SOFTWARE LICENSINGADVISORSLICENSING BRIEFSQL SERVER VIRTUAL SERVERMOBILITY WITHOUT SOFTWAREASSURANCEBy taking advantage of some lesser-known SQL Server licensing options,customers can significantly reduce their costs, eliminating the requirementto pay for Software Assurance on SQL Server to ensure Licensing Mobility

TABLE OF CONTENTSContentsImportant Microsoft Licensing Rules for SQL Server Virtualization.3General License Assignment Rules.4License Assignment for SQL Server.5License Mobility Rules.7License Mobility Without SA.9Other Cost Scenarios.12SA Benefits Lost.13References.16Universal License Terms in Product Use Rights Relevant to SQL Server.16General License Terms for SQL When Licensed Through the Server / CAL Licensing Model.19Product-Specific License Terms for SQL When Licensed Through the Server / CAL Licensing Model.20General License Terms for SQL When Licensed Through the Per Core Licensing Model.22Product-Specific License Terms for SQL When Licensed Through the Server Core Licensing Model.23Windows Server Datacenter Rights Associated with VMs and License Mobility.25Software Assurance Benefits Related to SQL Server.27SQL-Relevant Rules in the Enterprise Agreement.305.Transferring and assigning Licenses.30Software Licensing Advisors.32

SOFTWARE LICENSING ADVISORS LICENSING BRIEFImportant Microsoft Licensing Rulesfor SQL Server VirtualizationPrepared by Paul DeGrootSenior ConsultantSoftware Licensing AdvisorsLast updated, July 2014ABOUT THIS DOCUMENTThis document summarizes research from Software Licensing Advisors on published andpublic Microsoft documentation regarding Licensing Mobility, SQL Server 2012 (and later)licensing rules, and general rules outlined in Microsoft licensing documents.Quotations in this document are taken from various documents that are part of the customer'scontract with Microsoft, including Product Use Rights, the Product list, and standard Microsoftcontracts. The language in your contract may be different, depending on the age of thecontract and modifications that might have made to the contract.It is not necessary to read, in full, the reference material at the end of this document (includedwith digital copies only). Clicking on any shaded citation will take the reader to the originallanguage. The reference material is provided to offer the reader additional context for thecitation.Our interpretations do not always conform with the advice that Microsoft account teams,white papers, and other communications give to customers. This document is designed topresent, to the best of our knowledge, the rules that customers are bound by contract tofollow. Customers can then decide, when communications from Microsoft appear to divergefrom our interpretations, how they should proceed.Among other things, they can elect to use this information to Page 3negotiate contract language acknowledging that a specific interpretation of thelanguage will apply to their contract, or

SOFTWARE LICENSING ADVISORS LICENSING BRIEF design their operations and architectures around these interpretations of the rules, inthe belief that Microsoft will not have sufficient grounds to pursue legal action in anaudit or similar action against the customer, or follow Microsoft's advice, if they believe Software Licensing Advisors has not correctlyinterpreted the language that describes these rules, has not made an argument strongenough to survive legal scrutiny, or if they want to avoid arguments with Microsoftover these rules.This document is NOT advice to pursue any particular path, but is intended only to informcustomers, so that they can take any course of action they deem advisable with greaterknowledge of what the applicable contract language says. Software Licensing Advisors doesnot provide legal advice and is not responsible for any consequences that might result fromyour pursuing any actions as a result of what you read here.SUMMARYThis document summarizes Software Licensing Advisors' understanding of rules for licensingSQL Server, with references to relevant language in the original contract documents andapplicable licensing documents, such as Microsoft Product Use Rights and the Product List.Our focus is first to explain the basics of license assignment for Microsoft products, andsecond to understand how various licensing options affect license mobility for SQL Server.Microsoft's general advice is that Software Assurance is now required to move SQL Servervirtual machines (VMs) from one physical host to another more frequently than Microsoft's90-day limit on license reassignment permits.It is our assertion that Software Assurance is not automatically a requirement for movingvirtual machines in less than 90 days from the previous move. Many customers may be able toconfigure dynamic clusters with SQL Server that offer frequent reassignment of SQL ServerVMs to different hosts without requiring Software Assurance, which increases licensing costsby 25% a year. These costs range from tens of thousands of dollars each year for smallercustomers to millions of dollars each year for large customers.Our assertion is that License Mobility concerns the assignment and re-assignment of licenses,not VMs. Certain licensing approaches may reduce or eliminate license re-assignment amonghosts, even though the customer may move VMs among different hosts.Page 4

