Guide to Migrating from On-Premise Licenses to the Cloud

Introduction

Migrating from on-premise licenses to the cloud has become a key strategy for companies and users looking to modernize their systems. Instead of relying solely on software installed on local servers or individual devices, more and more organizations are opting for cloud-based solutions due to their advantages in flexibility, cost, and scalability. This definitive guide explores in detail what this shift involves—from both a technical and commercial perspective—helping you plan a smooth and successful transition.

Moving from a local environment to a cloud-based one is not only about transferring data and applications—it also involves adapting licensing models. Major software providers have made significant changes to their licensing policies, often encouraging the adoption of cloud subscription models. For example, Microsoft has adjusted its pricing and terms for traditional licenses to incentivize companies to transition to services like Azure or Microsoft 365. In this context, understanding the differences between on-premise and cloud licenses, their benefits, challenges, and the steps required is essential for making the right decision.

Below, we break down all these aspects in a complete guide. Let's get started!

What Does It Mean to Migrate from On-Premise to the Cloud?

Migrating from on-premise to the cloud means moving your systems, applications, and software licenses from a local environment (installed on your own servers or computers) to an environment hosted on remote servers accessible via the Internet. In a traditional on-premise setup, a company purchases perpetual software licenses and installs that software on its local infrastructure (such as an in-office server). In contrast, in the cloud model, the company accesses software and services over the Internet, typically through a subscription or pay-as-you-go model, without needing to maintain physical infrastructure.

On-premise licenses vs. cloud licenses: On-premise licenses generally involve a one-time payment for a copy of the software that you can use indefinitely (often called perpetual licenses). These require the organization to manage its own servers or devices to run the software, as well as updates and maintenance. Cloud licenses, on the other hand, usually operate under a subscription model (monthly or yearly) where you pay for the right to use the software or cloud service. This cloud model typically includes continuous updates, on-demand scalability, and vendor support.

Example: Think of Microsoft Office. With an on-premise license, you might buy Office 2019 or 2021 with a one-time payment and install that version on your PC (with no upgrades to newer versions unless you purchase them again). In the cloud model, a Microsoft 365 subscription (formerly Office 365) gives you access to Word, Excel, PowerPoint, and other cloud services—always in their latest versions—by paying a periodic fee. Your files can also be stored in the cloud (OneDrive) and accessed from anywhere.

Migrating from on-premise to the cloud therefore implies changing the way you acquire and use software: from owning a permanent local copy to using a service hosted externally with recurring payments. This change brings numerous advantages but also requires cultural and technical adjustments within the organization, as we will see in the following sections.

Benefits of Migrating Your Licenses and Systems to the Cloud

Why are so many companies considering migrating their licenses and systems to the cloud? Below are the main advantages of taking this step:

Scalability and Flexibility

The cloud offers virtually unlimited, on-demand resources. If your company needs more computing power, storage, or additional users with access to certain software, you can scale up with just a few clicks—without buying new hardware or additional perpetual licenses. Likewise, if you need to scale down, you can reduce resources and adjust costs. This level of flexibility is difficult to achieve in on-premise environments where hardware and licenses are fixed once purchased.

Reduced Operational Costs

By migrating to the cloud, many organizations report savings in infrastructure and maintenance costs. You no longer need to invest large amounts in physical servers, electricity, data center cooling, or hardware maintenance staff. Instead of capital expenditure (CapEx) on infrastructure and perpetual licenses, you shift to operational expenditure (OpEx), paying only for what you use. This can lead to a more predictable expense flow aligned with business growth. Additionally, software updates are typically included in cloud subscriptions, eliminating the cost of upgrading to new versions.

Global Access and Remote Work

With cloud solutions, your applications and data are accessible from anywhere and from any device with an Internet connection. This facilitates remote work and collaboration among geographically distributed teams. For example, migrating a local file server to a cloud service enables employees to access documents in real time from home or during business trips. Likewise, SaaS (Software as a Service) applications allow for seamless collaborative work (such as several users editing the same document simultaneously).

