Managing your Microsoft Licenses in Preparation for a Software Audit

As we have been explaining throughout the latest blog posts, software vendors have increased the amount of audits they preform and Microsoft is no different. We have noticed the most common reason for an audit is money (which we can’t blame vendors for, this is a business!), closely followed by compliance – software vendors aren’t going to want their software used illegally.

In this week’s blog we look at the complications of licensing your Microsoft estate and give you some insightful advice for managing Microsoft products, including their programs, servers and virtual environment. It has never been more important to understand the licensing rules of Microsoft as they are one of the top five vendors that preform the most audits within a twelve month period. Being unprepared for an audit consumes internal resources, IT budgets and may end up in an expensive fine.

Managing Program Licensing

Wherever Microsoft software is installed, you have to have a license, but there are several ways your organization can license your software. For example for some products, you can license each device within your organization so whoever is logged in on that hardware can use the program, or you can license each user within your organization and they can access the program from any device that has the software installed. Both options come in a subscription based agreement or a perpetual agreement. Licensing starts to become more complicated when you upgrade the software on your devices, you will only remain compliant if the PC or user have the correct underlying licenses attached. Microsoft have many resources to help customers remain on top of their licensing, you can actively search for the “Product List” which is updated every month and lets you know which licenses are eligible for upgrades against their previous versions among other things.

How you are allowed to use a product will vary with its version, if you sign up to Software Assurance (SA) you will have the rights to upgrade to the latest version. With Software Assurance, if you decide that you do not wish to use the latest version of a product that is fine, but as you own the rights to the most recent version, and therefore, the most recent license you must understand and comply with the rights for that version. Microsoft update and release their “Product Use Rights” document quarterly to help you stay on top of what you are and aren’t allowed to do. If you have purchased within a suite, you will never be able to separate them. For example, purchasing Microsoft Office will entitle you to a number of programs (how many depends on whether you procure the Professional, Standard or Professional Plus Suite), deploying Word and Excel on separate devices from the same suite is not allowed.

There are several ways your can purchase Microsoft products for your business; through Original Equipment Manufacturer (OEM) where the software is already installed when you purchase a device, Volume Licensing where you mass buy software whether that is through a three year agreement (Enterprise Agreement EA) or a pay as you go style (Select Plus) where you purchase as many licenses as you need at that time or Fully Packed Product (FPP) where you purchase the product through a retail store/reseller.

Alongside most Microsoft products you can purchase Software Assurance (SA) on a subscription basis. SA is Microsoft’s support and maintenance that gives you the opportunity to move licenses across to certain devices, upgrade to new versions and gain access to help and training.

Managing Servers, Processors and CALs

A server is a system that responds to requests across the network. Originally, they were used for share files and enabling the organization to print to one printer wherever you were located within the building. Now servers can also be used for saving and sharing documents, hosting the organizations intranet, holding virtual desktops and supporting the virtual environment. If install SharePoint to a server you do not need to license it, but will need Standard and Enterprise Client Access Licenses (CAL) to entitle users to use the server’s functionality. When purchasing your Processor and CAL license to use the server, we recommend you read the SKU, within the SKU there is the number of licenses that you are entitled to and you may find you will only need to purchase one license to cover two servers. For a user or device to access the server organizations need to purchase a CAL, each device/user that is attached to the CAL will then be permitted to access the server’s information, the same principle applies to each user.

Alongside user CALs you can purchase External User CALs for someone who is accessing your server but doesn’t work directly for the company, such as, a Contractor or Partner. Microsoft do not mind if you have a mix of user CALs and device CALs unless you purchase them through an Enterprise Agreement (EA) then you will have to decide which path to take.

Remote Desktop Services (RDS) enables your organization to run an application or entire desktop on one device but have it controlled by a server, this is ideal if you would like to save money on new hardware as it virtually delivers the desktop to the user. Even though the software is running elsewhere you would need to license the device and require a RDS CAL. Depending on what your organization’s circumstances are, whether employees wouldn’t need their own personalized desktop, would be subject to whether you would need Remote Desktop Services.

If you have multiple servers you are able to transfer licenses from one to another but only every 90 days without Software Assurance or more frequently if you have software assurance (with the exception of Windows server).

Benefits of Software Assurance (SA): be able to move licenses across servers as regularly as you like, save money on secondary devices (Companion Device Allowance on specific products) that need the user’s desktop, license mobility for transferring licenses in-between servers (with the exception of Windows server), new version rights and support.

Managing Virtual Environments

When licensing virtual environments, you always assign the license to the physical server which then gives the rights to the virtual machines. Depending on the server, processor/cores and Software Assurance in you have licensed, you may already be entitled to move part of your network onto a virtual environment. If you are currently running a server with Windows Server 2012 RT Standard then two virtual machines are allowed per license whereas Windows Server 2012 RT Datacenter allows for unlimited virtual machines when SA is purchased. When it comes to licensing your core processors, ensure you count all cores before making a purchase as these are licensed in twos. You may find you have three cores on one processor and seven on another, without adding them together you could end up with ten cores and twelve licenses.

If your organization is considering expanding your environment to a virtualization environment we would recommend you purchase the 2012 RT Datacenter server license, by licensing all processors you simultaneously license all the virtual machines. Even if you feel this may not happen for a while, your license will last as long as your processor and will save time and money in the future when you are ready to make the move to virtualization.

Benefits of Software Assurance (SA): Mobility to move licenses, unlimited virtualization, new version rights and support.

As we can see there is a lot to consider with Microsoft licensing (this just touches on the basics) and remaining compliant can be challenging to an unprepared Software Asset Manager. Below we have suggested some best practice tips for when Microsoft request their audit.

Receiving an Audit Request

Upon receiving an audit request, most likely to be from a third party, we would recommend you check what the letter is asking and ensure you, the third party and Microsoft sign a Non-Disclosure Agreement (NDA). Once you know what Microsoft are asking, you need to pull together all the internal resources and reconcile all of your entitlements and audit data within the time framed agreed, which can be as short as 28 days.

Records of all licenses, regardless of how you purchased it, need to be held in your Software Asset Management (SAM) system and provided to Microsoft as part of the audit. To save time on finding licenses that may have been purchased by an employee and claimed back on expenses, be proactive and check your inventory data regularly for any new software deployed, then using your SAM tool, update the license record so they are easily accessible. We recommend you document this process so you can show how you have gathered the data, as installation is sometimes the first step in demonstrating compliance.

Microsoft have been known to preform audits after a company has submitted their true-up order (which is early) so don’t be surprised if you are requested to look into your license position following a contract negotiation. Microsoft also offer funded exercises or engagements that assist your organization with compliance and SAM, these are optional but if you don’t participate you are more than likely to receive an audit request.

The latest industry statics show that Microsoft audits are now at 36% of all audits preformed in a twelve month time span, if you have been lucky enough not to receive one yet then it is only a matter of time. Understanding Microsoft licensing and acting proactively will help you overcome the challenges each organization has to face.

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Ben Eagling

Ben Eagling

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