As Microsoft phases out older versions of Exchange Server, IT leaders must navigate complex licensing changes to maintain compliance and control costs. Understanding the licensing landscape for Windows Server, SQL Server, and Exchange Server is essential for organizations seeking to avoid costly mistakes and even uncover opportunities for savings.
Exchange Server Moves to Subscription Edition
In October 2025, Microsoft deprecated older versions of Exchange Server, including 2016 and 2019, and launched the Exchange Server Subscription Edition. Although the core software functionality remains similar, the licensing rules have evolved significantly. Organizations with on-premises Exchange installations must now acquire licenses through Microsoft Volume Licensing, making Software Assurance (SA) a required component of compliance. Active SA is necessary for both the server license and client access licenses (CALs).
Read more about Microsoft Volume Licensing
Understanding Software Assurance
SA provides critical benefits beyond compliance, acting as a subscription that needs renewal every three years at approximately one-third the original license cost. Key advantages of SA include:
- Version Protection: Customers can upgrade to future releases without repurchasing licenses.
- License Mobility: Virtual machines can be moved across hosts in clustered environments.
- Bring Your Own License: Existing licenses can be transferred to cloud environments like Microsoft Azure or Amazon Web Services.
- Cold Backup Rights: Organizations can run a standby disaster recovery server without needing a separate license.
SA enhances flexibility and can lead to long-term savings across various Microsoft licensing scenarios.
Common Licensing Mistakes
One prevalent mistake in Microsoft licensing is misunderstanding client access licenses (CALs), which are backward-compatible but not forward-compatible unless covered by active SA. Organizations that forgo SA can face the costly necessity of repurchasing CALs to access updated server versions.
Small businesses often assume compliance simply based on whether software appears to work. However, the lack of proper licensing can lead to unexpected costs during Microsoft audits, where unlicensed use may be exposed.
Windows Server and SQL Licensing Updates
For Windows and SQL Server, organizations can now license virtual machines directly if SA is active, potentially reducing costs. The minimum requirement is eight core licenses per VM and 16 per environment.
Since SQL Server 2022, SA is also necessary for licensing per virtual core, critical for maintaining rights to mobility and upgrades. Additionally, when older systems like Windows Server 2012 reach their end of support, active SA or new licenses with SA are required to access extended security updates.
Conclusion
Microsoft’s updated licensing policies introduce complexities that can challenge even seasoned IT professionals. Organizations are advised to consult licensing experts to interpret these rules, maintain compliance, and effectively plan upgrades or migrations. CDW offers advisory and implementation services specifically tailored to help organizations transition to the new licensing framework and optimize their existing setups.
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