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10,000+

The number of businesses audited by Microsoft in 2016 for inadequate licensing

As a business owner or an IT expert that utilizes Microsoft software for your employees, not being properly licensed can land you in hot water with Microsoft, which does not look good for your financial situation or company image. Many IT experts think their licensing is fine because they know Microsoft products very well, but the reality is quite different: many businesses endure hardship from unnecessarily high costs, loss of resources, and company embarrassment due to having incorrect licensing of Microsoft products.

82,000+

Possible licensing configurations for Microsoft

Unfortunately, Microsoft licensing is very complex as there are seriously hundreds of Microsoft software licensing configurations that exist. For Windows Server alone, there are about 82,000 different product combinations for which you can get a license! Many IT experts may be quite familiar with the software itself, but not all are well-versed in this many licensing configurations, and errors when obtaining licensing can happen without the correct knowledge.

$100,000

The average S.AM. audit fine

These errors can be very expensive for businesses, whether they are over-licensing (too many licenses for the mount of software in use) or under-licensing (not enough licenses for the amount of Over-Licensing usually happens when companies are afraid of being audited by Microsoft with a SAM (Software Asset Management) audit, and so they go overboard and end up buying too many licenses for the amount of software and users they really have. While some companies assume this strategy works to avoid a negative audit from Microsoft, they actually end up throwing away thousands of dollars, all of which could have been avoided through correct licensing.

Over-Licensing and Under-Licensing

Over-Licensing usually happens when companies are afraid of being audited by Microsoft with a SAM (Software Asset Management) audit, and so they go overboard and end up buying too many licenses for the amount of software and users they really have. While some companies assume this strategy works to avoid a negative audit from Microsoft, they actually end up throwing away thousands of dollars, all of which could have been avoided through correct licensing.

Under-Licensing is when companies have not bought enough software licenses for the number of users they are allowing onto the network, which can likely be much more expensive than over-licensing. The extra expense is due mostly to the SAM audit mentioned earlier in which Microsoft will scan your network to see how many active users and devices you have, and then cross reference that with the licensing you currently have. These SAM audits can cost in the neighborhood of over $100,000, which can do serious damage to smaller businesses. If your business becomes a target for a SAM audit and Microsoft finds out that you did not purchase enough licensing for the number of users on your network, Microsoft will offer you two not-so-good choices: “become compliant” or be subject to a lawsuit by Microsoft. In order to become compliant, you will have to purchase versions of the open license software necessary at full retail price. The best way to avoid the high costs, embarrassment, and firing those responsible for theoversight is to be correctly licensed in the first place.

False Licensing

Another problem that many businesses may not know about is the incessant licensing piracy that happens on the Internet from questionable websites that say they sell Microsoft software licensing. These illegitimate websites look a lot like honest sites with professional design, contact information, reviews, and realistic content. Since these bad sites mimic the good ones so well, it makes it difficult for average users to tell the difference between fraudulent and legitimate sites for Microsoft licensing. The scam happens like this: you “make a purchase” on the website and it gives you a product key for registration; however, upon trying to redeem the key, you find out it is invalid, and now that money is gone. Researching licensing websites (other than Microsoft itself) can be one of the defenses to save yourself frustration and embarrassment.

Types of Licensing

There are a few kinds of Microsoft software licenses to know about to ensure that you do not overpay for too many licenses nor become the victim of a Microsoft audit:

Software License

The actual product license, such as the Windows Server license, for the actual software itself. This kind of license is different from user and device licensing, which are required separately.

Windows Server Essentials

Windows Server Essentials is the most basic license that allows for up to two concurrent remote connections and only one installation (either physical or virtual). This Windows Server license includes 25 user CALs with the ability to support up to 50 device CALs; it should be noted though that all device CALs are sold separately. This kind of license is ideal for smaller work environments that have less than 25 users and only require one installation and two or less remote connections.

Windows Server Essentials is licensed PER PROCESSOR, NOT PER CORE. Each Windows Server Essentials license covers 2 processors, regardless of cores.