SOFTWARE LICENSING ADVISORS LICENSING BRIEFGeneral License Assignment RulesBy default, Microsoft assigns licenses to either users or physical devices. This language is foundin the Enterprise Agreement (Section 5, “Transferring and assigning Licenses.”)Internal assignment of Licenses and Software Assurance. Licenses and Software Assurancemust be assigned to a single user or device within the Enterprise. Licenses and SoftwareAssurance may be reassigned within the Enterprise as described in the Product Use Rights.The Definitions section of Microsoft Product Use Rights further confirms that a license is onlyto a “physical hardware system.” To state the implication here, licenses are not assigned toVMs.Licensed Device means the single physical hardware system to which a license is assigned. Forpurposes of this definition, a hardware partition or blade is considered to be a separate device.The same section of the PUR specifies that a server is a hardware device.Server means a physical hardware system capable of running server software.LICENSE REASSIGNMENTBy general rule, Microsoft licenses cannot be reassigned from one device to another morefrequently than every 90 days. The Universal License Terms in the Product Use Rightsdocument sayExcept as permitted below, you may not reassign licenses on a short-term basis (within 90 daysof the last assignment), nor may you reassign licenses for Windows desktop operating systemor Rental Rights, or Software Assurance separately from the underlying license to which theSoftware Assurance is attached.As this paragraph says, reassignment is permitted in some cases. One of those cases describesa license reassignment rule called “License Mobility.”License Mobility within Server Farms and Server Re-partitioning. You may reassign certainserver licenses on a short-term basis under License Mobility within Server Farms rights andServer Repartitioning.Page 5

SOFTWARE LICENSING ADVISORS LICENSING BRIEFLicense Assignment for SQL ServerThe rules outlined so far about license assignment need to be applied to many differentlicensing models. SQL Server licensing is governed by two distinct licensing models inMicrosoft Product Use Rights. Servers: Server / CAL (Server License CAL Optional External Connector) Servers: Per Core (Core License)Each model has different rules regarding license assignment and mobility. In this document wewe focus only on the more complex per-core licensing model.LICENSE ASSIGNMENT FOR THE PER CORE MODELMicrosoft Product Use Rights describes various licensing models, including the Per Coremodel. The General Licensing Rules section for the Per Core model outlines rules that apply toall products licensed per core.Each core license is assigned to a server:You must assign each license to a single Server.Note that this language must be read carefully to avoid confusion between core licenseassignment and core license purchases. As the licensing model's name suggests, licenses are“per core.” A core license has a one-to-one relationship with a physical core. However, SQLServer licenses are purchased as a bundle of two core licenses. We might sometimes say that"a license covers two cores," but that is not technically accurate. The Microsoft SKU or partnumber includes two core licenses, each of which covers only one core.LICENSING VMS WITH THE CORE MODELThe number of licenses that must be assigned to the server depends on whether SQL Server isrunning on the physical hardware or in a VM. Adding another level of complexity, virtualmachines can be licensed for only the virtual CPUs they use, or by licensing a physical coreinstead.Page 6

