In today’s fast-paced and data-driven world, businesses rely heavily on robust database management systems, and Microsoft SQL Server stands as a leading choice for many. However, the cost associated with SQL Server licensing often presents a significant financial challenge for companies. This white paper delves into the complexities and substantial expenses involved in SQL Server licensing, aiming to provide a comprehensive understanding and strategies for cost rationalisation.
The primary factors contributing to the high cost of SQL Server licenses are twofold. First, the inherent cost of the license itself is substantial. Microsoft's pricing model, which includes a variety of editions and licensing options, often leads to confusion and can result in the selection of a more expensive licensing option than necessary. Second, and equally crucial, is the issue of insufficiently planned installations within the IT environment. A lack of strategic planning often leads to over-provisioning, where more licenses are purchased than are actually needed, or under-utilisation, where the full potential of the purchased licenses is not realised.
To effectively tackle the challenges associated with SQL Server licensing costs, a comprehensive and diverse strategy is essential. This white paper provides a detailed guide on various methods and practices designed to maximise the value of SQL Server license investments. It addresses the intimidating nature of these costs, highlighting that with the appropriate strategies and insights, businesses can achieve substantial cost reductions.
The primary goal of this document is to empower IT leaders with crucial and reliable knowledge and tools that enable them to adeptly manoeuvre through the intricacies of SQL Server licensing.
This white paper does not attempt to replace the official Microsoft documentation but to add much needed context and clarity derived from experience running successful SAM programs and Microsoft license audits. This white paper should be useful for Software Asset Managers, Software Licensing Specialists, IT Procurement, IT Service Providers, IT Managers, IT Consultants, Analysts and CIOs.
The increasing complexity of SQL Server environments arises from a range of factors, including diverse and ever-evolving licensing models, the intricacies of SQL Server's specific licensing requirements, rapidly changing technology trends, and the varied needs of businesses and end-users. SQL Server is used by 27.5% of organisations worldwide and is also supported on Linux. As it gains more popularity it becomes more integral to business operations across industries. Understanding and effectively managing these licenses is crucial.
SQL Server licensing has undergone significant changes, adapting to the shifting paradigms in software deployment and usage. With options ranging from core-based licensing to server/CAL (Client Access License) models, and the more recent cloud-based and hybrid scenarios, organisations are often challenged to identify the most cost-effective and compliant licensing strategy. Each model has its specific considerations, such as core counts, virtualisation, and user access levels, which can dramatically affect both cost and compliance.
Microsoft's enterprise software, particularly SQL Server, has experienced a trend of consistent price increases over the years. These increases reflect not only Microsoft's strategy in evolving its product line-up but also the broader dynamics in the enterprise software market. The recent history of Microsoft SQL Server's pricing indicates a notable increase that took effect from January 1, 2023. This increase was the first significant change in pricing since the release of SQL Server 2012. Specifically, Microsoft implemented a 10% price increase for on-premises editions of SQL Server Enterprise, Standard, and Web across all purchasing channels. This adjustment was communicated to customers in late October 2022 and marked a substantial change in Microsoft's pricing strategy, reflecting the added value and features over the past decade.
The price rise applies to various licensing models and affects Azure SQL customers using SQL Server licensing offers, such as software subscriptions or License and Software Assurance. However, the Azure SQL pay-as-you-go rate was not subject to this increase, given its recent launch at a higher price point compared to other offerings. For existing Software Assurance customers, the price increase will not take effect until their renewal.
This shift in pricing strategy underscores the continual evolution of Microsoft's enterprise software offerings, mirroring the industry's move towards more advanced and feature-rich solutions. The increase reflects the significant enhancements in SQL Server's capabilities, particularly in its 2022 version, which includes new features like fully managed disaster recovery through Azure SQL Managed Instance and a new pay-as-you-go billing model enabled by Azure Arc.
For businesses and IT asset management professionals, this change emphasises the importance of staying informed about licensing costs and models. It also highlights the need for strategic planning around software investments, especially for organisations heavily reliant on Microsoft's ecosystem.
Understanding the different SQL Server feature sets against organisational needs requires in-depth knowledge and strategic planning. The growing preference for cloud environments, including Azure SQL Database, introduces new licensing considerations and potential benefits, but also adds layers of complexity in terms of license management and cost optimisation.
