPI strongly advises organizations to seize the savings opportunity offered by Microsoft by adjusting their Windows Server SKUs (Datacenter/Standard) and optimizing their server footprints. We recommend enterprise customers establish an effective license position (a License Position Assessment in NPI parlance) prior to their true-up or renewal. This will help ensure the Windows Server environment is appropriately sized to maximize the benefits of Microsoft’s changes.
- Bulletin: 9 Questions to Ask to Right-size Your Microsoft 365 Spend
- Blog: What’s New with Microsoft Windows Server Licensing?
- Blog: O365 Optimization: Getting to the Root of Suboptimal Licensing to Eliminate Cost Waste
- NPI Service: Microsoft License and Cost Optimization Consulting
- NPI Service: Software License Audit Services