INSIGHT: Hidden complexities of software licensing in the cloud

“Contrary to popular belief, moving to the cloud does not make software licensing challenges disappear…”

The cloud has made many things simpler.

From eliminating the software installation process, to enabling access of information from virtually anywhere, and allowing businesses to scale up or down quickly, the list of benefits is substantial.

Contrary to popular belief however, moving to the cloud does not make software licensing challenges disappear.

Instead, the cloud brings with it an entirely new set of complexities that may pose problems for the underprepared.

In order to ensure efficient control of what can be one of the most costly IT assets, cloud technologies need to be carefully considered by organisations considering new delivery models like Software as a Service (SaaS) and Infrastructure as a Service (IaaS).

Closer examination of the licensing rules tied to the type of cloud (public, private or hybrid) is also essential, as each has its own set of licence management ramifications.

In the popular SaaS model, an application is delivered to end users via the Internet using a web browser.

Typically, SaaS applications such as Salesforce and Dropbox use subscription-based licenses which often mean that organisations end up over-spending on licenses that are under-used, or on subscriptions with features they don’t really need.

In this way, while SaaS delivery may alleviate some compliance issues, it certainly doesn’t mean a decrease in overall costs.

To get around this, organisations need to have tools in place that help track usage per individual. One advantage of this approach is that license compliance becomes less of an issue, since each user must be authorised before logging in.

Bear in mind though, even with an SaaS model, an organisation could still be non-compliant if multiple users share a single account.

In the IaaS model, the (public) cloud service provider offers the basic server and networking infrastructure to the customer.

It is typically a virtualised server environment that may provide computing elasticity, allowing more server capacity when needed to handle peak loads, and less capacity when the load is smaller.

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While this is one of the main attractions to IaaS, from a software licensing standpoint, organisations are typically responsible for software licenses they move to the cloud provider’s infrastructure, even though the provider may own the servers, operating system and virtualisation platform.

In comparison to running the software on-premises in the customer’s own datacenter, IaaS complicates license management due to the dynamic nature of the cloud environment, the lack of clarity from many vendors regarding product use-rights and the impact cloud usage has on licensing terms.

When considering IaaS, it’s critical to have license management tools that can be deployed in the public cloud so that cloud customers have the visibility and control necessary to manage their entitlements.

Overall, one of the key challenges of moving to the cloud is that any business unit within an organisation can subscribe to IaaS services without IT permissions, resulting in loss of IT control and visibility.

As a result, organisations may fail to set up rigorous processes that control their license consumption which can lead to additional expenses as they overuse or underuse software.

So what can companies do to successfully manage software licenses in the cloud?

• Keep the IT department and/or the license manager as the gate keeper for any licenses.

This can be done via enterprise app stores that allow users to select the application they want to use and which then have the ability to check for license availability during the approval workflow.

• Monitor the usage of all licenses across cloud and on-premises environments, making sure they are always used at their optimum capacity. Processes must be set up to manage the full lifecycle of these licenses.

• Optimisation must be automated and continuous to leverage a deep understanding of entitlements and associated product use rights.

Despite the promise of simplicity, cloud licensing models have their own challenges.

Organisations should understand and consider the impact on software license management before jumping into a particular cloud based delivery model.

Both the compliance challenges that exist when moving on-premises licenses to the cloud, coupled with the effort required to optimise the cloud-based entitlements, should not be underestimated.

While there can be savings associated with monitoring cloud license consumption and performing software license optimisation, organisations cannot rely on cloud providers to perform these tasks.

By Tom Canning, VP APAC, Flexera Software