Backup and Disaster Recovery

Cloud providers maintain robust and redundant infrastructures that enhance security and availability for your systems. By migrating, you benefit from automated backups, redundant storage across multiple data centers, and built-in disaster recovery plans. In an on-premise environment, implementing this level of resilience would require enormous investments in additional hardware and backup facilities. In the cloud, even small businesses can enjoy high availability and peace of mind, knowing their data may be replicated in multiple locations.

Continuous Innovation and Advanced Technology

By using cloud services, you have immediate access to the latest technologies offered by the provider. This includes advanced tools that may be difficult to implement locally, such as artificial intelligence, machine learning, big data analytics, Internet of Things (IoT) services, and more. Cloud providers (such as Amazon Web Services, Microsoft Azure, Google Cloud, among others) continuously add new functionalities and performance improvements. By being in the cloud, your company can take advantage of these innovations without having to build them from scratch. Additionally, cloud subscriptions like Microsoft 365 ensure you always have the latest software version at no extra cost.

In summary, migrating to the cloud can provide greater business agility, facilitate growth and expansion into new markets, and free your IT team from many maintenance tasks so they can focus on strategic projects. However, to fully benefit from these advantages, it is important to consider the challenges and plan the transition properly, as we will discuss next.

Challenges and Considerations Before Migrating

Despite the many benefits, migrating from a local environment to the cloud also involves important challenges and considerations. It’s crucial to recognize them so you can mitigate risks with solid planning:

Security and Compliance

Is the cloud secure? This is one of the first questions that comes up. While cloud providers invest heavily in security (data encryption, firewalls, continuous monitoring, certifications, etc.), moving sensitive data to external servers can be a concern for some businesses. It’s essential to understand the security measures offered by the provider, properly configure data protection (for example, managing access permissions and encrypting critical information), and ensure compliance with data protection regulations and laws (such as GDPR in Europe) in the cloud environment. You should also consider where your data will be physically stored, since certain industries or regulations require data to reside in specific countries or regions.

Unexpected Costs and Expense Management

Although we highlighted cost reduction as an advantage, poor control over your cloud environment can lead to unexpected expenses. In the cloud, it’s easy to provision resources with just a few clicks, but if you don’t optimize usage, you may end up paying for more than you need. For example, forgetting to shut down virtual machines you’re not using, or provisioning more storage than necessary, can inflate your bill. To avoid surprises, it’s vital to implement good cloud financial management practices (also known as FinOps), regularly monitor consumption, and use the tools that providers offer to budget and set spending alerts. A thorough upfront analysis will help you estimate the total cost of ownership (TCO) in the cloud compared to your current on-premise setup.

Vendor Lock-in

When you migrate to a specific cloud provider, you may create a degree of dependency on its platforms, tools, and formats. Switching providers later on or returning to an on-premise environment may not be straightforward. To mitigate this risk, consider hybrid or multi-cloud architectures where possible, and favor open standards and portable technologies (for example, Docker containers, standard virtual machines, etc.) that make it easier to move workloads between different environments.

Performance and Connectivity

To use cloud services, you need a reliable Internet connection. If your company is in an area with limited connectivity or your users have slow connections, performance when accessing cloud applications may be affected. Likewise, certain applications with very low latency requirements (for example, highly latency-sensitive transactional databases) may need specific solutions such as dedicated connections or hybrid architectures where part of the service remains local. Before migrating, assess the impact on the user experience: you may need to invest in a better connection, enable local data caching, or leverage distributed cloud services that are geographically closer to your users.

Organizational Change and Training

Migrating to the cloud is not just a technical shift; it’s also a cultural change for the organization. Your IT team will need to update its skills to manage cloud services (which is different from managing traditional physical servers). Support procedures, backup policies, and even the day-to-day tasks of the IT department will change. In addition, end users may need training to get the most out of the new cloud tools (for example, learning new software versions or online collaborative features). It’s important to have a change management plan: communicate the benefits to everyone involved, provide training and support during the transition, and possibly carry out the migration gradually to make adaptation easier.

Anticipating these challenges and planning how to address them is essential. A successful cloud migration requires not only a technological decision, but also a comprehensive strategy that accounts for security, costs, performance, and people. In the following sections, we will look at how to technically carry out the migration and how to align the commercial aspects so that the process is a complete success.

