Azure Hybrid Benefit for Windows Server — An Overview
In our day-to-day engagements with enterprise customers, we still encounter a minority of businesses that do not fully understand or have not taken full advantage of Azure Hybrid Benefit, despite being mature in their licensing approach and software asset management methodologies.
In this post and accompanying video (below), myself and William Nelson, Microsoft SAM Sales Specialist at Version 1 will outline what Azure Hybrid Benefit (AHB) is, share some cost-saving tips and importantly, as AHB is a trust-based platform, look at some of the considerations around governance.
What is Azure Hybrid Benefit?
If you have invested in on-premises license for Windows Server Standard or Windows Server Datacentre, and Software Assurance is attached to those licenses, Microsoft will allow you to leverage the investment you have made in those licenses in Azure.
In doing so, you can eliminate the software rental fee associated with Windows Server in Azure; other costs still apply such as storage and compute costs however, overall, we estimate that the cost saving can be anything between 20–40% per Azure VM (the cost for Software Assurance is still a factor and needs to be carefully examined moving forward.)
Standard v Datacentre Edition
It is important to look at Azure Hybrid Benefit in a couple of ways. What editions of Windows Server are you currently licensed for with Software Assurance — more than likely most organisations will have Standard Edition and Datacentre Edition.
When we look at Datacentre Edition, there are several core differences to consider versus Standard Edition;
- In terms of Azure Hybrid Benefit, specifically Dual Use Rights; if you have Windows Server Datacentre on-premises with SA that is current, you can run simultaneous corresponding machines in Azure based on the entitlement of the number of cores that you have, at the same time as keeping those machines on-premises in a shared tenancy. The caveat here is that it must be a typical shared tenancy, which most customers will have in Azure rather than dedicated hosts. If it is dedicated hosts, then you can run this for 180 days during a migration period and then disassociate those entitlements from the on-premises environment.
- The common scenario is: Shared tenancy and VMs in Azure. If you have Windows Server Datacentre on-premises with Software Assurance, then it makes sense to apply that entitlement to the Azure VMs that you are running without incurring the cost of the license on those VMs in Azure.
In essence, leverage the benefit from the on-premises cost that you have already committed to and apply those to machines in Azure at the same time and just pay for your compute costs. This represents a quick win in terms of cost savings.
If we now consider Windows Server Standard Edition, the main difference here is that Windows Server Standard Edition does not give you dual use rights; the only exception is when you are migrating — there is an allowance from Microsoft that provides a 180-day concurrent use right during the migration.
It is essential that you understand the difference between Standard and Datacentre Edition. Remember, this is a trust-based model and if you inadvertently continue to license on-premises instances of Windows Server with Windows Server Standard Edition, and then bring those Standard Edition entitlements and use them to attain Azure Hybrid Benefit, one side of this equation is going to be non-compliant. Either your Azure Hybrid Benefit will be assigned incorrectly, or your on-premises environment (that should be licensed with Windows Server Standard Edition) is no longer accurately licensed. Consider carefully what the course of action would be if this noncompliance was discovered during an audit.
There is one key similarity between Windows Server Standard and Datacentre that is often overlooked and that is the core grants that you receive. Although one is considerably more expensive in the on-premises world than the other, the number of cores with regards to Azure Hybrid Benefit that you get from a Windows Server Standard Edition is exactly the same as the Windows Server Datacentre Edition.
Governance
As Azure Hybrid Benefit is a ‘trust-based’ model, it is paramount that you incorporate thorough governance practices to ensure that you do not breach Microsoft’s product terms. Be very careful in ensuring that your entitlement for Azure Hybrid Benefit matches the entitlement that you have within your current agreement. A thorough understanding of the following is advised;
- What has been applied?
- Where this has been applied?
- Who this was applied by and why?
- Has this been applied in an optimal manner for usage?
This is where effective Software Asset Management (SAM) practices deliver real benefit, ensuring that you are not overusing or conversely underusing the benefit, and staying compliant.
If you inadvertently breach the rules, Microsoft could approach you to engage in an audit and risk having to pay backdated costs. There is also the risk of being subject to greater controls around how AHB is enabled which can create a significant uplift in your regular Azure monthly spend, as well as potentially paying retrospective costs backdated to cover the non-compliant period.
Cost Saving Tips
1. Prioritise assigning your benefit to the highest performing series VMs
Unlike the fixed-cost of Windows Server licenses when purchased for use on-prem, the comparative cost of renting Windows Server licenses in Azure increases, depending on the level of performance of the Azure VM — the higher the performance, the higher the cost of renting Windows Server OS. Therefore, it is recommended, as a single consideration, assigning Windows Server core licenses to the highest performing Azure VMs first.
2. Prioritise assigning your benefit to VMs with the highest number of cores.
Azure Windows VMs must have a minimum of 8x core licenses assigned to comply with AHB terms. Therefore, a 4-cores Azure Windows VM requires the same number of Windows Server core licenses assigned for AHB as an 8-cores Azure Windows VM. This would increase the total cost of ownership and offer a lower return on investment.
3. Renewing Software Assurance — take a careful look at the cost-benefit for renewing SA for Windows Server Datacentre v renewing SA for Windows Server Standard. In certain scenarios such as shrinkage in your on-premises environment (and this needs careful consideration and future technology roadmap planning), there may be a case to question whether there is any advantage in having Software Assurance for Windows Server Datacentre.
4. Auto Shutdown — if you have machines that are running part-time e.g. 8am to 8pm, then it is important to understand whether it is worthwhile applying AHB to this type of machine when it is not running full time.
5. Dev Test Discount for Enterprise Agreements — if you are running non-production machines in a production subscription, could they be converted into the ‘dev test’ subscription, and using the Visual Studio or developer license entitlement and discounts, remove the cost of the Windows Server License in a ‘dev test’ environment. Consider if your machines are in the right place in Azure and are deemed the right type: either production or non-production.
There is a great deal to understand within Azure Hybrid Benefit, in terms of making sure that you have applied the benefit in the correct and most optimal manner and that you have good governance in place to ensure you are managing the risk of noncompliance.
Further Information
As Microsoft license experts, we have deep expertise in the application and management of Azure Hybrid Benefit and are happy to help with any Microsoft license queries you may have. Please go to our website or contact us with any questions.
Watch our short video below to listen to this conversation.
About the Author:
Karl is a Principal Licensing Consultant at Version 1, providing Microsoft license expertise to organisations globally and ensuring customers get the best value from their Microsoft assets.
