Our thoughts on the future of digital innovation and the cloud.

Azure VMs have two components to their costs, the compute and the licensing charges.  Both can be set up on a pay as you go model, but Microsoft has programs to help reduce the costs for both compute and licensing in Azure which can be utilized without having to alter the configuration of the virtual machines.  Compute costs can be reduced through Savings Plans and Reserved Instances, check out my other blog post on that topic, this one is to explain how to utilize the Azure Hybrid Use Benefit to save money on your licensing in Azure. 

Microsoft introduced the Azure Hybrid Use Benefit program to reduce a barrier of entry to Azure, allowing customers to utilize an existing investment in on premises server licenses with active software assurance still if their servers are being migrated into Azure.  The program includes the rights to use Windows Server licenses and SQL Server licenses in Azure with some restrictions.  The licenses need to be core based, have active software assurance and there are minimums of cores that need to be assigned to each virtual machine.  There are two models of server licenses that would qualify, Perpetual license with Software Assurance, or subscription-based licenses.  Subscription based licenses are less expensive than the initial purchase of L+SA, but more expensive than the SA renewals of the licenses.  These can be purchased on a one year or three-year term.   

One important note about the eligibility of the server licenses for AHUB, Windows Server DataCenter Cores can be utilized for both on prem datacenter hosts and Azure VMs simultaneously, while Windows Server Standard and SQL Standard and Enterprise can only be used either on premises or in Azure.  There is a six-month migration period allowance, but this benefit is intended for existing licenses that are assigned to a workload being moved up to Azure. 

Microsoft has published detailed information on the program, but one question that I get asked repeatedly is whether it is cost effective to buy more licenses to bring into Azure for the virtual machines.  Obviously, it’s easy to see the value of utilizing any Windows DC cores or available Windows Std or SQL cores in Azure to reduce the licensing costs, but there is also an opportunity to recognize significant cost savings with subscription-based Windows Server Standard cores to use in Azure.  Unfortunately, SQL Server does not show the same cost savings.   

Each Windows virtual machine in Azure requires a minimum of 8 Cores assigned to it if the AHUB is being used.  An 8 Core Pack of Windows Server Standard licenses will cost approximately $355 CAD for one full year.  When we look at the annual costs of just the Windows licensing on Azure VMs, the range goes from $7/month on a small B series VM, all the way up to over $800 per month for an 8 Core D-series VM, or a range of $84-$9600 annually.  There are absolutely some VMs that can see a reduction in up to 95% of the licensing charge by buying an annual subscription for $355 to forgo the Pay as you Go charges.  Some, you should keep on the PAYG model.  

The cost comparison for SQL is simpler, there is a standardized cost for SQL licensing based on the saize of VMs, 4 Cores or less is $4,630 for Standard and $17,350 for Enterprise annually, and the costs go up incrementally based on number of cores for the VM.  The annual subscription costs for SQL Core based licenses are actually more than the PAYG costs, so in this case, buying annual subscription licenses is not recommended, but I do recognize that large organizations could have locked in SQL subscription costs for lower on a server and cloud enrollment, which could change the recommendation.  Also worth noting, the rights to have a secondary SQL server in Azure as part of a disaster recovery program is allowed under the models of licensing the primary SQL server with either Active SA or with PAYG SQL licensing, so the ability to spin up a secondary SQL server without having to pay for the SQL license does not become a consideration here. 

The content for this post comes from an episode of The Invero Show that was hosted by Invero’s own Stephanie Yackimec, our Licensing Practice Lead. You can watch the full episode for free to learn more great tips like the ones above.

For more information on the above, or to inquire about having Invero analyze your virtual machines for AHUB related savings opportunities, please reach out to us using the contact form below.