Technical Approach: How to Perform the Cloud Migration

From a technical standpoint, migrating systems and licenses to the cloud is a process that must be carried out carefully. Below are common strategies and technical steps to perform the migration:

1. Initial Assessment of Systems and Licenses

Before migrating anything, perform a full inventory of your IT assets. Identify which servers, applications, and databases you have on-premise, what hardware and operating systems they use, and which software licenses are in force (including versions and details of support contracts or Software Assurance, if applicable). This assessment will help you decide what should be migrated, what could remain local (if you opt for a hybrid model), and whether there are critical dependencies between applications that you need to take into account.

2. Defining the Right Migration Strategy

Not all workloads are migrated in the same way. There are several technical migration approaches, such as:

• Lift-and-Shift (Rehosting): This consists of moving your applications as they are from your local infrastructure to equivalent virtual machines in the cloud. In other words, you recreate your server in the cloud with minimal changes, in an IaaS (Infrastructure as a Service) model. This strategy is fast and carries low compatibility risk, but may not take full advantage of the cloud (for example, you could end up paying for oversized machines if your on-premise server was underutilized).
• Replatforming (Light Refactor): This involves making small changes to the application or environment so they better fit the cloud without fully rewriting them. For example, migrating a database from a local server to a managed cloud database service (such as Azure SQL Database or Amazon RDS) instead of simply moving the database to a virtual machine. You still essentially have the same application, but you use cloud services that offer optimization, automatic backup, managed scaling, and so on.
• Re-architecting (Full Refactor): Here you redesign the application to take full advantage of cloud capabilities. This may involve breaking a monolithic application into microservices, using containers (Docker, Kubernetes), serverless services (where you don’t manage servers directly, such as AWS Lambda or Azure Functions), or other cloud-native technologies. This approach provides the greatest benefits in terms of scalability and efficiency, but is also the most demanding because it requires deep changes to code and architecture.
• Replacing with SaaS: In some cases, instead of migrating your existing application, you can choose to replace it with an existing cloud service. For example, instead of migrating your on-premise Exchange email server, you could simply move to Exchange Online (part of Microsoft 365) or Google Workspace and use those SaaS platforms. Similarly, many companies replace their on-premise ERPs or CRMs with SaaS equivalents offered by specialized providers. This option usually requires migrating data to the new system and training users on the new tool.

Each strategy has its pros and cons, and you may use more than one in your project depending on the application. For example, you might decide on a temporary lift-and-shift for certain applications to migrate them quickly, and then, over time, refactor them to optimize them for the cloud.

3. Selecting the Cloud Environment and Provider

Decide which cloud (or clouds) you will migrate to. The most well-known options are public cloud (such as AWS, Azure, Google Cloud), private cloud (infrastructure dedicated to your company, hosted externally or in your own data center but using private cloud technology), or a hybrid approach (a combination of on-premise and cloud). The choice will depend on your business requirements: budget, compatibility with your applications, regulations, and so on. Also consider the possibility of multi-cloud architectures to avoid excessive dependence on a single provider. At this stage, review the licensing offers of your chosen provider: many vendors offer migration benefits. For example, Microsoft Azure has the Azure Hybrid Benefit, which allows you to use your on-premise Windows Server or SQL Server licenses with Software Assurance on Azure virtual machines, reducing costs because you “bring your own license” (BYOL). Programs like this can significantly cut expenses if you already own existing licenses.

4. Planning the Cloud Architecture

Once you’ve chosen the target environment, design your cloud architecture. Define the structure of virtual networks, the layout of servers or equivalent cloud services, backup schemes in the cloud, and security configurations (security groups, cloud firewalls, identity and access management). It’s important to size resources correctly: for example, determining what size virtual machine you need for each migrated service, and how many instances will be required for high availability. Here, provider assessment tools can be useful; for instance, Azure Migrate or AWS Migration Evaluator can analyze your current environment and recommend cloud instance sizes. Don’t forget to plan for data migration as well: how will you move your databases, files, and other data to the new environment? Sometimes you may need data replication tools or even physical disk shipments if volumes are very large, or staged migrations to minimize downtime.

