Alexander: This is a SAMexpert podcast about Cloud Economics and Enterprise Licensing presented by Alexander Golev and Daryl Ullman.
in this episode, we are talking about the changes that Microsoft introduced to SQL Server licensing in the end of 2022, and the economic impact on the budgets.
Daryl: One of the main concerns that I've been hearing is that how are these changes that have come into place going to affect our 2023 budget?
Alexander: I would say just above half of the clients won't notice the changes in 2023, especially those who are on long term agreement like EA and they majorly buy SQL Server licenses through an Enterprise Agreement. Because economically, the biggest change that Microsoft introduced in SQL Server 2022 is that now to license SQL Server per virtual machine it requires active Software Assurance. So those of you who purchase all the SQL licenses through an Enterprise Agreement you obviously have compulsory Software Assurance and nothing changes for you.
But clients that use legacy licenses and nitty gritty tweaking of every single license in every single department and branch and may use SQL Server licensing per virtual machine, if they want to upgrade to SQL Server 2022, they will have to repurchase the licenses with Software Assurance. So if previously, for those specific configurations where they could reduce the costs and even have purely CapEx licenses, perpetual licenses, they can't do this any longer and they now need to switch to some sort of an OpEx model, either Software Insurance or subscription licenses.
And that's obviously, with the coming years, the total cost of ownership of those instances will grow. Sometimes double.
Daryl: I understand that if I'm an Enterprise Agreement customer, my pricing is set, I've got Software Assurance, there's gonna be no impact.
What about if I'm a CSP customer? Is there any kind of impact?
Alexander: In CSP, there are two types of licenses. The perpetual licenses, which have no Software Assurance equivalency. Those licenses if they're currently assigned to SQL Server virtual machines and say like single host configurations, that is absolutely fine. If you want to upgrade to 2022, you will have to switch to OpEx. You will have to switch to a subscription. There's no way now to upgrade and buy another perpetual license because that's not going to work in that configuration when SQL is licensed per virtual machine.
How long will SQL 2019 remain in support for? Say it comes next year and Microsoft says, you know what? We stop supporting it. We're not releasing any more security updates. Many companies will be compelled to switch to a new version, and by switching to the new version, they will have to review the entire SQL Server licensing strategy.
The costs will grow.
Daryl: What about actual pricing? Has SQL pricing increased?
Alexander: By 10%.
Daryl: By 10%? So just say I'm a CSP customer and I'm on a monthly model. Will my pricing increase as a new price list comes out? Or have I got any kind of price protection.
Alexander: Monthly? Immediately.
Daryl: So if I'm on a monthly program, my monthly cost will increase by an average depending on whatever terms and conditions you have with your reseller by 10%. So that's going to impact me immediately.
Alexander: Yes,
Daryl: That's a big difference compared to an EA that you are on a three year contract and your pricing is locked in for the entire duration of the contract. So that's another big benefit of an Enterprise Agreement compared to a CSP that's either monthly or it could be a yearly. That means depending when your year is going to end, you're gonna be impacted sometime in 2023.
Alexander: CSP also has three year subscriptions where essentially, you lock in the price. And here's the benefit of an EA. When you subscribe in CSP for three years you get a discount compared to annual prices, but there's no reduction.
It's not even a commitment. It's one lump sum for three years upfront. No spread payments, which still exist in EA. And no ability to reduce. Enterprise Agreement Subscription, which is a three year contract, is actually three annual subscriptions, which you can right size every year.
So EA is still more flexible. But annual subscriptions in CSP also lock the price in.
Daryl: For a year only. That means sometime in 2023, you're gonna see a 10% increase.
Alexander: Yes.
Daryl: Is there any impact on Azure or Azure pricing or license or something changing there?
Alexander: Azure licensing, interestingly, introduced a positive change.
Daryl: Okay.
Alexander: Quick intro for those who don't know. In Azure, you can either pay as your go for what you purchased from Azure directly, or you can bring your own licenses. Before December, you could get passive instances – Disaster Recovery, High availability. Passive instances didn't require licenses if you brought your own licenses to Azure. If you procured Azure instances of virtual machines through pay as you go, you had to pay for pricing for instances. From December, Microsoft finally said, fine, we are aligning Azure terms with on-premise terms.
What does it mean? If I have an active SQL Server that serves my workers with data, financial, retail, whatever. And there's a standby secondary instance or secondary virtual machine in Azure, I only will have to pay for compute costs, storage costs and whatnot, but not for the SQL Server license, which will reduce cost in Azure.
