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Analysis: SQL Server 2012 Licensing Pitfalls and Strategies

• December 23, 2013

A licensing expert recently gave advice on Microsoft's new SQL Server 2012 licensing, which can come with some costly pitfalls.

The details were reviewed by Paul DeGroot in a Thursday talk on "SQL Server 2012 Licensing Strategies." DeGroot is a founder of Pica Communications and a senior consultant for Sacramento, Calif.-based Software Licensing Advisors, an independent consulting firm focused on Microsoft licensing matters.

Microsoft made changes to its licensing model with SQL Server 2012, switching from a per-processor licensing model to a per-core one. In addition, the editions were changed somewhat. Microsoft eliminated the Datacenter edition that exists with SQL Server 2008 R2, but it added a Business Intelligence edition and continued the Standard edition with SQL Server 2012. Microsoft also deprecated the Server License plus Client Access License (CAL) licensing model that was available with the SQL Server 2008 Enterprise edition.

Pricing has remained the same with the SQL Server 2012 editions, for the most part, according to DeGroot. However, he added that there are some "traps" that could significantly increase costs for organizations, particularly at the license renewal stage. For instance, the core conversions from SQL Server 2008 to SQL Server 2012 can be incorrectly assessed. An organization might assume four cores per licensed processor, but the actual core counts could turn out to be higher at license renewal. He cited an example of a reseller that underlicensed in that way, resulting in an extra "true-up" expense for a customer of $290,000.

DeGroot said that organizations should not take Microsoft's core counts as being accurate, and that resellers have not been "proactive" on the issue. Organizations need to assess their hardware infrastructures to get the correct core counts, perhaps using software tool, such as the Microsoft Assessment and Planning (MAP) toolkit, he added.

Renewal costs may stay the same on machines with four or less cores. However, many organizations have machines with six to 12 cores. Renewal costs with SA can increase by 50 percent on machines with six or eight cores, or 150 percent on machines with 10 cores, according to DeGroot's calculations.

SQL Server 2012 licensing also comes with a new "vMotion/live migration" requirement for virtual machines (VMs). Microsoft used to allow its customers to freely move VMs around machines, although there was a 90-day restriction for some of the licensing. With SQL Server 2012 licensing, it's possible to move VMs without restriction but it will require having SA coverage to do it. DeGroot said that this SA requirement for moving VMs will add 25 percent per year to the cost of licensing SQL Server over a three-year term, amounting to a 75 percent cost increase.

"Microsoft is calling this 'a new SA benefit,' so you might disagree with the notion that increasing the price of something by 75 percent is beneficial, but that's their terminology for it," DeGroot said.

Licensing Model Changes
There are three editions (Enterprise, Business Intelligence and Standard), but they have different licensing models. Enterprise edition licensing is now sold on a per-core basis. The BI edition is not available on a per-core basis -- it can only be licensed on a per-server basis. The Standard edition is available in either licensing model (per core or per server). All per-server licensing requires also buying Client Access Licenses (CALs) for end users.

DeGroot said that Microsoft's licensing team did a poor job for organizations by making it difficult for them to plan. For instance, if an organization is moving to the Enterprise edition, it may have to "throw away" its CALs.

Organizations with SA coverage for the SQL Server 2008 R2 Enterprise edition can continue to run the SQL Server 2012 Enterprise edition licensed on a per-server basis. However, it won't be possible for those organizations to buy any more new per-server licenses, DeGroot explained. Instead, organizations can purchase the BI (server + CAL) edition of SQL Server 2012 to get an upgradeable server that can be used with CALs. The Standard edition of SQL Server 2012 is still available on a per-core basis at the same price as in the past, but the CAL prices have gone up $135 to $170, DeGroot said.

Licensing Strategies
DeGroot offered some strategies to reduce SQL Server 2012 licensing costs. One of the strategies relies on using the true-up process with SQL Server 2008 R2 licenses to gain additional core entitlements. A true-up is licensing lingo for contract renewals under Microsoft's Enterprise Agreements. DeGroot noted that true-ups will cost the least during the third year of an agreement. The idea behind a true-up is that organizations can add software during the year and pay for the additional licensing later at the annual true-up assessment time. The true-up fee is the cost of the software license plus a certain amount of SA cost, he said.

The cost-cutting example presented by DeGroot was installing SQL Server 2012 Enterprise edition with 20 core licenses and then using the true-up process for SQL Server 2008 R2 installations with eight cores to get the rights to 20 cores at the price of eight cores. Organizations can run a tool such MAP to demonstrate that the organization ran a server with 20 cores. The SQL Server 2012 Enterprise edition that's run for this assessment using MAP doesn't actually have to have a workload to be counted for licensing true-up purposes, he explained.

Another strategy is to defer paying for SA. Organizations get VM mobility with SA coverage, but it can be expensive paying for SA across all of their machines. SQL Server licensing without SA confers the rights to run one VM on each core. So, instead of paying for SA on all machines, an organization could license a server with 12 cores to run 12 VMs without SA coverage. This approach was described as getting the vMotion capability through "overlicensing." However, DeGroot cautioned that if an organization upgrades beyond four cores, the cores get considered by Microsoft to be a block of licenses that can't be split up if the organization lacks SA coverage. The rationale for that rule is simply that Microsoft wants to make things less flexible for people without SA coverage, he explained.

Right now, it seems that organizations have a good chance of having SA rights to SQL Server 2014 if their Enterprise Agreements terminate in 2014. Microsoft has said that the SQL Server 2014 product will be released in either the fourth quarter of 2013 or in the first quarter of 2014, DeGroot said.

DeGroot's talk was more detailed than can be summarized in this article. However, it illustrated why a whole consulting industry continues to revolve around Microsoft's often complex licensing structures. On top of the SQL Server 2012 licensing changes, Microsoft has a new Products and Services Agreement option to come, as well as a new Server and Cloud Enrollment. DeGroot offered few details, but he called the Product and Services Agreement "scary" because it requires an organization to put SA on all existing servers and clients, increasing costs.

A replay of DeGroot's talk can be found at Software Licensing Advisor's page here (requires registration).