Cloud-enabling your software licenses

Here's how to move forward while keeping your feet on the ground.

Joaquin Gamboa (left) and Marc Lindsey say that old software licensing models don't work in the cloud.

Joaquin Gamboa (left) and Marc Lindsey say that old software licensing models don't work in the cloud.

To keep track of transaction volumes, the licensed software can be enabled with software agents that monitor and report on the transaction volume during the appropriate measurement period. (Annually makes the most sense. It accounts for seasonality and avoids introducing too many burdensome electronic audits.)

Determining which transactions for a given piece of software will be relied on for pricing and then developing reliable monitoring agents are among the technical challenges transactions licenses present. Forward-thinking licensors should be motivated to overcome these challenges, however, because the rewards are worth the effort.

Licensors will be able to offer many of their potential customers a more rational pricing option that doesn't force them to purchase more license entitlement rights than they actually use initially and allows them to purchase more as needed. Because licensees won't feel cheated by the licensor, more will resist the temptation to abuse their license rights. Licensors that evolve their software designs and license practice to keep pace with the virtualization and grid computing technologies will have a competitive advantage.

The promises of virtualization and cloud computing are tempting. But when moving forward with virtualization, make sure your head is not lost in the clouds. You should be clear about what you're getting yourself into. Identify the real costs, pin down the scope of your use rights, put protections in place in case things don't go as planned, and lay a strong licensing foundation that will serve you in the future.

Gamboa and Lindsey are partners at Washington law firm Levine, Blaszak, Block & Boothby (www.lb3law.com ). Contact them at jgamboa@lb3law.com and mlindsey@lb3law.com.

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