Data integration and licensing: How Microsoft regulates multiplexing

Multiplexing - what is it all about? Basically, it's about how different connections are bundled together to enable access to servers and services. In this blog post, I will show you exactly what multiplexing means, how this technology works and what different types there are.

Microsoft uses multiplexing to increase the efficiency of its services - it's their secret recipe, so to speak. Licensing is an important topic: here you will learn why both direct and indirect users need to be licensed, which licence models Microsoft offers and why compliance audits play such an important role.

Finally, I will look at typical licensing scenarios and show you how companies can minimise legal and financial risks. Because nobody wants to get into legal trouble, do they? So stay tuned and make sure that your company is always on the safe side when it comes to licences!

What is multiplexing?

Multiplexing is a technique used in software and network technology. Technopia defines it as follows:

Basically, the aim is to send several data streams simultaneously via a single connection. An application server, a gateway or even a switch are components that are typically used as multiplexers/demultiplexers. They collect all possible connections and forward them as a bundled signal to the Microsoft services. This allows resources to be better utilised and efficiency to be increased.

Technically speaking, multiplexing combines several signals and transmits them via a common medium. This process is used in data communication and in networks. Common methods are:

• Time division multiplexing (TDM): Divides time into sections (slots) and assigns each data stream its own slot.
• Frequency division multiplexing (FDM): Uses different frequency ranges for different data streams.
• Code division multiplexing (CDM): Uses different codes to differentiate the data streams.
• Wavelength division multiplexing (WDM): Uses different wavelengths of light for transmission.

Space division multiplexing (SDM): Uses different spatial channels for the data streams.

To illustrate and make the topic more tangible, here is an example of TDM: It is comparable to a conference where each speaker only has a certain amount of time to speak, which enables organised and efficient communication. More information on implementing TDM can be found here: Engineers Garage: Hardware-Implementierung von TDM.

How does Microsoft use multiplexing in its technology?

Microsoft uses multiplexing to maximise the performance and efficiency of its services. One example is the use of Time-Division Multiplexing (TDM) in Skype for Business and Microsoft Teams. Several communication streams such as VoIP calls, video conferences and data transmissions are routed via shared networks. TDM enables clear separation and efficient management of these different communication streams, which ensures high service quality and reliability.

But this is precisely where the catch lies: we will now look at how this technology can become a licence drama. Because even if this technology has an optimising effect on the systems, all users or devices that access Microsoft services via it must be licensed accordingly.

Licensing with Microsoft

Client Access Licences (CALs) are required to access Microsoft server services such as Windows Server, SQL Server or Dataverse. Even if users or devices access indirectly via a multiplexing solution, everyone needs their own CAL. A few examples from everyday project work will illustrate this:

Examples of multiplexing licensing scenarios

Data integration between CRM and ERP: A sales team creates a new customer in Dynamics CRM. Partial data from this contact is then forwarded to an ERP system (e.g. SAP or Microsoft Dynamics 365 Finance and Operations). If the customer is new in the ERP system, a new data record is created and qualified there. The qualified customer data is then fed back to the CRM system. In this scenario, the ERP users access the data in Dynamics CRM indirectly. This means that all users of the ERP system who work with this data also require a Dynamics CRM CAL.

Automated processes: If Power Automate is used to export and re-import data from Dataverse, all end users accessing this data will need the appropriate licence as the automated process is considered multiplexing. If the data is exported and imported manually, this is not multiplexing.

Why do users need CALs in this case? Because the rules for multiplexing state that all users or devices accessing Microsoft services must be licensed - either directly or indirectly. In the first case, for example, all ERP users who work with CRM data must also be licensed.

Licence compliance from Microsoft

Many companies tend to only licence the direct users of their CRM or ERP systems and neglect or fail to check indirect use through integrations and multiplexing. This can lead to real licensing issues as Microsoft regularly conducts licence compliance audits to ensure that companies are complying with the licence terms and using their software correctly. A typical audit includes a comprehensive review of software deployment strategies, usage patterns and licence documentation by independent auditing firms. Breaches of licence terms can have significant financial consequences, including re-licensing and penalties. A thorough internal software asset management (SAM) strategy is therefore essential to ensure compliance with licensing requirements and minimise risks. You can find more information here: Microsoft compliance verification faq, The European Business Review or Microsoft Licence Guide.

By highlighting the most important aspects of multiplexing and the associated licensing, companies can be supported in making their software deployment more efficient and compliant.

Conclusion

To summarise, multiplexing is a fascinating topic that can significantly increase the efficiency of architectures. However, it should not be forgotten that licensing plays a central role, especially when using services such as those from Microsoft. Neglecting these aspects can lead to significant problems. It is important that companies have licensed not only the direct but also the indirect use of Microsoft services. This means looking closely at the licence models and ensuring that all users accessing these services - whether directly or via integration solutions such as middleware - are correctly licensed. This shows that licence compliance is not just a formal act, but an essential part of the IT strategy.

Precisely because multiplexing plays a role not only for Microsoft, but also for other providers, it is essential to obtain comprehensive information about the licence conditions. Microsoft's Dataverse, for example, shows how easy it is to fall into a licence trap if you don't know the subtle differences in the licence conditions. If you don't take a close look here, you run the risk of coming across a real "licence bomb" hidden in the licence terms.

Ultimately, the aim is to ensure the smooth operation and legal protection of the software used. A careful licence check and knowledge of the requirements and pitfalls of technologies such as multiplexing are essential. It is advisable to consider the data paths architecturally and to ensure that no Microsoft component provides a primary storage location (also known as primary storage) for exported data. If this situation is unavoidable, it must be clarified with Microsoft whether multiplexing is present or not. This will ensure that not only the technical, but also the legal aspects of the software and system architecture are optimally handled.

You can find out more about exciting topics from the world of adesso in our previous blog posts.