Navigating the realm of SQL Server licensing is fraught with potential pitfalls. Even seasoned IT professionals and decision-makers can stumble upon various licensing challenges, leading to compliance issues and financial repercussions. Below are some of the most common SQL Server licensing issues, accompanied by examples for better understanding.
| Issue | Symptom |
|---|---|
| Edition Mismatch | Deploying a different edition than what is covered by the license agreement is common. A notable example is a business running SQL Server Enterprise edition while only having a license for the Standard edition. This leads to three options: buying new licenses, acquiring Step-up licenses, or reinstalling to the licensed edition. Conversely, running a lower edition (like Standard) when owning a higher one (like Enterprise) is permissible under edition downgrade rights, but still may require adherence to specific conditions. |
| Version Mismatch | Using a different version than the licensed one poses a risk. A typical scenario involves using a more recent version of SQL Server than the one licensed, without the necessary Software Assurance coverage. Additionally, CALs (Client Access Licenses) must match or be higher than the server software version they access, and overlooking this can lead to non-compliance. |
| Misapplying Licensing Use Rights | Incorrect administration of licensing use rights, especially in virtualised environments, can be problematic. For instance, a company might reassign SQL Server Enterprise edition licenses more frequently than allowed, violating the specific reassignment rules and resulting in non-compliance. |
| Core vs Server + CAL metrics | SQL Server under the core licensing metric does not require users benefiting from SQL reporting to have CALs (Client Access Licenses), it is typical that organisations would use core metrics when covering public facing or highly accessible SQL as the Per Core model allows access for an unlimited number of users or devices to connect from either inside or outside an organisation’s firewall. |
When licensing under the Server + CAL model however it is important to consider the CAL requirements based on the fact Multiplexing does not reduce the number of Microsoft licenses required. Users are required to have the appropriate licenses, regardless of their direct or indirect connection to SQL Server. E.g. SQL Server is serving as a CRM database, those accessing the CRM would require CALs. | | Overlooking Fully Licensable Components | The SQL Server product family contains a set of stand-alone services that require a full SQL Server license:
→ Analysis Services; → Data Quality Services; → Integration Services; → Master Data Services; → Reporting Services;
This misconception can lead to unintentional non-compliance. For instance, a company might deploy SQL Server Reporting Services for enhanced data reporting, unaware that this requires a separate license, thus inadvertently breaching licensing terms. | | Licensing in Hybrid and Cloud Environments | With the increasing adoption of cloud and hybrid environments, licensing becomes even more complex. For example, organisations using SQL Server in a hybrid setup (partly on-premises, partly in the cloud) must understand how their licenses apply in both contexts. The use of Azure Hybrid Benefit, for instance, allows leveraging existing on-premises licenses for Azure SQL databases, but requires careful management to ensure compliance. | | Non-compliance with Software Assurance (SA) Requirements | Software Assurance provides a range of benefits, including new version rights and mobility rights, but also comes with specific terms that must be adhered to. A common issue is failing to renew SA in time or misunderstanding its benefits, leading to scenarios where an organisation might use features or versions not covered under their current agreement. | | Overlooking License Mobility through SA | License mobility is a key benefit under Software Assurance, allowing licenses to be moved between servers within a server farm or to third-party hosting organisations. However, not all SQL Server licenses are eligible for this, and failing to understand these nuances can lead to compliance issues. An example could be a company attempting to transfer a non-eligible SQL Server license to a new server in a different server farm, unknowing that this violates the SA terms. | | Improper Use of Developer Editions | SQL Server Developer Edition is often used for development and testing. However, a frequent mistake is using it in a production environment, which is not permitted under its licensing terms. For instance, a small company might mistakenly deploy the Developer Edition for its production database, thinking it's a cost-effective solution, when in fact it violates the licensing agreement. | | Common Reporting Mistakes in Service Provider License Agreement (SPLA) | When using Subscriber Access Licenses (SAL), it’s common to forget to report all authorized users. Each user or device accessing the SQL Server must be counted, and failing to do so can result in underreporting and compliance risks.
Reporting incorrect license types or editions is a prevalent issue. For example, a service provider might report a Standard edition license while actually using an Enterprise edition. This misreporting can lead to compliance issues and potential penalties. | | Core Minimums | A common mistake is neglecting the minimum requirement of four core licenses per VM or per physical CPU. This rule ensures that even small deployments are adequately licensed, and failing to comply can lead to licensing shortfalls. | | Edition Optimization | Using SQL Server Enterprise with Software Assurance (SA) allows for unlimited virtualization on a host, which can be more cost-effective for environments with many virtual machines. This can optimize costs and simplify license management. | | Different Rules Without Software Assurance | Without Software Assurance, the rules for virtualization are different. You must have at least as many core licenses as there are VMs if the number of VMs exceeds the number of cores on the host. This requires careful planning to ensure compliance and cost efficiency.
Check the FAQ for a side-by-side comparison. | | Disaster Recovery Rights | The ability to deploy backup instances of SQL Server software for temporary use in a server dedicated to disaster recovery is a benefit of Software Assurance. When considering licensing requirements and entitlement allocation it is important that these software assurance benefits are considered, and that if software assurance is not present that the failover devices (passive) have sufficient license coverage for the primary (or active) device. |
Microsoft SQL Server is a critical component in many IT environments, spanning traditional datacenters, public clouds, containerized environments, and virtualized environments. Ensuring compliance with Microsoft SQL Server licensing terms and conditions is essential for IT leaders to effectively manage their licensing requirements and avoid potential penalties.