What is a software licence? How Microsoft licensing works

Have you ever wondered why Microsoft Licensing is so complicated? Why software licensing, in general, is so complex, Microsoft included? Why is it not making any sense at times?

Why, for example, if you buy a server license, are you still not allowed to use it until you buy some client access licenses? You have already paid for the server license. What client access licenses?

Or why can you not just buy empty computers for your enterprise and then deploy Windows Enterprise on those computers because you have a Microsoft Enterprise Agreement?

It just doesn't make sense!

Chances are, you may have been asking these questions. And when I entered the world of IT more than 20 years ago, when I, for the first time, decided to get familiar with software licensing, I was baffled. And only after spending a few years in Software Asset Management I have come to this explanation.

Software license explained

Licensing software doesn't make sense because we treat a license as an object. But it isn't.

Say you go to an online shop. You use your credit card to pay for a Microsoft Visio license. Does that Visio belong to you, then? No, it doesn't.

What happened is that you paid a license fee. And in exchange for that fee, Microsoft allows you to download Visio, install it, and then only use it according to the rules, inside the boundaries defined by Microsoft.

When you buy, for example, a camera, a cup, or a chair, you exchange your money for an object. For thousands of years, that's how the trade worked. That's how the transfer of ownership worked.

But a license is not an object. Strictly speaking, you cannot "buy" software. You pay a license fee. Then in exchange for that fee, the vendor grants you rights to use licensed software, again, within the boundaries set by the vendor, the boundaries that they defined. And you have to play by their rules.

When you think about licenses next time and feel it doesn't make sense, stop treating them as objects. Think about it as a contract, a set of terms and conditions, rights and obligations.

Why required license quantities often seem non-sensical

For that reason explained above, the number of licenses you need does not always correspond to the number of times you install the software. You'll lose money by overpaying or having to pay audit penalties if you misunderstand that. Misunderstanding of the lack of that one-to-one connection is one of the main reasons for non-compliance.

With some products, you may only need one license that would cover multiple instances of that product.

Or even it may be just one instance of Microsoft Visio that your employees access from their homes using a VPN. When licensing Microsoft Visio, you need to count their home devices. So if they have 15,000 devices that have even a remote possibility to access that one copy of Microsoft Visio, you need 15,000 licenses.

And I see this mistake everywhere. A corporation buys a new server or deploys a virtual machine, and it orders a new license for it. It may already have enough licences, or licensing allows for unlimited virtual machines, etc. And thus, you may waste money.

Requirements do not depend on the quantities of instances. Requirements depend on where you deployed the software, how you deployed it, who has access, and how they use it.

So you must read the small print. You must study Product Terms and Conditions to avoid wasting your hard-earned budget.

It's not that licensing does not make sense. (Well, sometimes it doesn't.) It's our misunderstanding of licensing that is a problem.

A license is a right. It's not an object. And if you treat all the licensing from that point of view, you'll make fewer mistakes.

And that applies to Microsoft licenses or to any other vendor for that matter.

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