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Acquiring Microsoft Software Licenses

There are many ways to legally acquire software. Traditionally, most organisations have purchased Full Packaged Products (FPP) from retail outlets. These may be either full license, or upgrades - which require you to have an older version of the software already. Apart from the nuisance of storing the boxes and managing the number of licenses purchased for compliance, this is always the most expensive method of legal software acquisition.

In the following, we will discuss more cost-effective options for acquiring licenses, concentrating on Microsoft's licensing plans. Please note though that all other vendors also provide similar options.

• Full Package Products are available from retail stores or your preferred reseller, and come in both Full licenses and Upgrade licenses. You generally get a box, a manual, a paper or sticker license and the actual software (media).
• Benefits
• A complete package in a box, including manual, media (CD/DVD)
• No limitation on usage, upgrade or transfer
• Can be purchased anytime, in any quantity
• Disadvantages
• Highest cost
• Need to store lots of boxes for multiple installations

• OEM Licensing is available only when purchasing a system from a licensed reseller or system builder (Original Equipment Manufacturer). This is generally the lowest-cost option, and gives you a full license to use the product. OEM pricing is typically less than 1/2 the FPP pricing, and often less than upgrade pricing. The only limitation is that not all products are available in OEM packaging. All operating systems plus certain office suites are available, while individual products, such as Project or Visio, are not.
• Benefits
• Purchased with system, including manual, media (CD/DVD)
• Pre-installed with system
• Lowest cost - approximately 50% retail cost
• Disadvantages
• Usage restricted to system that was purchased with
• Cannot be transferred
• Can only be purchased with hardware – not available separately
• Not all products are available through OEM channel

• Volume Licensing is available across virtually all products, and results in discounts of between
  22-28% off retail, depending on the individual product purchased. With volume licensing, you receive: - confirmation of your purchase; - on-line electronic license tracking; - the right to install and use the product on as many computers as you have licensed.
• Benefits
• Lower overall cost of acquiring software than retail
• Approximately 75% retail cost
• On-line tracking of license inventory, rather than paper or boxed licenses
• Single media required for multiple installations - no need to store and manage multiple CDs
• No limitations on transfer between systems
• Disadvantages
• Higher cost than OEM licensing (but less than retail)

• Volume licensing requires that media – CD/DVD – be purchased separately. Whether you buy one or 100 licenses, you must purchase at least one media kit to obtain the software for installation.

• Volume licensing comes under a number of formats, depending on the license plan, the number of licenses, and whether you wish to subscribe to upgrades. Some of these types are:
• Open License Program: Usually referred to as OLP, this license runs for two years, and requires that a minimum of five licenses be purchased initially. Thereafter, during the term of the license, any quantity of one or more may be ordered again.
• Software Assurance: SA is optionally available with OLP licenses, and provides for the automatic upgrade of the product should a new version be issued. Initially valid for two years, it may be extended indefinitely on expiry. SA is priced at 25-29% of the OLP license cost. SA is also available as an addition to OEM and FPP licenses within 90 days of purchase. As new releases are typically produced every 18 months, this is the most cost-effective way to ensure software in use is at the latest version.
• Open License Value: (OLV) is similar to OLP but is paid annually, thus reducing the initial capital outlay. OLV also mandates inclusion of Software Assurance.
• SELECT: MS-Select license plans are aimed at larger organisations (>250 machines) that are able to forecast their purchasing over a multi-year period. Discounts are negotiated individually based on forecast volumes.

• To initiate a volume licensing plan, it is necessary to purchase a minimum of five licenses to start with. These may be across applications, systems and products, and not necessarily all the same.

• All license options above are for internal use only. What is generally not obvious is that these licenses to do not permit you to provide access to individuals outside your organisation. For example, if you are hosting any form of service on the Internet – perhaps an Extranet or web hosting, the above licensing plans do not satisfy legal obligations. To do this requires a completely different license approach.

• Services Provider Licensing: Referred to as SPLA, this plan allows you provide services to third parties, and is fundamentally different from ‘standard’ software acquisition.
• There is no up-front capital purchase
• License fees are billed and paid monthly, depending on the number of users
• You must submit a user count monthly to Microsoft
• SPLA automatically includes SA – you always qualify for the latest version

So which is the best option for me?

• If you wish to stay current at all times, purchase volume licenses together with Software Assurance
• If you wish to minimise capital outlay, and don’t need to keep software current, purchase OEM licensing with your new systems
• If you anticipate keeping your computers longer than the 3-year expected business lifetime, purchase OEM licenses where available, and supplement these with individual products where necessary
• Always purchase operating systems via the OEM channel - with the system

What needs to be Licensed

Now that we’ve covered the various types of licenses, we’ll finish this topic with a discussion of what licenses are required.

• Servers: Each server product requires a combination of licenses. Depending on the number of users either a server license plus Client Access Licenses (CAL) or a processor license:
• A server license is required for each physical machine and each application. For example, if you have two servers – one running Exchange and the second running SQL, you need two x Windows Server licenses plus one each for Exchange and SQL
• A CAL is required for each user connecting to the servers/applications. For example of you have 40 users accessing the servers in the above example, you need 40 CALs each for Windows, Exchange & SQL
• Optionally, if you have a significant number of users, you may replace the server license and CALs with a processor license. This allows unlimited numbers of users to access the server. Note that if the machine has multiple processors, you must purchase an equivalent number of processor licenses.
• Workstations: One license is needed for each hardware workstation for each of:
• The operating system
• Each application, or application suite, installed, whether or not actually used