License, Please

Staying on top of your organization’s software licenses will keep you gainfully employed and out of court.

Back when I was naïve and foolish, I made the mistake of thinking that I had actually bought the computer software I was using. It stands to reason that if I purchase something, I should be able to do what I want with it: give it away, resell it, make copies and so on. Right?

Wrong. I quickly learned in “Computers in Real Life 101” that no one really owns computer software. We “license” it, which is commerce-speak for saying that we lease permission to use it. And, just as a renter has less say about the condition and disposal of the property he rents than an owner, the licensee has less to say about what happens with his software. The licensing, as opposed to purchase, of software is one of the great devices of modern economics and, like compound interest, the windfalls it has created are enormous.

Everyone is vaguely familiar with licensing software. During the installation process of a piece of software, you’re inevitably asked to agree to the EULA (End User’s License Agreement). Most people click “I agree” and move on without really reading the fairly boring and occasionally hard-to-understand legalese. If you stop to read the EULA, though, you may find it to be an eye-opener.

When you’re in the business of selling intellectual property, you’re going to be rigorous in assuring that those licenses are honored. Issues include both the illegal copying and distribution of software within an enterprise and inadequate license purchases. Not surprisingly, Microsoft has taken an aggressive approach to “helping you” by developing methods for you to track and pay for your licenses, while drastically stepping up the management of its licenses. Microsoft’s license management techniques have (rightfully) gotten so tight, that it’s important for administrators to pay attention to how much software they have out there (licensed or otherwise), lest the corporate lawyers find themselves occupied with defending the company against a variety of legal actions.

Let’s take a look at some of the various interlocking business and software issues that revolve around licensing Microsoft software.

Automate the Audit

You can track software usage and license compliance using the Microsoft Software Inventory Analyzer, available for free from Microsoft at
, or you can use some of the tools available on the market, including the following (click on the product's name to read the reviews):

eXpress Compliance Toolkit v. 5.5
(reviewed by Robert J. Shimonski)
$13 per node for 10 nodes; volume discounts
Altiris, Inc.
Lindon, Utah

NetSupport TCO
(reviewed by J. Peter Bruzzese)
$1,999 for 100 users
Alpharetta, Georgia

Also see "Get to Know Those Nodes," Sally Miller's review of Vector Networks LANutil Elite 5.1, in the March 2002 issue.

Microsoft Volume Licensing
You can buy software in bulk from Microsoft through its Software Assurance program. Generally you get a set of all the media CDs you require, but no manuals. Microsoft uses third-party resellers to fulfill volume orders, and your volume reseller will have a listing of additional media and manual costs. Microsoft offers several licensing options. You can read more about Software Assurance at

The idea behind Software Assurance is that you buy (excuse me, lease) the software for a certain period of time. Once purchased, you no longer have to worry about buying upgrades. Instead, you buy the full package through the Software Assurance plan. You’re entitled to upgrade at a reduced price as newer versions are released.

Microsoft currently has four Software Assurance licensing options for entities larger than those for a personal user or home office:

  • Open License 6.0—For companies with five to 250 desktops, two-year commitment.
  • Select License 6.0—For companies with 250 or more desktops, three-year commitment.
  • Enterprise Agreement (EA) 6.0—For companies with 250 or more desktops, three-year commitment.
  • Enterprise Subscription Agreement (ESA) 6.0—For companies with 250 or more desktops, three-year commitment.

What’s the difference between Select, EA and ESA? It revolves around the availability of Client Access Licenses (CALs) and the pricing methodology.

Client Access Licenses
Client Access Licenses (CALs) are necessary for desktop computers that make use of server software. CALs can become really expensive. For example, say you have a 300-desktop network, and you’re interested in installing Systems Management Server. You buy an $8,000 server on which to run SMS and you purchase your SMS server license for, say, $500. Pretty cheap installation at $8,500, eh?


You also have to purchase 300 CALs at around $25 each ($7,500), plus a $500 SQL Server license and $100 CAL (SMS doesn’t include the SQL Server license or software). Total cost of deployment: $16,600—$8,100 more than you originally thought.

