There are three deployment options for service providers – Hybrid (mix of on premise and cloud) Dedicated, and Shared. In this article, we will break each one down to explain how they work and the options available.
Dedicated Scenario – (3 options available)
Option 1
Your customer decides to bring their own software (such as Exchange) and infrastructure (Windows) via their own volume licensing agreement. They do not have software assurance on the software. Can they do this?
Yes. Why? Everything is dedicated. Server, virtual machine all dedicated to one single organization. Software Assurance is NOT required.
Option 2
Your customer decides to bring the software but the hoster will provide the infrastructure in a dedicated environment. Again, customer does not need Software Assurance if it’s a dedicated environment. In this scenario, the hoster (you) will provide the Windows license via SPLA and not report the other applications the customer brings over since it is already covered via their own volume licensing agreement. This is applicable, it’s dedicated (VM and physical servers)
Option 3
Your customer is a healthcare company that needs a dedicated environment due to regulatory compliance. They do not own any software; they would need the hoster to supply the software licenses. Can they (the hoster) do this? Yes, the hoster would report everything under SPLA. The hoster (you) CANNOT use your own volume licensing agreement to provide the solution but you can certainly provide SPLA. Please be aware that if you own a volume licensing agreement, you cannot use the same hardware your volume licensing agreement resides as your hosted solution.
Also keep in mind that SPLA is non perpetual, when the customer leaves, they can no longer use the software they were accessing.
Summary of Dedicated –
Dedicated is applicable for both SPLA and end customer owned volume licensing. Dedicated also means dedicated hardware and dedicated VM’s. In dedicated environments, the end customer DOES NOT need software assurance. From a compliance perspective, it is defined as the following:
“Any hardware running an instance of Microsoft software (OS or application) must be dedicated to a single customer. For example, a SAN device that is not running any Microsoft software may be shared by more than one customer; since, a server or SAN device that runs Microsoft software may only be used by one customer.” (source: Microsoft VDA FAQ)
Hybrid Scenarios – 3 options available
Option 1
You decide to offer your customer a shared infrastructure but they want the same applications to run on premise. A good option would be to have the customer purchase the server applications (think Exchange, SharePoint, Lync) with software assurance (SA) and run them on premise. You (the service provider) would run the same applications in your shared environment BUT report the SAL for SA SKU. Much cheaper option than standard SPLA prices. I wrote about this here This also works well for Disaster Recovery options.
Option 2 (not really a hybrid but just go with it)
You can use license mobility. Microsoft likes to define this as a “hybrid option” but to me, hybrid insinuates the ability to run on premise and in your cloud. License mobility is a SA benefit for certain applications (SQL, CRM, SharePoint, Exchange, Lync) that allows customers to leverage their investment in SA and transfer those licenses into a hosters shared infrastructure. Reason why I don’t think this is truly a hybrid is the customer is TRANSFERRING licenses into your datacenter. This means that if a customer wants to move back to their own datacenter, they have to wait 90 days. (transfer license rule). With SAL for SA, nothing is being transferred. Windows does not have mobility rights, this will need to be reported under your own SPLA. I wrote about license mobility many times – here’s an article for your review – here You can also check out the Microsoft site for more of a definitive definition http://www.microsoft.com/licensing/software-assurance/license-mobility.aspx
Option 3
Good Ole’ SPLA. Customer can run their own servers on premise, you just report SPLA licensing in your shared environment. The new SPLA agreement even allows you to run SPLA software on customer owned hardware as long as you still manage it.
Shared Scenarios – 2 options
Option 1
License Mobility – see above
Option 2
SPLA. We all know what that is.
Summary
I hope this brings a bit more clarity. Sorry if some things are redundant but at the same time, some things are simply worth repeating. Here’s the takeaway – customer’s can always bring licenses into your datacenter. There is no law of the land that prohibits this. What is prohibited is the way you deploy the technology. There is only one option to install customer owned licenses in a shared environment and that is license mobility. Again, (here I go being repetitive) if Microsoft allowed customer owned licenses to be installed in shared environments than why would they create license mobility?
If you still have trouble comprehending all this, shoot me an email located at the top right of this page. One general rule of thumb – if it’s shared – 90% of the time SPLA is required.
Thanks for reading
SPLA Man
SPLA Licensing 
Piaras MacDonnell (@piarasmacdonnel)
August 29, 2014 at 8:03 am
Great post SPLA man. Summed up nicely with the comment ‘why would they create license mobility…’ and the rules of thumb on license dedicated to one customer and 90%
How might these options change as customers are pushed at renewal time to a core based license?
