Before taking on an intranet project, you really want to know what software license fees to take into account. Go ahead and call your trusted SharePoint consultant: “I want to set up a SharePoint-based intranet for 500 staff - what license fees do I need to reckon with?” You’ll get numerous ifs and buts but no specific figures.
This is by no means the fault of the consultant. He’s frustrated because he can’t help you. He would love to take a quick glance at a straightforward price table and give you a reliable figure, as we do when a caller asks about the cost of Confluence licenses for however many staff. It is because of Microsoft’s opaque and indeed bizarre license policy. If you want to set up an intranet with MS SharePoint, prepare to be unpleasantly surprised by the license fees.
The licensing of nearly every Microsoft software suite in companies, be it Cloud-based, client-based or server-based, is subject to a multitude of contractual conditions, infrastructure requirements and contingencies. So intransparent is the jungle that there are entire business models based on helping businesses to navigate it and find the best value licensing solutions for customers.
Enterprise Agreements and the Customer Price Sheet
Businesses with more than 150 PC workstations will usually enter into an Enterprise Agreement (EA) with Microsoft. The EA is a 3-year contract which offers various advantages to large businesses. These include volume discounts, a simplified ordering process for software licenses and additional support services.
So far, so good. Much more importantly, the Enterprise Agreement includes a Customer Price Sheet (CPS) agreed upon with Microsoft, which defines the cost of every licensed product relevant to the business. The licenses for each software product can be negotiated individually.
Depending on negotiation tactics, sometimes high price tags will be placed on software products which are initially of no interest to a business but to which it might eventually (want or need to) switch.
You heard right: price is negotiable! And if you enter into an Enterprise Agreement with Microsoft today and don’t currently need to use SharePoint at all, but do end up rolling it out in two years’ time, then the conditions you agreed to initially will apply. This results in the scenario where we pay three times as much for SharePoint licenses as our neighbours AOE do sitting one floor below us in the same building, or vice versa.
Ordering licenses via Enterprise Agreements takes place exclusively through large account resellers, which are nominated by Microsoft depending on the volume of license sales. Within an Enterprise Agreement, there is no option to obtain licences any other way. (A customer can also have other contracts with Microsoft, through which it can potentially obtain licenses more cost-efficiently.)
Software Assurance
A Software Assurance (SA) is compulsory for all purchased licenses within an Enterprise Agreement. With the Software Assurance,businesses can consistently use the most recent, updated version of the software, without having to buy new licenses. For example, you can upgrade from SharePoint 2010 to SharePoint 2013 with the Software Assurance. The fees for the Software Assurance for a license typically amount to around 50% of the actual license - spread over three years.
Updates are not included in the license fees at all. For that, you can pay extra. Or, more correctly, you must pay extra, as the Software Assurance is obligatory.
SharePoint sizing
The scaling capabilities of SharePoint are undoubtedly a strength of the platform.
The service and server role technologies make the architecture so flexible that up to even tens of thousands of users to work performantly with the system.
However, particularly in very large businesses, a lot of hardware and a lot of know-how are also required to do this. But let’s stick to something a little more manageable. A business with around 500 employees normally has a SharePoint farm consisting of a minimum of four servers:
- 1x database server (MSSQL)
- 2x web servers (with load balancing)
- 1x application server
A farm this size requires the following licenses:
- 4x Windows servers
- 3x SharePoint servers
- 1x SQL server
Depending on the contractual conditions, this costs between € 5 000 and € 15 000 (estimated) for the servers alone. This does not even include back-up or security services. And up to this point, no one is licensed to work with the SharePoint intranet.
SharePoint licensing
Just like Exchange, Lync or Windows Server, Microsoft SharePoint requires two kinds of licenses:
- The licenses for the servers (see above)
- The licenses for the users
This means that in addition to the server infrastructure which requires a license, the users need a license (Client Access License, CAL). This exists in three versions:
- SharePoint Foundation (free or licensed via Windows Server CALs; irrelevant when considering SharePoint servers vs. Confluence servers)
- SharePoint Server Standard CAL (allows the use of standard features only)
- SharePoint Server Enterprise (additive license; necessary for users who use at least one Enterprise feature. You can find an overview of the functional differences here.)
A user accessing SharePoint within the business needs in addition at least a Windows Server CAL, since he is accessing a network service. Usually businesses already own these CALs, since the employees need to access network drives and need to log into a Windows PC. An SQL Server CAL is not required, since this service is covered by the SharePoint server.