5. Pilot Testing

Before moving everything, it’s highly advisable to run a pilot project. You can select a less critical application or a subset of data to migrate first to the cloud and test the process end to end. This pilot will allow you to check whether the new infrastructure works as expected, measure response times and compatibility, and detect any configuration or performance issues. It also gives your team a chance to become familiar with the procedure. During this phase, document the steps, any errors encountered, and the solutions, so you can refine your overall migration plan.

6. Phased Migration

For complex projects, it’s best to avoid migrating everything at once; instead, move in stages or by groups of related services. For example, you could first migrate back-end applications (such as databases and internal application servers), and then front-end or customer-facing services. Or you might migrate department by department within the company. The idea is to reduce risk: if something goes wrong, the impact is contained and it’s easier to roll back or fix. Make sure you communicate migration windows and any potential downtime to users, and have a contingency plan in place (for example, if migration of a service fails, you can temporarily fall back to the on-premise system while you resolve the issue).

7. Post-Migration Optimization

Once your systems are in the cloud, the work isn’t finished. It’s time to optimize. Review usage patterns in the cloud: are you leveraging auto-scaling so you’re not paying for idle capacity? Are there underutilized resources you could consolidate? Adjust configurations to improve performance and cost efficiency. Likewise, strengthen security now that everything is live (for example, by applying continuous monitoring policies and vulnerability analysis on your new cloud instances). Also update your IT documentation to reflect the new environment and related procedures (e.g., how to request a new user or instance, what to do when more storage is needed, etc., in the cloud).

By following this structured technical approach, your migration will be far more manageable and come with fewer surprises. The key is planning and taking advantage of the tools that providers offer to ease the transition.

Additionally, don’t hesitate to seek help from experts or partners with migration experience if your internal team doesn’t have all the required skills; sometimes a timely consultation prevents many headaches down the road.

Business Approach: Impact on Costs and Licensing

Migrating on-premise licenses to the cloud also brings a significant change in your cost and licensing model. From a commercial perspective, these are the key aspects you should consider:

From CapEx to OpEx

As mentioned earlier, one of the fundamental changes is moving from capital expenditures (CapEx) to operating expenses (OpEx). Instead of buying servers and perpetual licenses with a large upfront investment, the cloud allows you to pay only for what you use, when you use it. This can be very beneficial for the company’s cash flow and for aligning IT costs with business activity (for example, paying more in months of higher usage and less in quieter months). However, it’s important to recalculate the Return on Investment (ROI) carefully: in some cases, over a very long period, an ongoing subscription might appear more expensive than a perpetual license purchased once. For this reason, companies should make financial projections comparing both scenarios. In practice, many organizations find that the benefits in agility, included updates and reduced maintenance costs make the OpEx model more profitable or easier to justify.

New Subscription-Based Licensing Models

When you migrate, you will likely leave behind traditional licenses and adopt subscription licenses. For example, if you previously purchased Windows Server or SQL Server licenses for your hardware, when moving those workloads to Azure you might license them differently: paying per hour of use for a virtual machine that already includes the license in its price, or using your existing licenses with Software Assurance to cover the instance (BYOL). In productivity software, the shift is from local office suites to subscriptions such as Microsoft 365 or Google Workspace. These subscription models often provide advantages such as automatic updates, included support and the ability to scale the number of users easily. Still, you must read the terms carefully: what happens if you cancel the subscription? How do you get your data back? Are there minimum commitment periods? Make sure you understand the cloud provider’s service contract (SLA, Service Level Agreements) so you know your rights and responsibilities.

Leveraging Existing Licenses (BYOL)

Many companies have invested heavily in on-premise licenses over the years. The good news is that several cloud providers allow you to take advantage of those investments through “Bring Your Own License (BYOL)” or hybrid use policies. This means you can bring your own licenses to the cloud provided they meet certain requirements, avoiding paying twice for the same software. Microsoft, for example, offers hybrid benefits whereby if you have Windows Server, SQL Server or Office licenses with active Software Assurance coverage, you can use them in cloud environments (Azure and also some other certified clouds) at no additional license cost or with significant discounts. This reduces the cost of migrating workloads to the cloud. It’s important to inventory which licenses you have with active maintenance and consult the provider or a reseller on how to move those rights to the cloud. Also bear in mind that certain licenses may need to remain active (by renewing Software Assurance or similar) to stay valid in the cloud.

