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In this second article, we explore how software and licensing models differ between traditional server environments and cloud platforms.
Back to the blog
Again, we’ll reference Microsoft Azure for consistency.
| Topic | On Premises | Cloud (Microsoft Azure) |
|---|---|---|
| Initial agreement | Most of the time, a business will purchase a particular version of Windows or SQL Server licenses which are tied to a specific version, e.g. Windows Server 2022 or SQL Server 2025. | When utilising the PAYG option in the cloud, the cost of the Windows Server license is included in the running cost of any cloud servers (virtual machines) that you might use. This can be on any supported Windows version (currently between Server 2016 and Server 2025). |
| Licensing | I’ve rarely seen businesses purchase the optional Software Assurance that accompanies a license. Microsoft sells it separately, and it allows customers to upgrade to newer versions as they’re released e.g. from Windows Server 2022 to Windows Server 2025. | The best savings for licenses come from buying them upfront for a given period e.g. 3 Years, and this is something I frequently engage with customers on to maximise cost savings in the cloud. Other licenses like SQL Server, (which can be costly to purchase upfront), can be consumed by the hour at some of the cheapest rates available when used with an Azure virtual machine, allowing again for customers to only pay for what they use, when they need it. |
| Software Assurance | If Software Assurance isn’t purchased, when that version of the software becomes end-of-life, security updates are no longer provided by Microsoft and at that point new licensing (and potentially in most cases new hardware) is required. | If you are one of those who does have Software Assurance within your existing licenses, you are able to bring those licenses to Azure and use them (with some limitations) and therefore see an increased saving in cost. |
| Remote desktop | (Excluding Azure Local), most on-premise or server environments want to provide some form of ‘Remote Desktop’ to end users to provide access to the ERP applications or a shared desktop. This means purchasing additional licenses, such as Remote Desktop Client Access Licenses for each user, Citrix or something else that provides this functionality to end users. | The modern application delivery service (think Remote Desktop) in the Azure cloud; Azure Virtual Desktop can provide access to apps and virtual desktops with no extra licenses needed. It can utilise your Microsoft 365 licenses if you have either M365 Business Premium or M365 E3. This is easier to manage than “how many RDS users do I have” and remove another line item on the invoice. You’re already handling these licenses out to users. |
On-premise environments commonly rely on licences purchased and maintained over long periods. While this approach can feel familiar, it may also introduce constraints as software versions age.
Common challenges can include:
Cloud platforms introduce more adaptable licensing options, allowing organisations to align usage with actual needs.
Rather than committing to long-term capacity upfront, businesses can adjust environments more easily over time.
In the next article, we’ll look at management and support overheads.
About the author: Liam Freeman is the Infrastructure Director at Klipboard. Klipboard Managed Services, formerly known as Excenta, helps organisations to migrate to, optimise and manage Microsoft Azure and Microsoft 365 environments - on your own terms. Whether you want full end-to-end management or a co-managed model alongside your IT team, our Microsoft-accredited team deliver a secure, high-performance cloud infrastructure that’s tailor-made to fit your business.
Klipboard Managed Services also specialises in managing the cloud environments for companies in the merchant sector, in particular, users of Epicor – BisTrack and Intact IQ application software. Klipboard Managed Services is engaged with more than 50% of Epicor’s UK BisTrack user base, and a growing number of North American BisTrack users. We have extensive experience in providing and managing the Microsoft Azure cloud environments for firms in the merchant sector.
Find out more here: Klipboard Managed Services
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