  • Include 25 User CALs
  • Licensed Per Processor (1 license covers 2 processors)
  • Limited to 2 concurrent remote connections (Each requires a remote license)
  • Supports up to 50 Device CALS (NOT INCLUDED)

Windows Server Standard

Windows Server Standard is the normal license for most medium to large organizations and offers unlimited concurrent remote connections with each requiring an RDS CAL. Additionally, each RDS CAL requires a local CAL of the same type, whether it is a user or device CAL; each user or device CAL is purchased separately. The Standard version allows for one physical installation and up to two VMs. It should be noted that an additional license is required for every two VMs added to the installation. You are technically allowed to add an unlimited amount of VMs, but it may not be as cost effective. If you have more than eight VMs, it would be more cost effective to upgrade to Datacenter to avoid purchasing an extra license for every two VMs.

  • Licensed Per Processor Core
  • Supports Unlimited Concurrent Remote Connections (Each requires a remote license)
  • Support Unlimited VMs (2 included, each additional 2 VMs require additional Standard license)
  • No User CALs or Device CALs included

Windows Server Datacenter

Windows Server Datacenter is designed for highly virtualized environments, and offers the most robust features. The Datacenter version offers unlimited concurrent remote connections with each remote connection requiring an RDS CAL. Additionally, each RDS CAL requires a local CAL of the same type, whether it is a user or device CAL; each user or device CAL is purchased separately. Datacenter allows for UNLIMITED VIRTUAL MACHINES UNDER 1 LICENSE! The ability to have unlimited virtual machines makes Datacenter more cost effective than Standard when you get past around 8 VMs, as with Standard you are required to have 1 license for every 2 VMs.

  • Includes Unlimited VMs under 1 license
  • Licensed Per Processor Core
  • Supports Unlimited Concurrent Remote Connections (Each requires a remote license)
  • No User CALs or Device CALs included

Open License Program (OLP) vs. Original Equipment Manufacturer (OEM) Software

OLP and OEM are sold differently, and have different requirements and features, and are explained in more detail below.

OEM

Under Microsoft Windows Server licensing, you must license a minimum of 16 processor cores per machine even if your machine has less than 16 cores. Fortunately, the Standard OEM license will cover up to 16 processor cores per machine. OEM licenses don’t include transfer or downgrade rights and typically aren't allowed to be purchased to become compliant if you've already begun an active SAM audit; after which, you typically need to purchase OLP licensing.

Since OEM software licenses are sold as 16-core sets, you may consider an OLP license instead if you have more than 16 cores but less than 32 as in that scenario the OLP licensing would be less expensive overall. OLP licensing is sold as one license for every two cores, so if you have 20 cores total, it's cheaper to buy ten OLP licenses than two OEM licenses.

  • Lower upfront cost than OLP
  • Comes in sets of 16 core licenses
  • No Transfer Rights
  • No Downgrade Rights
  • May not be accepted during an active S.A.M. audit

OLP

OLP licensing is sold as 2-core licenses with each covering two processor cores of your machine. Since there is still a minimum of 16 cores that must be licensed, you will have to buy a minimum of eight OLP licenses to satisfy this requirement. If you have 16 or fewer cores loaded onto your machine, it's typically less expensive to get one 16-core OEM license than eight individual 2-core OLP licenses.

OLP is typically a bit more expensive than OEM, but offers a few key benefits over OEM, including transfer rights and downgrade rights, and OLP is typically required to be purchased to become compliant if you are found out of compliance during an active Microsoft SAM audit.

  • Higher upfront cost than OEM
  • Comes in sets of 2 core licenses
  • Includes Transfer Rights
  • Includes Downgrade Rights
  • Accepted during an active S.A.M. audit

What are downgrade rights?

Downgrade rights allow users to purchase the latest version of a particular software licensing, and use it with previous versions of the same software; for example, purchasing a license for Windows Server 2016, but using Windows Server 2012. This is typically done when a user is currently already using an older system, but plans to upgrade their system at a later time to the newer version. If you have OLP licensing, you are allowed downgrade rights and then would also get transfer rights so you can use previous Windows Server versions until you're ready to migrate to the newer version. When you are ready to upgrade, uninstall the older version and then install the newer version, all the time remaining compliant.

What are transfer rights?

Transfer rights allow you to uninstall your software from one machine and reinstall it onto another machine. This option is ideal if you plan on upgrading your server or getting a new server. Additionally, you can avoid having to repurchase all of your licensing. OEM licensing doesn't include transfer rights, so be sure to purchase OLP licensing if you would like to have this option.