On-Premise Price Increases and Industry Trends

An external commercial factor pushing migration is the strategy of software vendors. In recent years, companies like Microsoft, Adobe, Oracle and others have been increasing the cost of their on-premise products while simultaneously promoting cloud versions. For example, Microsoft has raised prices on local server licenses and released product versions only available via subscription. This means that sticking with legacy models can become increasingly expensive and complex from a licensing standpoint. The IT industry in general is moving toward SaaS and subscription models due to predictable revenue and continuous service improvement. For customer organizations, this translates into the fact that adopting the cloud is not only beneficial technologically, but sometimes necessary to avoid falling behind on costs compared to competitors who have already made the transition. Keeping up to date with these trends will help you make informed decisions: migrating to the cloud at the right time can prevent unforeseen cost increases or being left with outdated software because the vendor no longer prioritizes the on-premise version.

Legal and Licensing Aspects When Migrating

Changing environments does not exempt you from complying with license terms. It is essential to ensure that, after migrating, you are still correctly licensed. For example, if you had Windows Server installed on 2 physical CPUs with certain licenses, and you decide to move it to 4 virtual machines in the cloud, your current licenses might not cover that scenario without adjustments. Consult each vendor’s licensing guides for cloud environments. In some cases, migrating to the cloud can simplify compliance (because you delegate part of it to the provider in a SaaS model), but in other hybrid scenarios, you will have to manage both worlds. Having licensing advice (from your license provider or specialized consultants) can be very valuable during migration, to avoid non-compliance that could lead to penalties or extra costs later on.

Ultimately, the commercial approach to migration must go hand in hand with the technical one. A successful migration not only works well, it is also profitable and legally compliant. We recommend preparing a business case before migrating: estimating current costs vs cloud costs, identifying qualitative benefits (higher productivity, less downtime risk, etc.) and quantitative ones, and presenting it to company management to align the decision with business goals. If everything is clear on paper, implementation will be smoother and enjoy the support of all stakeholders.

Practical Steps for a Successful Migration

At this point, let’s summarise a possible practical action plan to migrate from on-premise licenses to the cloud. These steps combine technical and management aspects:

Analysis and Planning

Bring together your IT team and key stakeholders to analyse what will be migrated and why. Define objectives (for example: reduce costs by X%, improve response times, enable remote work, etc.). Perform the systems and license inventory as mentioned previously and prioritise which applications or services to migrate first. Create a project plan with estimated timelines, required resources and identified risks.

Choosing Partners and Tools

Decide whether you will carry out the migration entirely with internal resources or whether you will work with a technology partner. Many companies choose to rely on partners who are experts in cloud migrations or directly on professional services from the cloud provider for certain critical stages. Likewise, identify which tools you will use (for example, tools to migrate virtual machines, utilities to migrate databases, etc.). Have the official documentation of your chosen cloud provider at hand and train your team in those tools.

Preparing the Cloud Environment

Before migrating, get the cloud environment ready. Create the necessary accounts or subscriptions with the provider (whether Azure, AWS, Google or another), configure the virtual network, connect the cloud to your local network if needed (via VPN or dedicated links), and verify that you have the required quotas and permissions to create resources. It’s like “preparing the new house before moving in”.

Test/Pilot Migration

As suggested, choose a non-critical system to perform a test migration. Document the process and refine any technical details. If the test goes well, it builds confidence in the team and validates the timings and steps in the plan. If it goes poorly, it’s better to find out now when a critical system is not at stake; learn from the test and adjust the plan.

