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Software Licensing in the Cloud

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Flexibility and a better work-life balance are amongst the most advertised benefits of cloud computing. So long as an employee is connected to the internet, they can be working, which has a positive impact on productivity, and business. Data can also be accessed on almost any device, which provides yet more freedom for your IT environment. Services can be easily scaled up or down to better adapt to what your customers and clients require, without the need for a costly in-house infrastructure to deal with varying demand.

The IT savings don’t stop there either. By opting for cloud computing, your organization needn’t shell out for in-house server storage or on-premise application requirements. No operational costs, no administrative costs, and no hardware costs.

Difficulty with the cloud comes from managing your organization’s software licenses. Software as a Service (SaaS) is unlikely to cause too much of a headache, but Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) cloud delivery models share control over what is being delivered in the cloud environment with you as an organization. For example, with IaaS, you will have control over operating systems and deployed applications, but you will neither manage nor control the underlying infrastructure. It’s the opposite for PaaS where you will have control over the deployed applications, but not the operating system.

Did software licensing models just get more complicated?

Currently, software licenses are delivered by vendors using fairly complex models based on user numbers, core or processor numbers, or just actual usage. Each model is based on generating revenue for the vendor – they’re a business too, after all – and so in order to maximize that revenue, software vendors may encourage you to move to the cloud simply to alter your original agreement, altering your licensing rights and therefore altering (and most likely increasing) the amount you’re spending.

If your rights around using software in the cloud aren’t in black and white in your agreement, then legally speaking you have no pre-existing right to use it in that way. The cloud is not necessarily an expansion of your software licensing rights and often clarification is required to decipher how the software vendor expects you to operate in the cloud. With any change in licensing rights comes a period of adjustment internally and so having an effective IT Asset Management process is more important than ever. Understanding and controlling contracts, deployments and users will ensure you don’t expose your organization to any costly risks. The better work-life balance attitude that cloud supports, could end up causing havoc with your ITAM team if it’s not monitored properly.

 Freedom and flexibility breeds confusion

At License Dashboard, we’ve seen agreements that give cloud vendors the right to access, copy and modify any software should a business sign with a third party solution. This effectively gives the cloud service provider permission to alter the software and make changes on behalf of the organization and impinge possible rights of use. These agreements also state that should these impingements result in non-compliance and therefore a breach of the license terms, they are not accountable. That’s right:

 The cloud service provider will not take responsibility for any adverse consequences.

 And that means:

You, the customer, take full responsibility for the use, and therefore misuse, of the software.

Speak to an ITAM or cloud specialist before signing a contract including this clause. There could be a way to negotiate the removal of such risks.

Software asset management and cloud computing

There’s potential to make huge boosts in productivity and therefore business growth should you decide to move to the cloud, but neglecting to keep tabs on software usage could be costly.

Software license management often becomes more complicated in the cloud, but understanding the agreement your organization has signed inside and out is the first step to avoiding non-compliance. It’s essential to know how your business is using software, and what implications your new cloud agreement has on licensing models as well as how your rights as a company are affected. In a nutshell, your software license must include software being used onsite as well as externally to cover all eventualities.


Libby Phillipps

Libby Phillipps

Libby Phillipps is responsible for improving the global reach at License Dashboard, providers of ITAM tools and services. Her enthusiasm for helping IT, Finance, Procurement and Software Asset Management professionals deliver savings to their organization shows through her thought leadership and expert commentary in IT Asset Management. Writing for ITAM Review, ITPro Portal, Compare The Cloud, ITAM Channel and more, Libby also communicates her passion and her knowledge for the industry through License Dashboard's own "ITAM News & Views". You can find her Tweeting at @LDLtd.

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Tags: Cloud Computing, Technology