Key Management Service(KMS) activates Microsoft windows operating systems on your local network, No need for individual computers to connect to Microsoft.
KMS uses a client/server method of implementation. KMS clients connect to a KMS server, called the KMS host, for activation.

1- KMS Host that has windows server 2008 R2 installed and updated (other os can be used but Windows Server 2008 R2
is recommended to activate all kinds of windows Clients)

2- Your KMS Product key for windows server 2008 R2 (From Microsoft)

3- Administrative Privileges on your KMS host.

4- Internet connection to activate KMS online other wise you can activate by phone

1- From Start Menu Right Click on Command prompt and select Run as Administrator

2- In command Prompt Navigate to C:\windows\System32

3- Type cscript slmgr.vbs /IPK xxxx-xxxx-xxxx-xxxx-xxxx (Where xxxx-xxxx-xxxx-xxxx-xxxx is your KMS Product Key)

4- Type cscript slmgr.vbs /dlv  "to show current license information"

5- Type cscript slmgr.vbs /ato to activate KMS host through the internet.

6- Allow from windows firewall for  KMS service on TCP port "1688"

7- You will find a new service record for KMS Server when type in your command prompt nslookup -type=srv _vlmcs._tcp

8- Now you Network computer will find KMS server through KMS DNS service record then get product key direct from KMS Server and activates online.