If you’re an IT pro, much of what you do every day is governed by practical considerations. Deployments are judged by how well they work, and when things fail it’s usually a matter of troubleshooting to find and fix the problem.

But you can throw all that common sense and consistency right out the window when it comes to the licensing restrictions behind those IT deployments. And if you’re deploying Microsoft products, innocent errors can become very expensive — quickly.

The technicalities of Microsoft licensing are daunting. Even if you’re holding a receipt for a full-price copy of Windows (client or server), the product’s license might be invalid because you didn’t follow one of the arcane rules.

In-the-trenches IT pros can’t be expected to know those rules inside and out. But it helps to understand the basic principles so that you can avoid embarrassing and potentially costly licensing mistakes.

The basic goals are simple:

  • Know what you own. If your organization has more than a few dozen seats, you need to invest in management software that can help you keep track of every piece of hardware you own and every software license you’ve purchased. And you also need to know what you’re licensing. Are you paying for processors? Individual cores? These details matter.
  • Pay for every license you use. With volume license software, it’s easy to install more copies than you’ve actually paid for. If you’re ever audited, the costs of that mismatch can be staggering.
  • Avoid paying for licenses you’re not going to use. Licensing awareness isn’t always about avoiding audits and fines; buying the wrong licensing package can cause you to pay hundreds of dollars extra for each seat.

So where are you likely to go wrong? Here are four common gotchas known to produce painful financial injuries to unwitting IT pros.

1: Your volume license needs a second license

This is the single most common mistake that businesses make when buying Windows. Volume licenses for Windows are upgrade-only licenses. For the license to be valid, they must be installed on top of a “base operating system license.”

If, for example, you are installing Windows 7 Enterprise Edition (a product available only through Volume Licensing programs), the PC must already have a licensed, qualifying Windows operating system (Business or Pro, not Home) installed on the device. That means you have to buy a new PC with Windows preinstalled and then assign your Enterprise license to it when you reimage it. If you don’t have proof of both licenses, you’ll fail an audit.

2: Activation is a technical roadblock, not proof of proper licensing

Product activation has been a part of Windows for more than a decade. Everyone who’s ever installed a Windows upgrade knows the drill: Enter a product key, click a button, and wait for Microsoft’s servers to confirm that you’ve passed the activation test.

But here’s the dirty little secret: Successfully activating Windows (or Office, for that matter) doesn’t mean you’re properly licensed. Activation is a technical measure designed to prevent some forms of software piracy. It doesn’t prove that the software is properly licensed.

And paradoxically, a PC can fail activation for all sorts of reasons, even if its license is perfectly valid.

3: Any form of virtualization should get a full licensing review

Any IT pro who has had to deal with makeshift data centers full of sometimes balky hardware has to be thrilled at the idea of software virtualization. But those virtual machines contain the seeds of actual, physical headaches.

Wes Miller, of Directions on Microsoft, a Redmond consulting firm that specializes in licensing training, says virtualization will invariably lead you to Software Assurance — a pricey but practical Microsoft licensing option.

The biggest advantages of virtualization are scaling and fault-tolerance. You need more servers? Spin up another virtual instance. Balancing loads between different parts of your organization? Move some server tasks to a different VM.

But there’s the catch, Miller points out. You have no right to move Windows Server licenses between instances unless you’ve paid for Software Assurance. Consider yourself warned.

4: Be alert for BYOD violations

Setting up PCs used to be so easy. Each worker had a desktop PC, and a privileged few had notebooks. Today, your workers are likely to accessing your corporate network from a plethora of devices, most of them only loosely under your control.

That’s especially problematic if you opted to license on a per-device instead of per-user basis. And it’s especially dangerous if your users are accessing corporate data from devices running Office Home or Personal editions, which aren’t licensed for business use.

Your best option for those situations is to invest in subscription-based software, which I’ll cover in the next installment.