SOFTWARE LICENSING ADVISORS LICENSING BRIEFYou may license by Physical Cores on a Server or by individual Virtual OSE.Running SQL on the physical machine requires licensing all of the cores, so a server with 20cores will require 20 core licenses.Core licensing costs can be substantially reduced in situations where a physical host has manycores if SQL is run in a VM and SQL licensing is done per individual VM, as permitted above.The number of licenses required equals the number of Virtual Cores in each Virtual OSE inwhich you will Run the server software, subject to a minimum of four licenses per Virtual OSE.This approach allows customers to license fewer than all the physical cores on the server. Thecustomer can run a single VM with four virtual CPUs on a server with 20 cores without havingto purchase SQL licenses for all 20 cores.However, licensing individual SQL VMS is inefficient if the customer runs many SQL VMs on theserver. For example, the server would require a minimum of 20 SQL core licenses for just fiveVMs if SQL is licensed per individual VM, and 20 VMs would require a minimum of 80 corelicenses.That alternative is “licensing by Physical Cores.” In this case, all the cores must be licensed.The number of licenses required equals the number of Physical Cores on the Licensed Servermultiplied by the applicable Core Factor located at 229882.Once the proper number of core licenses have been applied to the server, each core licensepermits running SQL Server in one VM. Unlike individual licensing per VM, the number ofvirtual CPUs is ignored. Only one core license is required for each VM, regardless of how manyvirtual CPUs a VM has.For enterprise and parallel data warehouse editions, you may use any number of RunningInstances of the server software on the Licensed Server in a number of Physical and/or VirtualOSEs equal to the number of licenses assigned to it.Additional VMs (beyond the number of physical cores) can be licensed with additional corelicenses.For each additional enterprise edition license that you assign, you may use Running Instancesof the server software in one additional OSE on the Licensed Server.Page 7

SOFTWARE LICENSING ADVISORS LICENSING BRIEFLicensed this way, a server with 20 cores always requires at least 20 core licenses, but oncethat has been achieved, the customer can put 20 SQL VMs on it.Although this option is available only for the Enterprise Edition, it can bring the cost per VMdown substantially. The following table compares SQL Standard and Enterprise core licensingof VMs with these two models. Prices are Select A net pricing per core (not per Price percore 1,466.10 5,621.76 5,621.76Cores/VMHostcores2 VMs441202020 11,729 44,974 112,43510 VMs 58,644 281,088 112,43520 VMs 117,288 449,741 112,435The point at which Enterprise edition becomes less costly, in this case, is 20 SQL Server VMs.Licensing individual VMs with SQL Enterprise is less costly for up to four VMs on a 20-coreserver. At five individually licensed VMs the SQL Enterprise cost is the same.License Mobility RulesBefore 2012, License Mobility rights were offered for most server products released in 2008 orlater. In 2012, Microsoft added a new requirement. Servers released in year and later alsorequire Software Assurance in order to move VMs from one physical server to another lessthan 90 days from the previous move. This may be necessary in a data center where VMs areconstantly moved for load balancing purposes or where server activity and requirements maychange substantially over the course of a day. The “Additional Licensing Requirements and/orUse Rights” for the core-licensing model says“You may reassign licenses for which you have active Software Assurance coverage toany of your Servers located within the same Server Farm as often as needed. You mayreassign licenses from one server farm to another, but not on a short-term basis (i.e.,not within 90 days of the last assignment).“Page 8

SOFTWARE LICENSING ADVISORS LICENSING BRIEFLICENSING MOBILITY FOR INDIVIDUALLY LICENSED VMSExamining how this works in practice depends on how the VMs are licensed. First, let's look atindividual VM licensing, where a minimum of four core licenses must be assigned to each VM.According to Microsoft, these licensed require SA coverage in order to be moved morefrequently than every 90 days.It would be incorrect to say that the licenses are embedded in the VM and move with the VM.As we have seen, Microsoft is adamant that licenses can be assigned only to a physical server.Thus, two events occur simultaneously when a SQL VM with individual licensing is moved. The VM moves from its current assignment (the source host) to a different physicaltarget host. The licenses required for the VM on the source host are reassigned to the target host.Note that the target computer does not require SQL licenses before the VM is moved to it orafter it is moved to a new target. The licenses move in parallel with the VM.LICENSING MOBILITY FOR SQL ENTERPRISE VMS LICENSED PER PHYSICAL CORELicense Mobility within Server Farms is conceptually different for VM movement when welicense SQL VMs via licenses assigned to cores on the physical host.By default, we are dealing with fixed number of VMs: “a number of Physical and/or VirtualOSEs equal to the number of licenses assigned to it” as quoted above. This can include theminimum number, equal to the number of physical cores, plus any additional licenses thathave also been assigned.However, when SQL Server is licensed on a per-core basis and all cores must be licensed, thelicenses are inherently difficult to move without creating non-compliance.For example, assuming that all hosts in a server farm have 20 physical cores, taking a VM thatis licensed by one of those cores and moving it to an unlicensed physical server, will make bothservers non-compliant. The source host would now have 19 licenses, when Microsoft requiresthat all 20 cores be licensed, and the target host has only one license, failing to meet the fourcore minimum.Thus, we have a problem if the total VM count in a server farm approaches the number ofphysical cores in all the SQL-licensed cores in the farm. If all hosts have 20 physical cores andPage 9