Also wondering how the suggested options might change is you didn’t want to renew SA
splaman
August 29, 2014 at 11:03 am
Thank you for reading and for taking the time to comment.
Unfortunately it really does not change their options in my opinion. They can still use license mobility for cores w/ SA (such as SQL).
I think end customers need to reconsider if they choose not to renew with SA. For one, they can renew with just SA only (making it cheaper). Secondly, (and I touched on this earlier in another post), if you look at the history of SA it was designed for customers who want to pay annually or need the latest version. Fast forward to today, now it’s all about the cloud. Want to move to Azure? Sign an Azure only EA. Need to move to a service providers shared infrastructure – sign SA, etc. They limit their options without SA.
It’s a great move by Microsoft (great move for the company anyways) as it adds additional revenue stream on top of the licenses. Not only that, but service providers are now indirectly advocating SA to their end customers (since SA is a requirement for license mobility).
So to answer your last question – if they didn’t renew with SA and want to leverage their existing licenses, service providers are forced to dedicate (physical and virtual) the entire environment or use SPLA for everything. Not bad for the service provider to just report everything via SPLA, but bad for the end customer if they want to leverage their existing licenses. It’s like double paying for the same software.
Love them or hate them; I think Microsoft is more innovative than most people give them credit. After all, there’s a reason Bill Gates is one (if not “the”) wealthiest person on the planet.
Jeffrey Hunt
September 1, 2014 at 4:43 pm
Reblogged this on Jeffrey Hunt and commented:
People often forget about licensing implications of using public cloud infrastructure. This is a good run down.
Bobby
February 3, 2015 at 10:29 am
Hi SPLA man,
Thank you for this extensive explanation on Microsoft Licensing, it is quite a jungle of rules but you made it pretty clear. I see that this post is quite recent but are there any changes implemented by Microsoft in the meantime that you know of on this topic? 🙂
splaman
February 4, 2015 at 6:48 pm
Thank you for the kind words. Nothing has changed from a SPLA perspective regarding this post. Is there anything in particular your trying to accomplish? Happy to help.
Robert
April 17, 2015 at 12:21 pm
Hi – if we provide a customer with a dedicated physical server licensed through SPLA (say 2 processor Datacentre), can he install his retail copy of SQL Server (say 2005/2008 processor version) on one of the virtual machines. Many thanks.
Rich
July 15, 2015 at 8:47 am
This post is really helpful. Does this also apply to Dynamics CRM? We are ok if a customer brings their own licenses to us in a dedicated environment?
splaman
July 15, 2015 at 11:34 am
Yes…it would have to be dedicated though
RupeshD
August 19, 2015 at 5:01 am
Hi SPLA man,
Thanks for this wonderful information around license mobility by Microsoft, I have one question around usage of customer volume license for Windows OS in public cloud
Can customer bring his own volume license of windows OS for his dedicated VM in public cloud?
splaman
August 23, 2015 at 3:53 pm
Nope. Windows does not have mobility rights.
Jason
March 4, 2016 at 10:12 am
Hi SPLA Man,
In the healthcare example (Option 3) where the client has a dedicated VM/SQL Server in the hosted datacenter (shared hardware) with the licenses provided under SPLA can the end user manage and maintain the VM/SQL instance?
splaman
March 4, 2016 at 3:53 pm
Not technically. The person hosting (who has the SPLA agreement) would have to manage and maintain the instances.
Derek
July 17, 2017 at 10:43 am
Hi SPLAMAN,
Do you know which Microsoft agreement stipulates the restriction that volume licenses must be hosted on dedicated hardware in the Cloud? I see a lot of references to this in your blogs, in Microsoft license guides, on other sites – but I can’t find it documented anywhere in the SPLA agreement the SPUR or otherwise. Thanks!
MS Licensing
July 17, 2017 at 11:41 am
Hi Derek, It’s because both programs (VL and SPLA) have different use rights. When you assign a license to a server in VL, that server follows the product terms. The product terms prohibits hosting. When you assign a license to a server through SPLA, that server follows the SPUR. The SPUR prohibits internal consumption. As far as guides, I would check out the license mobility guide. If Microsoft allowed shared environments for everything, there would be no need for license mobility. Hope this helps and thanks for reading. PS – Don’t shoot the messenger!
Schlaubi
March 5, 2018 at 2:20 pm
Hi,
what about this scenario:
Serverfarm with 2 Domainservers
1x Server as a dedicated VM with SPLA Office and SPLA RDS on a shared Hypervisor licencensed with SPLA- Datacenter Ed.
1x Server as a dedicated physical Server with “VL” SQL- Server an SPLA- Windows on the bare metal.
both Servers are in the same domain
Is this okay, splaman ? Thanks !