In-Depth

Can You Cash In with Virtualization Licensing?

The virtualization locomotive just keeps on coming, and Microsoft has laid new tracks for its licensing.

Interested in jumping onto the virtualization bandwagon but still have concerns about the licensing implications? You're not alone. Microsoft's policies on licensing in virtualization environments are complex, to say the least -- but times are changing.

Over the last year, the Redmond, Wash., giant has worked to provide much more clarity around virtualization in general, and unveiled a set of licensing policy revisions that, in the end, could be a big boon to your organization's pocketbook.

Microsoft's new rules should help companies deal with the unintended -- and somewhat ironic -- consequences of going virtual: the immediate explosion of new server systems and the associated increase in total license costs.

Herein lies the problem. In the old way of managing a network, startup barriers for adding servers were relatively high: purchasing hardware, OSes and software; waiting for delivery, racking-and-stacking; and finally conducting a lengthy and sometimes manual OS and application installation.

Fast-forward to the virtual way and things are much easier. Need a new server? How about a copy, paste and rename? So you add them in droves and then wonder where all these additional licenses came from. No fun.

Taming the Growing Beast
To combat this problem and other uncertainties associated with licensing and virtual systems, Microsoft has released a policy update titled, "Licensing Microsoft Server Products with Microsoft Virtual Server R2 and Other Virtual Machine Technologies." This document was released to clarify Microsoft's definition of a virtual machine and announce additional support for licensing in virtualized environments. The policy revision revealed a number of changes to how running physical and virtual instances are counted against a business' available licenses.

A SIMPLISTIC ROI

In the end, it's the return on investment that will drive the conversion to a virtualized infrastructure. In a simplistic example, let's assume a company needs to roll out 100 Windows Server 2003 R2 Standard Edition systems, all of which are candidates for virtualization. List price for R2 Standard Edition approximates $725 per server with no included CALs. The total price for the additional deployment will reach $72,500 for the operating system licenses alone.

But because there's not always a 4:1 compression of virtual machines to physical machines, and because virtual instances are not the same as physical instances, the licensing math can get a little complicated. From a conservative performance standpoint, it is realistic to assume an 8:1 or better compression of virtual machines onto physical machines. In the 8:1 case, a purchase of 25 Enterprise Edition licenses will be required to obtain the 100 necessary virtual licenses. In your network environment, you may only deploy 13 servers to host the 100 virtual machines, but an excess of 12 physical licenses remain for other purposes. See Table 1 below for how physical and virtual licenses stack up.

List price for Enterprise Edition approximates $2,300 per server with no included CALs. Looking from a financial perspective -- even if our sample deployment only requires the functionality of Standard Edition -- an all-virtual rollout on Enterprise Edition will cost $57,500, minus the sunk cost of the 12 excess licenses that can be used for other purposes, for a total savings of $15,000. Additional savings on power, cooling and deployment costs also factor into the savings.

Bottom line? How you implement virtualization will dictate how much you save. Plenty of savings are available if the correct distribution of resources is engineered for per-processor applications. However, for those who haven't adopted the most recent versions of Microsoft software, many businesses are looking at potentially costly upgrades before they can enjoy those benefits.

For versions of Windows prior to Microsoft Windows Server 2003 R2, any running physical or virtual instance of the operating system would count against available software licensing limits. If you have 10 licenses for Windows Server 2003, you can run 10 copies of it either on a physical machine or virtually using virtualization software.

Table 1

Table 1. Buy one get four free. That's one physical and four virtual and no more.

Though this is essentially no change to the established practice for OS licensing, one useful change now grants the ability to store copies of running virtual machines on a file server for backup and disaster recovery purposes. This new benefit makes fully legal the process of creating full OS snapshots of production systems and storing them on tape or on file servers for emergency purposes.

The game changes, however, with Windows Server 2003 R2 Enterprise and Datacenter Edition. In what appears aimed at enticing customers to upgrade from R2 Standard Edition to R2 Enterprise Edition, Microsoft grants users of the most recent server operating system version four additional virtual OS instances for every licensed physical instance. The text of these "Expanded Use Rights" for R2 reads, "Each software license allows you to run, at any one time, one instance of the server software in a physical OS environment and up to four instances of the server software in virtual OS environments on a particular server." If you're one of the few who run Datacenter Edition, you're bumped to an unlimited number of virtual servers on a single physical server.

It's important to note that by leveraging Microsoft's "downgrade rights" clause, an organization is allowed to run a previous version of the software in place of the R2 version.