SOFTWARE LICENSING ADVISORS LICENSING BRIEFthe number of VMs averages 19 per host, one or more hosts may end up with more VMs thanit has licenses for. In a four-host cluster, the failure of one 20-core host could force themovement of 19 VMs to the three remaining servers, leaving them with an average of morethan 25 VMs each, well past their 20-VM limit.Microsoft's preferred solution is to add Software Assurance to all SQL core licenses.Independently of the rules for license mobility, the Software Assurance rights section of thePUR provides customers with the right to run any number of SQL Server instances regardlessof the number of cores on the server:For each server to which you have assigned the required number of licenses as provided in the“Physical Cores of a Server” section, you may run on the licensed server any number ofinstances of the server software in any number of physical and/or virtual OSEs, provided youhave active Software Assurance coverage for those licenses.(This language is identical for SQL 2012 and 2014.)This eliminates the risk of non-compliance, particularly where tools provide dynamicmanagement of VMs and can move them without user intervention (VMware's vMotion orHyper-V's Dynamic Optimization). They could migrate more VMs to a host than it has cores,thus exceeding the number of VMs for which the host is licensed.License Mobility Without SAHowever, Software assurance is costly (25% per year of the license price) and it cannot bepurchased for existing licenses that do not already have it. They must be re-purchased, andSoftware Assurance must be purchased at that time. In addition, the shift from processors tocores and Microsoft's generous conversion provisions exposes customers to dramaticallyhigher SQL Server licensing costs. Customers get four core licenses per processor or thenumber of cores actually in use, which ever is greater. Since the cost of SA on four cores isequivalent to the cost of SA on one processor, SA on a 12-core processor will be triple whatthey have paid in the past.Is there any way to permit dynamic provisioning of VMs, enabling them to move from onephysical host as required, without paying for SA? Yes.Page 10

SOFTWARE LICENSING ADVISORS LICENSING BRIEFThe solution is overlicensing the hosts for SQL Server to such an extent that the risk of puttingmore SQL VMs on a host than it is licensed for is eliminated, for all practical purposes.In fact, our experience is that many SQL users who have used dynamic provision of VMs in thepast, before SA was added as a requirement, can continue to do so without renewing SA onSQL Server cores and without changing their server configuration.Keeping in mind that License Mobility is all about re-assigning licenses, an organization thathas sufficient spare capacity on its SQL hosts can move a VM without re-assigning a license.The VM is covered by one license on its source host and by a different license on the targethost.One of our customer runs approximately 90 SQL Server instances across 12 servers, each ofwhich had two 6-core processors, or 12 cores per host. Licensed per VM, these SQL Serverinstances would require 360 core licenses. Licensed by physical cores, they require 144 corelicenses. The customer is overlicensed by 60%.On average, the customer is running 7.5 SQL instances per host, while each host is licensed for12 VMs. Even if the customer lost two of its hosts simultaneously, it would push the averageup to only nine VMs per host, still three short of average host capacity. The customer wouldneed to lose 5 of its 12 hosts simultaneously before it was forced to exceed its license count onat least one server, assuming that it was unable to shut off any of the SQL servers in thecluster.Keeping in mind that while many servers run dozens of VMs, it is not our experience that manyservers run dozens of SQL VMs, and our concern in this instance is only for those. Note as wellthat the 90-day restriction is waived in the event of hardware failure:Early Reassignment Due to Hardware Failure. You may reassign sooner than within 90 days ofthe last assignment if you retire the Licensed Device or server due to permanent hardwarefailure.Finally, paying for SA in order to get “unlimited” SQL virtualization rights may sound attractive,but no server has unlimited capacity. Getting real, a high proportion of servers running criticalSQL workloads are never provisioned with more SQL VMs than they have physical cores.Page 11

