“Licensing models and costs have undergone significant changes over the past year, leaving companies at an expensive crossroads if they don’t modernise and manage their licensing effectively”, says Chris Badenhorst, Head of Azure Core Services at Braintree.

Changing technologies, demanding governance and regulatory standards, higher cost management expectations and mercurial market conditions are having a profound impact on modernisation and expenditure. Companies want simplicity and transparency. Companies like Microsoft are changing their licensing structures to match these needs, and the demands of emergent technologies like AI. And these changes are impacting costs, modernisation and planning, especially as companies prioritise workloads and investments that allow them to stay ahead of emergent technologies like AI.

Perhaps one of the biggest challenges facing companies today is modernisation. Expanding their capabilities on top of legacy Azure or SQL Server environments means they’re running into structural challenges. Fragmented data, architectures are struggling and high costs are eroding any potential ROI. If your architecture is still on-premises and using older licensing models, like volume licensing, it’s also very likely you’re hitting a digital wall. You’d like to advance into new technologies, but your efforts are hampered by old processes and limited systems.

This is one of the reasons why Azure and SQL have undergone something of a transformation over the past year. Microsoft, playing heavily in the AI space with its increasingly impressive Copilot footprint and advanced capabilities, has prioritised its SQL strategy across Server, Azure and Fabric. The technologies have put AI first with native AI and data features in SQL and Azure focusing on AI-ready infrastructure and data-ready platforms. Microsoft has also introduced a plethora of features that customers can use in SQL alongside a new licensing model that simplifies costs and structures across most environments, including on premises.

SQL Server 2025 introduced some targeted changes and clarifications that improve the economics of modernising SQL estates both on-prem and in Azure. If you optimise your licensing and modernise your architecture now, then you’re building cost and operational efficiencies that will deliver value over the long term.

Think governance and security. Azure has spent the past year tightening governance and security with updates in 2025 adding richer policy and machine configuration capabilities plus built-in security and observability. Entra ID Governance has become the primary identity governance solution across hybrid and cloud and offers companies a deeper control over identity and access management.

Think pay-as-you-go licensing with Windows Server 2025 which allows you to license the operating itself. It materially changes how companies can run Windows workloads alongside Azure and Azure SQL and introduces a solid alternative to traditional perpetual keys. This can measurably cut down on costs across technical resources and overheads.

Microsoft’s change in licensing gives companies the opportunity to optimise their expenditure in their SQL server environment. You can, in a nutshell, save a lot of money, which is a very relevant conversation in South Africa today. The new structure of licensing allows you to optimise your expenditure on one hand but also comes with extra capabilities that are built into the feature set at no additional cost.

This is where having a partner with a deep understanding of the technologies and their quirks can make all the difference. Think an assessment that digs deep into your environment and looks at best practices and deployment on your existing architecture. This can potentially reduce your existing costs while optimising your systems. Think about having a granular view of your security architecture so you can catch vulnerabilities and address gaps you didn’t know existed.

Finally, think taking licensing, Azure, SQL and emergent technologies and making them work for you consistently regardless of whether you’re hybrid, on-prem, multi-cloud or completely in the cloud. It’s time to look at how your business can benefit within realistic costs and modernisation expectations.