Is that All?
The changes don't stop with the operating system. Licensing for some of the more expensive per-processor Microsoft servers like SQL Server 2005, ISA Server 2004 and BizTalk Server 2004 is also updated to include virtualization verbiage.

For the most recent versions of these servers, software inside a virtual environment is licensed based on the number of virtual processors rather than the number of physical processors on the server. This limitation holds true no matter if the number of virtual processors is greater or fewer than the number of physical processors on that server. This can have a substantial impact in one of two ways on how these servers are deployed in a virtual environment.

For the first, remember that system virtualization tools allow for the concatenation of multiple physical machines onto the same server. As an example, imagine four two-processor servers are virtualized onto a single four-processor host. If each virtual server is configured to use two processors, then the total number of virtual processors on that physical host is eight.

According to Microsoft's updated policies, eight per-processor licenses would need to be purchased for the Microsoft servers hosted on those virtual systems. Therefore, although a savings in Windows licenses is realized by aggregating physical servers onto virtual ones, no economies are gained for the licenses associated with SQL, ISA and other servers that may be installed on top of that Windows license.

Secondly, for some Windows servers, virtualization's improved rollout and resource assignment capabilities may help. As was discussed before, in the old paradigm (one service per physical server) barriers to change were difficult. Because purchasing additional hardware for existing servers is time-consuming and costly, new servers added to the environment are typically purchased with the greatest number of processors and RAM available for the chassis type.

Once virtualized, server resource use can be more granularly defined. If you find out after deployment that two-processors are overkill on your SQL server, then you can reconfigure the virtual machine to run on only one. Don't need six gigabytes of RAM? Reconfigure for two and reboot.

This benefit of virtualization means that Windows servers previously over-spec'ed at the time of purchase can now be right-sized for greater efficiency of available hardware resources. If businesses convert their four-processor instances to two-processor and/or two-processor to one-processor, they stand to realize a halving of their licensing costs. Your mileage may vary.

DR on the Cheap
Inactive instances of Microsoft products, like those running on a failover server at a disaster recovery site, do not require extra licensing. For Paul Hicks, IT director for Eskanos and Adler, a commercial law firm headquartered in Concord, Calif., this perk played a role in his decision to migrate to virtual infrastructure.

"While the primary drivers for our enterprise virtualization project were certainly the enhanced high availability and DR capabilities," Hicks explains, "the ability to have virtual machines running at our DR site without requiring additional Microsoft licensing was economically attractive."

Calling All CALs
Client Access Licenses (CALs) are also affected by virtualization. According to the new rules, each CAL allows any number of OS environments on a particular client device -- virtual or physical -- to access the server software. Separate CALs for physical and virtual machines on the same physical device are not necessary. This change holds true for Windows servers like Exchange Server 2003, SQL Server 2005 and Windows Server 2003, as well as the associated TSCALs for connecting to Terminal Services.

Figure 1
Figure 1. Fewer gets you more with the five-for-one Enterprise Edition deal.

Users of VMware Workstation, VMware ACE and Microsoft Virtual PC -- virtualization applications that operate at the desktop level -- enjoy the greatest benefit from this change.

For example, should a company wish to provide multiple desktop environments to its user base via one of these tools, they are not required to purchase additional CALs for those OSes' connections to file servers, mail servers and terminal servers. This clarification can mean a significant reduction in rollout costs to support multiple desktop environments.

Virtual Support
This ability to expand systems into the virtual space is great, but only if it's supported by the manufacturer. In tandem with the clarification on licensing, Microsoft has updated its support policy for Microsoft software running in non-Microsoft hardware virtualization software like VMware's ESX Server. This Knowledge Base article discusses how Microsoft support will handle issues when the operating system in question lies in a virtualization environment.

According to the document, businesses with a Microsoft Premier-level support agreement get special dispensation when calling in support cases. "Microsoft will use commercially reasonable efforts to investigate potential issues with Microsoft software running in conjunction with non-Microsoft hardware virtualization software," reads the article. A problem called in to Microsoft support may need to be replicated outside the virtualization environment, but for Premier customers it will not necessarily be required.

Non-premier customers beware: You don't qualify for the same level of virtualization support. "For Microsoft customers who do not have a Premier-level support agreement, Microsoft will require the issue to be reproduced independently from the non-Microsoft hardware virtualization software."

With either support level, Microsoft relates the obvious disclaimer that they do not provide any warranty associated with running their product on top of that of another company.

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