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Cloud licensing bill of rights

March 29, 2012 / Joseph Pedano

One tricky subject that tends to get overlooked when discussing cloud computing is software licensing. Historically, software licensing has been pretty cut and dry — one license for every OS or application sold. It is an approach on which many traditional software companies have made their fortunes and are banking their futures.

Unfortunately for them, the environments in which this software runs are moving toward the cloud where traditional licensing models don’t work well. Users are the ones stuck in the middle. It’s time for a licensing bill of rights. Let’s look at an example.

Say you have 300 users spread out over three shifts, with 100 employees showing up to work an eight-hour shift. You already know that no more than 100 people will be logged onto the system at one time. But you’re paying for 300 licenses. Wouldn’t it make more sense for you to just pay for 100 concurrent licenses? Wouldn’t it make more sense for you to pay for it monthly?

Let’s welcome the elephant to the cloud computing room.

Users are pushing to conserve, consolidate, and extend, whether it’s with bare metal resources or simplified management. But while infrastructure (bare metal, hypervisor, and management) has evolved, software generally has not.

Will software vendors warm up to the fact that they could make more money by embracing a concurrent (and recurring) licensing model in the cloud, as opposed to the traditional approach of one user, one time, one license?

Concurrent licensing is making current software licensing models obsolete. On top of that, there are even software licenses that dictate what type of hardware or architecture the cloud service provider must run the software on. The software industry is stuck in protection mode, with vendors trying to preserve their existing revenue model against the growing onslaught of cloud computing. This is RIAA vs. iTunes vs. consumption all over again.

To respond, several software companies have developed service provider models, only to restrict these models by prohibiting users from streaming their SPLA (service provider licensing agreement) software to a virtual desktop. So while their agreement will cover every piece of proprietary software on your computer under the sun, you won’t be able to virtualize that desktop and put it in the cloud to make it available to users anytime, anywhere, and any place. Frankly, this is like buying a finely tuned supercar, only to realize the city you live in has a maximum speed limit of 5 mph and there are cops with itchy trigger fingers at every stop sign.

Some cloud services providers have thrown in the towel and are embracing creative (and in my opinion, counterproductive) ways to circumvent these licensing issues. One increasingly common tactic is called “skinning.” This is where providers will purchase a server operating system that does not have “one user, one license” restrictions, but rather, allows concurrent users or removes the streaming guidelines. Then they apply a user interface that makes it look and feel like a desktop operating system (for example, you can make Windows Server 2008 look and feel like Windows). In doing so, you are NOT violating the software vendor’s licensing agreements. And from your user’s perspective, he thinks he’s using the software in the cloud as it was intended for a desktop, but it’s not.

This is really not an appropriate fix because the software that is being run on this skinned server consists of desktop apps that are subject to one-to-one licensing restrictions. While the cloud service provider thinks it’s pulling a fast one on Microsoft, and in fact, it might be, the reality is that it’s putting its end users in direct violation of myriad licensing agreements.

This is not a good short-term fix, and it actually compounds the problem for users and services providers alike. I propose advocacy for the licensing debate. Rules around streaming, concurrency, and multi-user licensing must be reinvented writ large.

Wouldn’t it be great if Microsoft led the charge? We believe that if the company was to evangelize this, much of the industry would follow suit, given its leadership position. The industry should adopt a concurrency model in which companies pay more per license, but are only paying for the users that log on that month. This license would not allow software vendors to restrict whose platform you run it on, nor how to configure or segregate the hardware that is being used.

To those software vendors that are afraid to update their licensing language to accommodate the cloud because they’re concerned they’ll lose the one-to-one relationship they have between license and hardware sales, I have some advice. How about a simple monitoring program that sits on the back-end and reports on how many separate users log on during a given month? Could it really be that easy? Yes, it could. VMware does it today (vCloud Usage Meter).

It’s not a perfect model, but it’s just one example of how easily the concerns of software vendors could be addressed. In doing so, they would probably open the floodgates to people embracing the cloud because corporations would be freed from a myriad of licensing and compliance concerns. The biggest thorn in a software provider’s side has been turning the one-time software license into a recurring revenue business. In a recurring model, people can’t skip a version release to save money (think Vista). Now their revenue is predictable and we don’t have to play the laughing game every two to three years when version 2xxx (insert meaningless year) comes out.

How about it, software industry? Can we wake up and smell the clouds?

Categories: General
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