Software Licensing in the Cloud: What You Need to Know

Goodbye CD-ROM, hello pay-as-you-go licensing

The cloud has changed the IT game, offering business, government, and healthcare organizations that understand its intricacies increased efficiency and performance, along with significant cost savings. So how does the cloud affect software licensing? When it comes to software licensing in the cloud, it’s out with the old (goodbye, CD-ROM!) and in with the new (hello, subscription and pay-per-use!)

That’s right, the method of managing data that you’re sure to be familiar with—purchasing a single license or rights for select users—is quickly becoming antiquated as the shift to virtual and cloud hosting becomes the way of the world. The good news is that today’s rapid cloud adoption has provided opportunities to simplify and improve upon those old school methods. Here’s some things you need to know to navigate licensing in this brave new word.

Determining Software License Mobility

The first question many organizations have is related to transferring licenses—i.e., if I already have a perpetual license and decide to move to the cloud, do I now have to pay again for licensing with my cloud provider?

Answering this requires confirming whether your licensing agreements have software assurance, so it’s time to dive into the fine print! Software assurance gives you “license mobility,” allowing you to move it around and utilize it both on-premise and within the cloud. For example, Microsoft allows for mobility across SQL, SharePoint, Exchange, and others.

Next, you’ll want to ask potential cloud providers if they are approved to accept your software assurance; not all providers are approved by all software vendors for license mobility. Of course, no software assurance means no mobility, and installing software on hardware not owned by the licensee is illegal with stiff penalties.  

Subscription and Pay-Per-Use Licensing Benefits

Cloud hosts that are SaaS (Software as a Service) providers make licensing a breeze because as the name implies, they offer software as part of their services. With the subscription model, you pay a set monthly or annual fee based on the number of users accessing the software. The other option is pay-per-use (while this is considered the latest and greatest, it has actually been a model floated around since 1993 in the nascent days of the internet). The pay-per-use is really just that; use of the software is metered and you only pay for what you use, much like a utility. This is especially beneficial to those with lower volume needs or whose usage may fluctuate, but it offers benefits to all, including:

  • Convenience
  • Ease of starting up
  • Low cost of starting up
  • Month-to-month affordability
  • Near-instant software updates

Software vendors like the model, too; it gives them real-time analytics regarding product usage which allows them to rethink and refine pricing models and packaging to better meet market demands—which ultimately boosts their bottom line. It really is a win-win for all involved.

Potential Software Licensing Challenges

While software licensing is simple with a SaaS host, challenges may arise if the provider follows the IaaS (Infrastructure as a Service) or PaaS (Platform as a Service) model of hosting. Within these models, software licensing is the responsibility of the customer. The IaaS or PaaS provider will usually always include clauses that absolve them of any and all responsibility when it comes to the use of the software; most clauses will state that if compliance with the terms of the license are breached when providing services, responsibility and liability falls on the customer.

Some actions they may take that could result in noncompliance:

  • Replicating software to create redundant systems
  • Modifying software to integrate with their systems
  • Performing maintenance on software

This mean it’s up to the customer to go through their licensing agreement with a fine tooth comb to identify their licensing rights and usage before deploying it into the cloud.

There’s no denying that the cloud has made business easier for organizations across all industries leading to rapid adoption. But like any better mousetrap with rapid adoption, questions come up. Thankfully, cloud providers are quick to rise to the challenges, and this has given leaders and CIOs much more latitude in terms of licensing—as long as you always remember to read the fine print!

 Miruma Protect Office 365 | DSM

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