SOFTWARE LICENSING ADVISORS LICENSING BRIEFOverlicensing offers significant savings over SA. Since SA costs 25% of the license price peryear, licensing all cores on a 20-core server with SA is the equivalent of purchasing another 15licenses for that server over a three-year period.Many customers do not need to purchase any additional core licenses, since by default theirservers are already over-licensed, as demonstrated by our example above. Should they wantto provide an additional buffer, it will be less costly to purchase more core licenses, each ofwhich licenses another SQL VM. Note that overlicensing actually increases the number ofperpetual licenses the customer owns. The latter is “rental” payments for licenses thecustomer has already purchased.The following table estimates the cost of overlicensing cores by various percentages, roundedup to the nearest 2-core-license purchase. (As a result, some servers will be licensed at ahigher percentage than indicated.)Total ServerCoresOverlicensing, rounded up to nearest 2-core licenseSA, 3 yrs10.00%30.00%50.00%100.00%12 50,596 11,244 22,487 33,731 67,46116 67,461 11,244 33,731 44,974 89,94820 84,326 11,244 33,731 56,218 112,43524 101,192 22,487 44,974 67,461 134,92232 134,922 22,487 56,218 89,948 179,89640 168,653 22,487 67,461 112,435 224,870Finally, hardware may be a better investment than Software Assurance, for the purposes ofcreating a dynamic SQL cluster. Customers report that increasing server memory, a relativelyinexpensive improvement, can have a dramatic impact on the frequency with which VMwareautomatically re-assigns VMs, thereby reducing the risk that servers will be inadvertentlyunderlicensed.Page 12

SOFTWARE LICENSING ADVISORS LICENSING BRIEFTHE WINDOWS DATACENTER SERVER EXAMPLEMicrosoft may argue that, in spite of the very clear License Mobility language indicating thatlicense reassignment, but not VM reassignment, is restricted, Software Assurance is stillrequired. The company does not require its licensing to be logical. It can simply insist that“spare” licenses don't count and can't be utilized when moving VMs from one host to another.That argument is significantly weakened by the fact that it already employs overlicensing logicfor another product, Windows Server. Windows Server has no license mobility, but it runs anyinstance of SQL Server that does.(Link to reference)However, when a host server is licensed with Windows Server Datacenter, the OS can be usedin an unlimited number of VMs on that host.5. For Datacenter licenses, the number of Virtual OSEs is unlimited, and use in the PhysicalOSE is not limited to hosting and management.In an optimally licensed VM architecture, all hosts are licensed with Windows ServerDatacenter. Although it does not have License Mobility, Microsoft explains that a surpluslicense is always available on any server licensed with this product and therefore any VMmoved between hosts will have one license on its source host and a different license on thetarget host,which is exactly the scenario we have outlined for SQL Server.While Microsoft may disagree with SLA's understanding of the licensing rules, we would invitethem to review those rules and identify any point at which is customer who is moving VMs perour suggestion has reassigned a license at all, let alone within 90 days.Page 13

SOFTWARE LICENSING ADVISORS LICENSING BRIEFOther Cost ScenariosLicensing SQL Server per core, without SA, and still having the flexibility to move VMs amonghost servers has other advantages.COMPARING STANDARD WITH SA AND ENTERPRISE WITHOUTIf we revisit our comparison of SQL Server Standard and SQL Server Enterprise in VMscenarios, SQL Server Standard will always require SA for License Mobility, while SQLEnterprise may not. All prices for products with SA in the chart below include three years of SApayment.EditionPrice percoreCores/VMHostcores2 VMs10 VMs20 VMsStandard w/SA 2,565.68420 20,525 102,627 205,254Enterprise w/SAEnterprise without SA 9,838.08420 78,705 491,904 787,046 5,621.76120 112,435 112,435 112,435In this case, 11 SQL Server Standard VMs cost about the same as 20 SQL Server EnterpriseVMs, and licensing SQL Server Enterprise by individual VM is more costly for as few as threeVMs.LICENSING IN AZUREAnother scenario that some customers might consider is moving their SQL Server licenses toMicrosoft's Windows Azure platform. That will be very expensive, since SQL Server Enterprise,when moved to Azure, is licensed only by individual VM, with a minimum requirement of fourcore licenses per VM.ProductLicensingModelPer-CorePage 14Product orProduct TypeLicensePermitted Number of OSEs perLicense/Permitted Number of Cores per LicenseAll eligibleProductsEach Core license with activeSoftware Assurance coverageOne virtual core (subject to the Product UseRights including the requirement of a minimumof 4 cores per OSE)