Daryl: That's actually a good benefit. That's very positive.
Alexander: There's another positive benefit of the changes in December. How many companies will that impact? Below 5%.
When you license SQL Server per virtual machine, containers inside those virtual machines are unlimited. Previously you had to count them as separate virtual machines. Great change. How many companies do use containers inside virtual machines? That's my question.
Daryl: But maybe now with that new benefit of unlimited containers, there's an opportunity for cost reduction and maybe optimization of how you use containers within SQL. If you are aware of this new benefit as a DBA or licensing manager, this is something that you should look into because potentially there could be some substantial savings going forward.
Alexander: We refreshed our SQL server cost reduction optimizations. Look at consolidation and containers. There are lots of considerations. And this is all based on the practice of what we do, how we optimize licensing. So go to SAMexpert.com. Go to the blog, to the articles, and you'll find it there. It's under the SQL Server tag.
Daryl: So if we continue on that line Alex of cost optimization and potentially some new benefits. There has been a new licensing model for on-premise use of SQL Server, something similar to Azure pay as you go based on usage. Can you just elaborate a bit on that? What's the concept?
Alexander: You can deploy SQL server on premises with the connector that is called Azure Arc, a r c, connected to Azure and have it on a pay-as-you-go model. So if you only wanna use it for a few minutes a month, that's what you're going to pay a few minutes a month.
But it must be always connected to Azure. So Azure can track that usage because that's how you are billed. Microsoft is allowing you to pay for the actual usage time on premises. That is a potential cost optimization, especially for those SQL server instances where, You have seasonal needs in using them, for example, or you only need to use it one day a week.
Daryl: I'm gonna put you on the spot here, Alex. If we are looking at pay as you go for on-premise use connected to Azure, that's only been available on the cloud. Now it's coming to on-premise licensing. A very interesting concept. Do you think that we're gonna be seeing more of that for other products as well? Is this gonna be the new future of server licensing or maybe even desktop licensing from Microsoft?
Alexander: More possibly than not. If this proof of concept goes well, Microsoft may potentially review such a possibility.
And it will convert software more into the consumption model. And that's ultimately where they wanna be.
Daryl: One of the questions, going back to SQL Server licensing is about test and dev deployments. Maybe you can tell us a bit about SQL Server Test and Dev and what are the rights via Visual Studio compared to maybe commercial licenses.
Alexander: I always advise you to listen carefully when I respond to those questions because it's a minefield.
The Basics. Visual Studio Professional Subscription, which is the cheapest Visual Studio option that you get, includes Windows Server and SQL Server as products that you may install within unlimited instances and use them for test, development, demonstration, non-production.
Through that Visual Studio subscription, as far as I remember, and I think I'm up to date, you get both Standard and Enterprise editions of SQL Server.
Here's the problem. For example, you have five, developers. And the team of IT people that is 200. And that development sandbox where those five developers work, if that is supported by the same IT team, if you are using software from the Visual Studio subscription, then the entire IT team of 200 people requires the same subscription.
See what the problem is?
Daryl: What a Visual Studio license. That's what you mean?
Alexander: Yeah. Anyone who touches somehow supports, backs up, configures, monitors with SCCM non-production workloads. Every admin requires a similar MSDN license per user.
You get both Standard and Enterprise. But for purely SQL Server development, we advise every time, deploy SQL Server Developer Edition. It's a technical equavalence of SQL Enterprise.
Daryl: Still available?
Alexander: It's completely free. It used to cost $50 per user per year. And then Microsoft made it free. Come on.
Daryl: Just say, I install SQL Server Enterprise Edition for test and dev. Commercial license. But I intended that only for development environment. And that's what I'm doing actually. Am I in a wrong? Do I have to buy an Enterprise Edition?
Alexander: It all depends on the license. If the license is a enterprise commercial license through EA, you can do whatever you want with it.
Daryl: But I have to pay for an enterprise license even though I'm using it only for development purposes.
Alexander: Yes, absolutely. If you use an Enterprise license. The alternative is to buy Visual Studio subscription.
And the other alternative is, as I just said, install SQL Server Developer.
Daryl: So I've got two alternatives that are the correct alternatives, either free Development edition that gives me the same capabilities as a commercial Enterprise edition or Standard edition, or through Visual Studio. Both are the correct way to go if I'm not using it for production.
Alexander: This is a SAMexpert podcast about Cloud Economics and Enterprise Licensing presented by Alexander Golev and Daryl Ullman.