Communication with the Organisation

Inform users and stakeholders about the migration. Set clear expectations: possible maintenance windows, changes they will notice (for example: “from now on you will access application X via this new cloud URL”, or “on this date your email will move to Office 365, and we’ll give you a short course on how to use the new features”). Proactive communication avoids surprises and resistance. Highlight the benefits they will gain to build support: “after the migration, the system will be available even if there’s an issue at the office, and you’ll be able to access it from home,” for example.

Executing the Migration

Carry out the migration according to plan. Closely monitor progress. During critical migration phases, it’s advisable for the IT team to be 100% focused and available so that any issues can be addressed quickly. Follow the agreed phases (for example, moving databases first over a weekend, then applications the following week, etc., according to your plan). After migrating each component, run immediate functional tests to verify that everything is working properly in the cloud (user tests, integrations, basic performance).

Optimisation and Final Adjustments

Once everything is running in the cloud, collect metrics and user feedback. Does the system feel faster? Are there any access issues? Is it meeting the expected cost targets? Adjust anything that is necessary: sometimes you discover that a certain virtual machine can be downsized to save money, or that you need to enable additional security in a specific area. This is the moment to fine-tune details. Also make sure you decommission the on-premise systems that have been replaced (to save costs and avoid confusion), except where you have decided to keep a hybrid environment for redundancy.

Documentation and Ongoing Training

Update all IT documentation to reflect the new reality. Backup policies, recovery plans, user manuals, etc. must all be refreshed to align with the cloud environment. Provide additional training to users if needed, especially if they now have new tools (for example, if you migrated from traditional Office to Microsoft 365 with Teams, it may be worth running workshops to make the most of Teams, OneDrive, etc.). Well-trained users get more value from IT investments. On the technical side, fostering continuous learning on cloud platforms is crucial: technology evolves quickly and there will be new features that could benefit your organisation.

By following these steps, you’ll be well on your way to a successful migration. Every company is different, so you can adapt the order or add more steps according to your situation. The important thing is to have a structured method, avoid improvisation and keep everyone informed and aligned throughout the process.

Licendi: Your Trusted Partner for Licensed Software with Warranty

A crucial part of migrating to the cloud is making sure you have the right software licenses during and after the transition. This is where Licendi can become a key partner. Licendi is a European store specialised in selling software licenses, renowned for its commitment to legality and customer satisfaction.

In the context of your cloud migration, choosing Licendi as your license provider will give you one less thing to worry about. You can focus on the technical side of the migration while we ensure you have all the necessary licenses, fully compliant and up and running.

If your project involves upgrading certain software as part of the migration (for example, moving from an old version of Office to Microsoft 365, or purchasing Windows Server 2022 to deploy it on a virtual machine in the cloud), we will provide those licenses instantly and at competitive prices.

Conclusion

Migrating from on-premise licenses to the cloud is more than a trend; it is a natural evolution for companies seeking to innovate, cut costs and gain agility in an increasingly digital world. Throughout this guide we have explored what this change involves, from understanding the differences in licensing models to technically planning the transition, always considering both the technical and the business side of the decision.

A successful migration requires a balance between taking advantage of the benefits of the cloud (scalability, flexibility, global access, resilience) and properly managing the challenges (security, cost control, staff training). With careful planning, pilot tests and a phased approach, any organisation —large or small— can make this move while minimising risks and maximising benefits.

If you are considering migrating to the cloud, take into account all the advice provided in this guide. Adapt the recommendations to the reality of your business and do not hesitate to rely on experts when necessary. Remember that the ultimate goal is not just to “be in the cloud” because it is fashionable, but to make your company more efficient, competitive and resilient in the face of changes in the technological landscape.

Finally, make sure you have strategic allies in the process. Whether it is a migration consultant, a managed service provider or a trusted licensing partner such as Licendi, surrounding yourself with the right partners will make everything easier. With Licendi’s legal and guaranteed licenses, for example, you will have a solid and secure foundation on which to build your new cloud environment.

Don’t wait any longer! The time to modernise your infrastructure and move your licenses to the cloud is now. With the right strategy and the right partners, you will soon be enjoying a more agile, cost-effective IT environment that is ready for the future. Take the step to the cloud with confidence and take your business to the next level. Your success in digital transformation is waiting for you!