This content is part of the Essential Guide: Navigating the Office 365 and SharePoint hybrid roadmap

Tips to align SharePoint hybrid licenses and subscriptions

If you’re considering a hybrid SharePoint license, the key is alignment between your cloud and on-premises licensing schemas.

Cloud services can augment an on-premises SharePoint deployment. But mixing SharePoint Online with on-premises...

requires rethinking some aspects of the licensing process.

To date, licensing SharePoint on-premises has been relatively straightforward, but things get more complicated with hybrid cloud-based SharePoint, or mixing on-premises SharePoint with SharePoint Online, because Office 365 cloud services are purchased through subscription fees rather than licenses. Aligning those purchases so that on-premises and cloud technologies work harmoniously is key to successfully navigating this terrain. This isn’t a major obstacle, but users should be aware of certain considerations when charting licensing costs for a SharePoint hybrid deployment.  

Is your organization using SharePoint on-premises, but considering some sort of cloud augmentation? It's a common scenario. Microsoft is making a concerted effort to promote cloud services through Office 365 with new features, potential cost savings and possibly downsizing IT -- but the reality is that most companies can't or won't move all content to the cloud. That makes SharePoint hybrid sort of a middle ground for organizations that want cloud benefits without giving up their on-premises investments.

Hybrid SharePoint licensing

Before discussing SharePoint hybrid licensing, let's take a look at the traditional on-premises scenario. Historically, SharePoint on-premises customers were required to purchase a server license for each SharePoint server, with a client access license (CAL) required for each user or device that will be accessing those servers. There was also an optional Enterprise CAL, sold on a per-user base for accessing additional features.

When cloud services are added to the mix, this relatively straightforward scenario becomes more complicated. As a subscription-based service, SharePoint Online is bought through a monthly per-user fee, instead of licensing.

The best practice is for companies to choose a plan that most closely matches their SharePoint on-premises licensing.

Roughly three years ago, Microsoft attempted to simplify licensing for hybrid SharePoint deployments by allowing Office 365 user licenses to be used as CALs for accessing SharePoint resources that reside on-premises. In other words, organizations that had both local and cloud-based SharePoint resources would have to purchase server licenses for each on-premises SharePoint server, but would not be responsible for purchasing CALs, as long as every user accessing the on-premises SharePoint resources had SharePoint Online as part of their Office 365 subscription.

Getting started

If an organization runs SharePoint in its data center and decides to extend its deployment to the Office 365 cloud, verifying that the local environment is properly licensed is the first order of business. As previously mentioned, each SharePoint server requires a server license. Unlike CALs, there is no "enterprise" upsell for the servers. Organizations must simply purchase a SharePoint server license, and any required dependency licenses, such as for Windows Server and SQL Server.

The organization will also have to purchase CALs for each person or device that will access SharePoint. Microsoft offers Standard CALs and Enterprise CALs. The Standard CAL provides access to SharePoint’s core capabilities, such as sites, communities, content management and search.

Organizations that need SharePoint capabilities beyond those covered by the Standard CAL should purchase an Enterprise CAL -- in addition to the Standard CAL -- for each user or device that will access those resources. The Enterprise CAL provides access to features such as Power View or Excel Services.

Once a company has verified that its on-premises SharePoint deployment is properly licensed, it can begin the process of extending that deployment to the cloud via Office 365 or SharePoint Online. There are numerous Office 365 plans available and Microsoft also offers two separate SharePoint Online plans. The best practice is for companies to choose a plan that most closely matches their SharePoint on-premises licensing. For example, if a company has invested in Enterprise CALs for its on premises deployment, it makes sense to choose a hosting plan that exposes enterprise-grade features.

Microsoft’s Plan 1 for SharePoint Online is more or less matched to the features that are delivered through a Standard CAL, while SharePoint Online Plan 2 is closely matched to the SharePoint Enterprise CAL. There are some minor differences between the Standard CAL and SharePoint Online Plan 1, just as there are some minor differences between SharePoint Online Plan 2 and the Enterprise CAL, but mostly these hosting plans are closely matched to their on-premises counterparts. A full feature-by-feature breakdown is available on the Office website.


Traditional SharePoint licensing required users to consider likely usage when determining CAL purchases, and subscriptions-based SharePoint Online and Office 365 take a similar tack. By ensuring the licenses are in order on-premises, users set themselves up for determining which subscriptions suit their hybrid SharePoint needs. Review features of the cloud plans carefully before buying, to ensure your organization's needs are met.  

When planning for hybrid SharePoint, organizations with large SharePoint Online deployments typically have to purchase subscription add-ons that allow for a greater storage capacity. This is a nonissue for on-premises deployments, since organizations that have their own data centers generally also have their own storage. But keep storage considerations in mind when planning a migration to SharePoint Online.

Next Steps

Experiences vary widely withSharePoint Online migrations

Office 365 licensing and features present unique challenges

Cloud features promote SharePoint hybrid deployments

Dig Deeper on Enterprise SharePoint strategy