As Microsoft phases out older versions of Exchange Server, IT leaders face critical decisions to remain compliant and efficient. The latest licensing shifts include the introduction of the Exchange Server Subscription Edition, which requires adherence to new licensing rules that may catch small businesses off guard.
In October 2025, Microsoft deprecated Exchange Server versions 2016 and 2019, transitioning to the new Exchange Server Subscription Edition. While the software remains largely unchanged, the licensing requirements have evolved significantly. Organizations now must purchase licenses through Microsoft Volume Licensing, with Software Assurance (SA) becoming mandatory for compliance. This requirement applies to both per-server licenses and Client Access Licenses (CALs).
Software Assurance is more than just a compliance necessity; it provides numerous benefits including:
These features contribute to flexibility and potential long-term savings.
One common oversight involves Client Access Licenses (CALs). These licenses are backwards-compatible; for example, a 2022 CAL can access a 2019 server. However, forward compatibility is only guaranteed with active Software Assurance. Without SA, organizations may face additional costs in repurchasing CALs for newer servers. This risk is especially pertinent for small businesses, as licensing compliance isn’t just a technicality but a necessity that can expose them to financial liabilities during Microsoft’s audits.
Similar updates affect Windows and SQL Server licensing models. Organizations can now license virtual machines directly rather than the physical host, provided SA is maintained. Minimum purchases are set at eight core licenses per VM and 16 per environment.
SQL Server licensing now mandates SA for per virtual core licenses starting with SQL Server 2022, which is essential to retain mobility and upgrade rights.
Software Assurance also becomes crucial when older systems near end-of-support transitions, such as Windows Server 2012. Active SA is required for organizations to qualify for Extended Security Updates (ESUs) or to purchase new licenses for Windows Server 2025 and use downgrade rights effectively.
Failure to maintain active SA results in costly compliance lapses, necessitating repurchasing licenses to regain compliance—an expense that can be avoided through proactive management of SA.
Microsoft’s new commerce experience now dictates the purchasing procedure for most Microsoft 365 products, shifting from the previous Cloud Solution Provider model. Resellers like CDW provide discounts and added value, such as 24/7 support and tools for license visibility and optimization.
Microsoft licensing can be intricate and confusing, even for experienced IT teams. Consulting services from providers can assist organizations in navigating these complexities, ensuring compliance and guiding effective upgrades and migrations.
These developments underscore the necessity for businesses to re-evaluate their licensing strategies in light of the recent changes to avoid pitfalls and leverage opportunities for savings and efficiency.
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