In my previous article, I explored how Azure Arc enables organizations to harness the power of the Azure cloud in managing SQL Servers, regardless of where the databases reside: on-premises, at the edge, or in other cloud environments. This extension of the Azure platform allows for centralized governance, enhanced security, and advanced features without requiring a full migration to the cloud.
But once this new management approach is enabled, what services are available, and how is licensing handled? What models are available, and how do they differ from traditional SQL Server licensing?
In this article, we’ll answer these questions by delving into the SQL Server licensing model enabled by Azure Arc and comparing the different approaches to help organizations choose the solution that best fits their needs.
Features Included at No Additional Cost
Azure Arc for SQL Server provides many features at no extra charge, depending on the type of license held. If the organization already has a SQL Server license with Software Assurance (L+SA) or opts for the PAYG (Pay-As-You-Go) model, it can access advanced tools for free, such as:
-
Best practices assessment
-
Automated patching
-
Automated local backups
-
Point-in-time restore
-
TDE encryption via Azure Key Vault
For customers with a License-only (L-only) model, even without SA, key governance features are still included—such as resource inventory, failover cluster management, and support for Always-On Availability Groups.
These capabilities allow for a cloud-like management experience, even while keeping databases on local infrastructure.
Figure 1 – SQL Server enabled by Azure Arc pricing model
Value-Added Advanced Services
Naturally, Azure Arc also enables the extension of feature sets through optional paid services, which can be activated selectively based on need:
-
Microsoft Defender for SQL Server, for advanced protection
-
Log Analytics and Azure Monitor, for deep monitoring
-
Azure Policy, for configuration and compliance management
-
Purview, for data governance
-
Cluster-aware patching and long-term backups to Azure or Amazon S3, for resilient and modern operations
This modularity allows organizations to scale their management capabilities based on actual needs while maintaining control over costs.
A New Perspective on Licensing Management
Traditionally, SQL Server licensing has been based mainly on Enterprise Agreements and Software Assurance contracts, binding companies to three-year purchases and requiring accurate forecasting of future usage. However, this approach doesn’t align well with modern IT environments, which are marked by workload fluctuations, hybrid adoption, and the need for more dynamic cost optimization.
Limitations of Traditional Licensing
In the face of this new flexibility, it’s worth highlighting the shortcomings of the traditional model. In addition to rigid contracts and lack of flexibility for workloads, organizations often face:
-
Difficulty tracking actual usage
-
Risk of under- or over-provisioning
-
Unexpected and costly true-ups
-
Complexities in managing across multiple teams and locations
In hybrid and distributed scenarios, these limitations can slow down processes and increase costs.
This is exactly where Azure Arc comes in—not only to extend management functionalities but also to introduce new licensing models that overcome past limitations.
The PAYG Model: Licensing That Fits
To meet these needs, Azure Arc offers a Pay-As-You-Go (PAYG) model for SQL Server, allowing organizations to pay strictly for what they use—hourly or monthly.
The benefits are significant:
-
No upfront costs: Ideal for temporary environments, testing, or seasonal workloads.
-
Adaptability: Licensing follows actual usage, reducing waste.
-
Targeted billing: Costs can be broken down by project, department, or individual server.
-
Visibility and control: The Azure portal enables continuous monitoring, compliance checks, and role-based access.
-
Cost-saving opportunities: PAYG licenses can be included in MACC agreements and treated as OpEx, making spending more predictable.
Conclusion
The true value of Azure Arc for SQL Server lies not only in its technical capabilities but in the innovative operating model it enables: greater visibility, centralized control, process automation, and cost optimization.
Whether it’s environments under strict regulatory requirements, intermittent workloads, or gradual modernization journeys, Azure Arc offers a flexible licensing approach that aligns perfectly with real business needs.
Azure Arc truly revolutionizes SQL Server license management, moving beyond a traditional, often rigid and complex model, to embrace a dynamic, transparent model that is natively integrated with Azure cloud tools.
This evolution allows organizations to respond more agilely to the challenges of an increasingly distributed IT landscape, making the most of existing infrastructure and accelerating digital transformation.
