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Tuesday, 17 March 2015 09:29

How to successfully manage software licensing in the cloud

Posted By  Vincent Smyth

Moving on to the cloud can mean a loss of control in software licensing, Vincent Smyth, explains how IT can take back control.


The cloud has simplified many things, allowed us to achieve economies of scale, eliminated the software installation process, and enabled access of information from virtually anywhere. Contrary to popular belief though, moving to the cloud will not make software licensing – and the challenges that go along with it – disappear. In fact, the cloud introduces a new set of software delivery and licensing models that can make license management a challenge for the unprepared.

Cloud technologies need to be carefully considered by organisations considering new delivery models such as Software as a Service (SaaS) and Infrastructure as a Service (IaaS).  Closer examination of the licensing rules tied to the type of cloud being considered (public, private or hybrid) is also essential – each has its own set of license management ramifications.  

For instance, in the SaaS model, the application is commonly delivered to end users via the Internet using a web browser. SaaS delivery may help alleviate some license compliance issues, but will not prevent over-spending in software. Typically, SaaS applications such as Salesforce.com, Workday, or Dropbox employ subscription-based models. Many organisations end up overspending on SaaS applications because they buy licenses for users that rarely, if ever, use the application.  In addition, many companies  will buy more expensive subscriptions with features that users do not actually need.

Organisations need to have tools in place that will help them track usage by individual users to help control overspending. One advantage to this approach is that license compliance becomes less of an issue, as each user must be authorised before logging in to use the applications.  However, even with the SaaS model, the organisation could still be non-compliant if multiple users share a single user account.

Similarly 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. While this is one of the main attractions to IaaS, from a software licensing standpoint, organisations themselves are usually responsible for the 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 for the cloud service provider to deploy license management tools in the public cloud so that its cloud customers have the visibility and control they need to manage their entitlements.

Generally, one of the key challenges of moving to the cloud is that any business unit within an organisation can subscribe to IaaS services without permission from IT, resulting in loss of IT control and visibility. As a result, organisations may fail to set up rigorous processes to control their license consumption, which in turn can lead to additional expenses as organisations overuse or underuse software.

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

  1. 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.
  1. 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.
  1. Optimisation must be automated and continuous to leverage a deep understanding of entitlements and associated product use rights.

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. Despite the promise of simplicity, cloud licensing models have their own challenges. Organisations should understand and consider the impact on software license management before adopting a particular cloud based delivery model.  There are savings associated with monitoring cloud license consumption and performing software license optimisation, but organisations must be cognizant that they cannot rely on cloud providers to perform these tasks. It is their responsibility.

About the author

Vincent Smyth is Senior Vice President EMEA at Flexera Software, responsible for driving revenue, market share and customer satisfaction in the independent software vendor, high-tech manufacturer and enterprise account domains. Prior to Flexera Software, he has held several sales management responsibilities for Business Objects, PTC and Computer Associates. He has extensive experience of doing business across Europe and the Middle East.

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