SOFTWARE LICENSING ADVISORS LICENSING BRIEF(Link to original text here)SA Benefits LostWe must note that SA provides benefits other than additional SQL VM capacity.UPGRADE RIGHTSThe most important SA benefit is upgrade rights. However, the recent release of SQL Server14, which most customers are unlikely to implement in quantity before 2016, means thatcustomers are unlikely to deploy a future version of SQL Server before 2018 or 2019. It will beless expensive to purchase new SQL Server licenses at that time than to pay for SoftwareAssurance for 4-5 years. That implies two three-year contracts, totaling six years of SApayments.Customers who have SA on SQL Server Enterprise core licenses, but who drop it in a newagreement to avoid large increase in SA costs need to be aware of two other disadvantages ofnot having SA.CORE EQUIVALENCY LICENSINGThe first is that, while Microsoft grants all customers with SA on SQL Server Enterpriseprocessor licenses the full number of cores in use, it places a special lock on core licenses forwhich SA is not renewed.These licenses may not be separated, but instead are continued as a hybrid of processor andcore licensing called “core-equivalent” licenses. Thus, if the customer does not renew SA onSQL Server running on a server with two processors of six cores each, it can only reassignthose licenses as blocks of six cores. If, for example, the customer purchased a new server withfour-core processors, it could move these core-equivalent licenses to the server, but only assix-core blocks. In effect the server will be licensed for 12 cores, even though only eight arerequired. The four surplus cores cannot be split from the block and used elsewhere.This rule has no purpose other than to inconvenience customers who do not renew SA,requiring them to track these special blocks of SQL licenses and thereby increase costs andcomplicate compliance.Page 15

SOFTWARE LICENSING ADVISORS LICENSING BRIEFIn practice, however, we doubt that this will prove a great barrier. Any existing servers onwhich SA is not continued will still be licensed for all of the cores they have today, and withmodest effort, future reconfigurations can accommodate these blocks of cores without seriousproblems.FAILURE TO RECORD CORE LICENSE GRANTSThe second loss of SA benefits has a similar intention—to inconvenience customers who donot renew SA—but it is more pernicious and we expect it to cause grief both for Microsoft andits customers in the future.Microsoft has implemented a policy of not recording license grants in excess of the defaultfour core licenses per processor if SA is not renewed. Thus, even though a customer is legallyentitled to eight core licenses if they have SA on SQL Server Enterprise per processor runningon an eight-core processor, Microsoft's records will show only four core licenses. In a futureaudit situation, Microsoft may insist that the customer is underlicensed, since its own recordsdo not show the other four cores.Customers should be careful to retain inventory records that show actual core counts on allSQL Server instances. These records are required in order to gain the additional cores anyway,so this is a matter of keeping those records where they can be accessed easily in the future, ifnecessary.We also recommend that customers provide copies of these records to their reseller and totheir Microsoft account team. While Microsoft may choose to ignore them, the customersright to these licenses is real and customers will need these records in future true-up and auditscenarios to ensure that they do not repurchase licenses that they already own.Page 16

SOFTWARE LICENSING ADVISORS LICENSING BRIEFREFERENCESExcerpts from Microsoft Contract DocumentsUniversal License Terms in Product Use Rights Relevant toSQL ServerDefinitionsCore Factor means a numerical value associated with a specific physical p

public Microsoft documentation regarding Licensing Mobility, SQL Server 2012 (and later) licensing rules, and general rules outlined in Microsoft licensing documents. Quotations in this document are tak