Cloud Computing & License Management

Software Asset Management in the age of Cloud Computing

by Sheshagiri Anegondi (Sheshu)

The IT community has been vending the idea of cloud computing as a panacea for all the ills facing the world. Well, in a way this is true. The author has been a convert to cloud computing since more than a decade – when the idea was still in its infancy.

Cloud computing brings huge benefits in scalability, business continuity, faster implementation of applications, collaboration efficiency, ability to work from anywhere, etc.

Cloud Computing is also supposed to reduce costs. In fact it does reduce capital costs. There is no doubt about this. Cloud computing is also supposed to remove all management headaches from the end-user.
The author has some doubts on cost reduction at a TCO level and in ease of license management. This paper very briefly touches upon these two concerns.

Reduction in Total Cost of Ownership:

Established software companies who are the major players in on-premise software are nowadays aggressively moving to vend applications that reside on their public cloud infrastructures. The initial purchase costs of customers is reduced because of the change in payment models from outright purchase of licenses to some kind of subscription model.

But, can anyone imagine a software company relishing the idea of reduction in revenue? This is not only improbable, actual studies are showing that software companies are finding methods to keep increasing their revenues whilst demonstrating lowered capital costs to their customers. The magic is in the Total Cost of Ownership that comes from support costs and more so, building in stickiness to their product and their revenues from incremental functionality purchases by customers.

Ease of License Management

Just imagine the challenges of license management of on-premise software assets : the end user has all control over the deployment , functionality usage and license entitlement.

Contrast this with a SaaS based application : the end user has no control over deployment, no flexibility in customisation & product integration, no control over service levels etc.

License management in the SaaS environment looks simple but in reality, it is more complex as the customer has absolutely no control. All control resides with the SaaS vendor. Unfortunately, the onus of license management continues to remain with the customer.