Managing Windows and SQL Server Licensing Costs as you Migrate to AWS

By Avinash Upadhyaya, Sr. Product Manager Technical

According to a report published by Enterprise Strategy Group (ESG), 80% of remaining on-premises workloads across the globe will be cloud candidates over the next five years. As companies continue to move these critical applications to the cloud, they face the decision to continue using their existing vendor licenses or use cloud instances that include the third-party license in the cost. Customers who have significant investments in Microsoft licenses in their data centers can leverage those licenses on AWS to save costs, if they choose the right license types.

The decision to migrate to cloud is often the beginning of a paradigm shift in a company’s cost and operations. As you are planning a cloud migration, it is important to understand the value of License Mobility. The decision to purchase perpetual licenses as opposed to subscription licenses can have a significant impact on short-term and long-term costs and your ability to avoid lock-in from a single cloud provider. Take the time to understand your legacy software providers license options, whether renewing for on premises or cloud usage and don’t assume a provider’s cloud is the best place to run their software.

In this blog, we will share insights from AWS and ESG highlighting how the decision to choose perpetual Windows Server licenses over subscription licenses can impact your Total Cost of Ownership (TCO) when you migrate to the cloud.

Perpetual vs. Subscription licenses?

Definitions:

Perpetual licenses – owned by you and cover the use of a license/version indefinitely
Subscription licenses – rented and the right to use the license expires if not renewed

The ability to bring and use existing licenses provides customers with the flexibility to rehost their applications in the cloud without making changes in code. It also reduces Total Cost of Ownership (TCO) by eliminating the need to purchase license-included instances from cloud providers. We have seen that customers who bring their existing Windows Server and SQL Server licenses to AWS save up to 50% by re-using their licenses in AWS.

A great example is a leading financial services firm that decided to bring existing Windows Server licenses to AWS in November 2020 and saved $180,000 per year in licensing costs, reducing their TCO by 30%.

Licensing Considerations

Customers who purchase Windows Server licenses after October 1, 2019 are unable to deploy those licenses in AWS (unless the license was purchased as a true-up to an Enterprise Agreement effective before October 1, 2019). SQL Server licenses with active Software Assurance do not have such restrictions, because the Microsoft licensing changes are applicable only for licenses without License Mobility.

The impact of Microsoft’s licensing changes differs between perpetual and subscription Windows Server licenses, as follows.

• Perpetual Windows Server licenses remain eligible for deployment on AWS if these licenses were purchased before the cut-off date of October 1, 2019 (or purchased as a true-up under an Enterprise Agreement effective before the cut-off date) as long as the version deployed was released before the cut-off date.
• Subscription Windows Server licenses lose eligibility for deployment on AWS at subscription renewal or when customer signs an amendment with Microsoft stating they are giving up perpetual license rights to move to a discounted subscription model.

A recent thought leadership paper by Enterprise Strategy Group (ESG) in May 2021 highlights the importance of having flexible licensing options in the cloud. According to ESG, customers can convert Windows Server subscription licenses purchased before October 1, 2019 to perpetual licenses if they “buy-out” those licenses prior to subscription renewal date. “Buy-out” will allow customers to maintain their right to continue bringing Windows Server licenses on AWS. ESG suggests that customers who run Windows Server or SQL Server on AWS can also take advantage of a modernization path in the long run, and move to AWS-native services. This can help you enjoy all benefits of AWS and further optimize your TCO.

In 2021, SeatGeek chose to containerize its Windows-based environments on Amazon Web Services (AWS). Using Amazon Elastic Compute Cloud (Amazon EC2) Dedicated Hosts, enabled them to use eligible software licenses from Microsoft; as a result, they get the flexibility and cost effectiveness of using their own licenses but the resiliency, simplicity, and elasticity of AWS. SeatGeek’s licensing use case is around Microsoft SQL Server, and by using Dedicated Hosts, the company avoided paying for both installations.

Ready to Migrate your Microsoft Workloads to AWS?

Interested in bringing your existing Windows Server and SQL Server licenses to AWS? Sign up for a free AWS Optimization and Licensing Assessment and we’ll help you discover and assess your environment, build cost models and make the most of your existing Microsoft licenses on AWS.

AWS can help you assess how your company can get the most out of cloud. Join the millions of AWS customers that trust us to migrate and modernize their most important applications in the cloud. To learn more on modernizing Windows Server or SQL Server, visit Windows on AWS. Contact us to start your migration journey today.