Counting Physical Cores

Computer systems contain two parts to remember when calculating the number of physical cores for license purchasing:

  • Central Processing Units (CPUs) - Each computer system can contain one or more CPUs
  • Cores - Each CPU can contain one or more cores (dual core CPUs for example)

The easiest way to determine your physical core number is to multiply the total number of CPUs by the total number of cores contained within each CPU.

For example, a computer system with three dual core CPUs has six cores

*3 CPUs x 2 cores per CPU = 6 total cores*

Virtual Instances/Virtual Machines

A virtual machine is an imitation of a physical computer system, providing the same functionality of a physical machine. Use of a virtual machine is typically warranted by utilizing specialized hardware or software, such as Windows Server software. This can be used to provide multiple users with operating system functionality without using other physical machines.

Are you currently in an audit?

If you're currently undergoing a Microsoft SAM audit, you will most likely be required to purchase OLP licensing to become compliant. While it can vary from case to case, Microsoft will typically require OLP licensing and won't allow you to purchase OEM licensing if you're already in the process of an audit.



UCAL
(User Client Access License)

UCAL licenses are for specific users to connect to the server where the software is installed, no matter which device they are using to connect to it. For example, your IT admin may have multiple workstations or locations where he or she connects to the company’s server where Windows Server is installed; either that user or his/her computer would need to be licensed, depending on a few factors. While there are different scenarios where sometimes it would make more sense only to license the device or the user, situations that require the user to be licensed would need a UCAL license.

DCAL
(Device Client Access License)

DCAL licenses are for specific devices that connect to the server where the software is installed. For example, many companies have an IT admin person that has a workstation that connects to the company’s server where Windows Server is installed; either that user or his computer would need to be licensed, depending on a few factors. While there are different scenarios where sometimes it would make more sense only to license the device or the user, situations that require the device to be licensed would need a DCAL license.

Remote Connector/RDS
(Remote Desktop Service)

This licensing option is different from the DCAL, UCAL, and Software License in that it is used for external connections, or connections made from devices or users outside of the local network. Windows Server is by default only accessible in the local access network where the server machine is located. To access a server from outside of the network (a team member working from home or in another office for example), someone would either need to proxy into the network where the server machine is located or get an RDS license to access it.

An RDS license is much more secure, and some industries and companies require the security compliance offered by an RDS.

An RDS license must be purchased in the same manner as the UCAL or DCAL (per user or device accessing the machine where the software is hosted). If you buy an RDS license, you must also have a local corresponding DCAL or UCAL, i.e. an RDS itself is not a license to use the software, but only a remote connector permission for an existing licensing to use the software. DCALs and UCALs are applied to the user or machine connecting to the machine with Windows Server installed. However, an RDS is applied to the machine with Windows Server installed itself, and allows permission for the outside users or devices to gain access to the machine. An RDS license is specific to Windows Server while DCALs, UCALs, and Software Licensing apply to both Windows Server and SQL Server.

My Choice Software - Your Value Added Reseller

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While licensing your software products can be complicated, My Choice Software is here to make things much more clear when it comes to ensuring you have the correct licensing for your machines and users. We are a Value Added Reseller, meaning that we add value to the transaction rather than simply being a low-priced leader. Our value is measured more in the long-term rather than the short-term, as most low-priced leaders are. A low-priced leader will provide all savings upfront upon purchase, but will not continue to add value after the transaction is complete, which include ensuring that the products and licenses you buy are the best fit for you.

Rather than simply providing our customers with the lowest prices available, My Choice Software chooses to give customers the best value in the long term. We do this by working with you to make sure that the setup you are purchasing will be the right kind for you to avoid the pitfalls of over-licensing and under-licensing, which as you know now can be very costly. While My Choice Software does offer competitive pricing, the focus is to ensure that you have what you need to be productive as well as compliant the first time around.

Here are some facts about My Choice Software as your preferred Value Added Reseller:

  • My Choice Software customizes licensing for each customer to ensure you only pay for what is required while remaining fully compliant, and not wasting money by over-licensing
  • My Choice Software employs certified Microsoft experts who can help you to understand your specific needs and provide you the optimal solution the first time
  • My Choice Software has IT experts who can help you with your remote installation, configuration, and any troubleshooting
  • My Choice Software guarantees the authenticity of all products
  • My Choice Software was the Microsoft West Coast Rising Star Award Winner of 2016

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