If you were a member of the EA or ESA program, you’d already have paid for the SMS CALs (and gotten a reduced price on them) as well as the SQL CALs because you would have told Microsoft how many desktops you have and would have paid an up-front cost per desktop. So all you’d have to buy for your SMS rollout would be the physical server computer and the SMS and SQL Server software—around $9,000.

When involved in the EA and ESA programs, you have a yearly “true-up” in which you tell Microsoft how many additional desktops you’ve bought. You then pay a price to bring these new desktops into the fold. If you paid, say, $300 per desktop when you first got your EA program going and you purchased 20 new desktops in the second year of your EA, you’d owe $600 per desktop for your true-up (because you’re buying the remaining two years for the additional 20 desktops).

Look Carefully at the License
The Product Use Rights (PUR) guide that Microsoft maintains at includes the following in the Windows XP section, “Internet-Based Services Components”:

"You acknowledge and agree that Microsoft may automatically check the version of the Product and/or its components that you are utilizing and may provide upgrades or fixes to the Product that will be automatically downloaded to your Workstation Computer.”

This small provision has been the subject of some recent controversy. The theory is that Microsoft can contact your PC to offer it automatic updates. But the worry is that Microsoft could potentially (and unknowingly) breach your company’s security in the process.

In practice, updates are managed by a component called “Internet-based Services Components.” This component allows a computer to be notified when there are patches or upgrades available for Windows XP, MSN Explorer and Root Certificates. Internet-based Services Components is turned off until the user turns it on. The user is offered the chance to turn it on at installation.

Microsoft provides a way for administrators of volume-licensing customers to install the software in such a way that they can choose which updates, installations and downloads they explicitly desire, rather than leaving this up to the user. That’s one more reason to opt for a volume license.

Monitoring your Software Licenses
Buying your software is only half of the battle. You also need to keep track of the software you’ve already bought. This is the purpose of software-metering applications. You’ve got a variety of choices, from Microsoft and other vendors.

SMS has a software-metering component that will allow you to monitor your deployed software and keep track of your licenses. When SMS 2.0 first came out, this feature didn’t work well, so I was turned off to license management through SMS. However, as service packs have been released, its capabilities have been augmented and you may find greater success utilizing software metering. Note that license metering takes a large amount of CPU and SQL server access so, in larger enterprises, you’d be better off to design a separate software-metering server into your deployment and perhaps even consider multiple boxes for this activity.

SMS software metering is customizable, so it’s not limited to Microsoft software—a feature that may be highly desirable for some.

If you don’t need all the features of SMS, take a look at the Microsoft Software Inventory Analyzer. MSIA is a free download available at This tool allows small- and medium-sized businesses to take an inventory of their Microsoft software. If you have other software licensing concerns, you need to check into third-party software.

Another alternative is the built-in License Logging service in Windows 2000. Licensing on Win2K servers is available through Control Panel | Administrative Tools | Licensing. You can set up licensing sites, monitor the licensing for various domains, and keep track of licensing throughout the enterprise. Here are the problems with licensing in Win2K: It requires administrative intervention, and administrators are just as likely to “set it and forget it” (i.e. add 10,000 bogus licenses to the count for user workstations so that the event logs don’t fill up with “out of license” errors). Microsoft’s licensing component works well—but if you decide to use it, you need to commit to using it and maintaining accurate counts. Otherwise, you defeat the purpose.

Of course, there are many third-party products to help you keep track of licensing. These include Altiris’ Compliance Toolkit and NetSupport TCO. These products vary in how they manage licenses as well as in their other features. You’ll find reviews of each following. In an upcoming issue, we’ll evaluate Executive Software’s SiteKeeper, which also falls into this category of solution. Finally, in the March issue Sally Miller evaluated Vector Networks’ LANutil Elite.

Software licensing can be an intimidating, annoying and confusing topic but—with an increasingly aggressive marketplace focusing on compliance, monitoring and activation methodologies and technologies—it’s here to stay. Developing an understanding of licensing and becoming familiar with ways to assure compliance is now a critical part of every administrator’s job skills. Failure to understand and master these skills may lead to time with the corporate legal team or worse, a trip to the unemployment line.

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