Microsoft Licensing Part I: Software Assurance

Author: Dave Norwood

I have been explaining the ins and outs of Microsoft licensing for many years.  It is time to put it down in ink.  This will be a two part blog.  Part one, below, will be Software Assurance.  Part two, which will be published in a few weeks, will explain the 5 “buying programs” that Microsoft offers.

Software Assurance (SA) is a subscription added to Microsoft licenses that offers additional benefits over just being licensed to use the software.  The benefit most people think of with SA is upgrade rights.  If your licenses are under SA when a new version is released, you get to upgrade to that new version at no charge.  For example, if you purchased Exchange 2010 Server and CALs with SA, and the SA contract was still in force when Exchange 2013 was released, you can upgrade to Exchange 2013, now or later, at no charge.

This can be very attractive if you keep up on software versions.  Assuming a new version comes out every 3 years (the rhythm Microsoft is on for most products), you end up saving as much as 25% on your license using SA versus re-buying the license each time a new version is released.  Pricing will be discussed in-depth later in this blog.

Free upgrades are not the only benefit of SA.  Depending on the product, there are many other useful benefits.  One example is “home use rights” on Microsoft Office.  If the company pays for SA on MS Office, the employee can run a free copy on a home machine.  This could be used as an employee benefit and training tool.  With Microsoft server platforms (Exchange, SQL, SharePoint, etc.), SA gives you the right to have “cold spares” of your servers.  Meaning, you can install a 2nd copy of your server software and fully configure it as a backup if the primary fails.  Please note that it is a “cold” spare, you must shut down the spare once you are done installing/configuring it.  The final example is SA on Windows Desktop.  If you have SA on your desktops, not only do you get to upgrade to the latest desktop OS when it is released, you are also allowed to run a second copy of Windows Desktop in a virtual environment (Virtual Desktop Infrastructure – VDI).

SA can be added to most any Microsoft license (Office, Server, Exchange, desktop etc.).  It is subscription based meaning that you pay for X number of years and then have the choice of renewing or allowing your SA contract to expire.  If you do allow SA to expire, you still own the license; you just lose the SA benefits; and, you don’t have to upgrade to the latest version of your software before the SA contract expires.  You own the version that was released when the SA expired, you can wait as long as you want to do the actual upgrade.  You must add SA to the license within the first 90 days after purchase.  You can also add SA to OEM licenses in the first 90 days (example Windows Desktop and/or Office coming pre-installed on a PC).

How much does SA cost?  I like to use my “one dollar example” to explain this.  Let’s pretend the Microsoft license you want to buy is $1.  You have a choice; you can just buy the license and be done or add SA.  If you just buy the license, you pay the $1 and you own the license, you don’t owe Microsoft any more money.  Of course, you also don’t have any of the SA benefits.  So, when the new version comes out, you would just repurchase that license for $1 (or perhaps more if pricing went up).

If you chose to buy SA, then you add 25 cents to the price, per year of the SA contract.  The most common SA contract we sell is 3 years (aka Open Value).  So, the license price plus SA in my example would be $1.75 ($1 for the license and 75 cents for the 3 years of SA).  In order to make SA more affordable, Microsoft spreads the cost over the 3 years with no finance charges.  So you would actually pay less in year one, 58 cents versus $1.  The 58 cents comprises of 33 cents for the license and 25 cents for the first year of SA.  Of course you then have to pay that same 58 cents at the beginning of years 2 and 3.  You are obligated to pay for all 3 years because you are still paying for the base license (33 cents per year for 3 years gives you the $1 license price).

After the 3 years you are not obligated to continue SA.  However, it is much less expensive after year 3, you’ve paid for the license and now only have to pay the SA fee.  In my example, after your three payments of 58 cents, you only pay 25 cents per year the beginning of year 4 and beyond.  Whenever/if you ever decide not to renew your SA, you own whatever version was available when your contract expires.

As I mentioned above, it can actually be cheaper to go with SA then to buy each new version outright.  For example, say you paid $1 for Exchange 2010 with no SA.  Then three years later Exchange 2013 comes out and you want to upgrade.  You would again pay $1.  So net is you paid $2 total for Exchange 2010 and 2013.  Had you gone with SA, you would have only paid $1.75 for those two versions and you would have got all the other benefits SA offers.  Of course this model breaks down if you skip over versions… but we all know how painful it can be running older versions of software when everyone else is on the current version, and you don’t get the other SA benefits.

I hope this helps you understand the basics of Software Assurance.  In the end, you might want to talk with a Microsoft Gold partner (Trusted Network Solutions) and/or Microsoft Certified Licensing Professional (me and many of my staff) to do a deep-dive into your particular licensing needs.  Drop us a line, we’re here to help.

NOTE: I am not a Microsoft employee nor do I know *all* the ins and outs of Microsoft licensing.  This is just my interpretation of the rules.  In no way am I speaking on behalf of Microsoft or offering legal advice.  Also, the rules change as new versions are released and new technologies change how things are done (example: virtualization).

Author: Dave Norwood

About Trusted Network Solutions:

TNS is a leading Value Added Reseller providing secure network systems and solutions to the SMB and enterprise markets. TNS offers best-of-breed technical solutions acquired, installed, secured, and maintained using the most cost effective methods available.www.trustednetworksolutions.com

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