The fees for the CALs (like the fees for the server products) are defined in the Customer Price Sheet (see above) and in the Enterprise Agreement, and you are again obliged to buy the corresponding Software Assurance.
Okay, then. Although this still doesn’t tell you what your licenses cost, as you have yet to negotiate that, what you do know is that you’re likely to need a hefty budget. Furthermore, Microsoft’s licensing policy is showing some tendencies which partly propel the whole thing into the realm of the totally arbitrary.
Special license circumstances
SharePoint's software licensing principles are characterised by a couple of particularly strange constellations, which particularly pertain to larger businesses operating on a global scale.
Example 1: If you want to keep an SQL server redundant across scattered locations (actively or passively), you actually only need one SQL Server License. However, if the physical distance between locations is more than four time zones, two licenses are required. But all this changes again depending on whether you run the SQL server in the data center or license it by the CPU. Marvellous!
Example 2: If you as a business want to use SharePoint for collaboration with third parties (such as customers or suppliers), SharePoint CALs must be purchased for the suppliers. However, these CALs are not required if your business has no contractual relationship (!) to its customers or suppliers. On what planet is that the case? No idea. Ask Microsoft.
Example 3: If you want to use SharePoint as a platform for an internet presence, you only need the server licenses. Anonymous (!) access to the website doesn’t require a CAL. However, as soon as you have a login (named user) in the portal, you’re back in a licensing grey area.
Summary
The complex state of affairs regarding SharePoint licensing is also summarised very nicely in this Microsoft video.
The topic again becomes considerably more complicated if you include SharePoint Cloud (within Office 365).This uses a completely different licensing model that shouldn't be used when comparing server variants.
In reality it’s not possible to say with any precision what license fees will apply before starting a SharePoint project. All you know is that the fees are going to be high. Even if a consultant succeeds in laboriously detailing the specific combination of products you use and need, license fees still have to be individually negotiated through the Customer Price Sheet.
So how does licensing work with Confluence intranets? This question can be answered a good deal more concisely.
Confluence license fees: Transparent and public
Two factors are important in Confluence licensing: the maximum number of users and your organisation type (commercial or academic). That’s it. You can view the specific pricing in our Knowledge Base.
Upon purchasing your initial license, you get the license itself as well as one year of license support from the developer Atlassian, which entitles you to submit support queries, install software updates, etc. After the one-year support period ends, you can keep using the software without loss of function: you can continue working without restrictions with your existing license for as long as you want.
If you would like to continue to benefit from updates, security patches and Atlassian support after your support period ends, you can extend this support. A year-long extension to the support contract amounts to 50% of the license fee.
The one exception is Confluence Data Center. Atlassian offers a clustered solution for operating in data centers: The Data Center Deployment is optimised for high availability and instant scalability of enterprise-critical Confluence instances. The license fee fora Data Center Confluence instance is US$24,000 a year for every 1,000 users. Unlike Server licenses, Data Center licenses expire and need to be renewed annually.
That’s all there is to know about licensing for Atlassian Confluence. And this simple, transparent price model also applies to all third-party apps and functional expansions that can be used to build a Confluence-based intranet. With a calculator, you can figure out in a few minutes which license fees you need to factor in.
To purchase Confluence itself and the many verified plugins, you have the choice of going through the manufacturer or through an Atlassian partner such as ourselves.
Conclusion
If you call us and ask about license fees for Confluence, you will get a direct and reliable answer as well as information on which you can base your plans. There is no individualised Customer Price Sheet like Microsoft’s, no price negotiations, no two-pronged licensing for servers and users, and no obligation to go through any manufacturer-certified resellers (even though there are many advantages to purchasing Atlassian licenses from //SEIBERT/MEDIA.) Instead of all this, Atlassian publicly offers specific figures and these apply to all customers.
Regardless of the software solution per se, do you think it’s a good start to an intranet project if the very licensing is a project of its own? Do you find it easy to trust a developer that can’t bring itself to publicly quantify the value it places on its software? Do you enjoy the thought that the service provider downstairs from you might be paying only a third of the license fees for the same solution while you are clearly being taken to the cleaners?
I don’t.
Further information
Linchpin - social intranet based on Confluence
The anti-SharePoint speaker at Cebit: Why businesses don’t give intranet users what they want and need
MS SharePoint as a wiki: Few functions, not really compatible
Linchpin intranet projects: Full cost transparency and flexibility for customers
Choosing an enterprise intranet to support interaction and collaboration
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