Server virtualisation, multicore processors and capacity
on demand do not fit with traditional models of software licensing,
and IT managers are facing growing complexity as suppliers struggle
to find a solution
Advances in technology are leading to a change in software
licensing models. But as suppliers are forced to revisit their
licences to offer more flexible deals, the task of IT directors in
managing these arrangements is becoming more complex.
The technologies that are driving this change include server and
desktop virtualisation, multicore processors, software as a
service, utility or grid computing, and hardware capacity on
demand.
Users can find themselves with multiple types of licences
depending on which hardware or software they are using.
With no industry standard for licensing, companies end up paying
different types of licences for the operating system, database and
middleware components of their IT systems.
Dave Reynolds, technical services manager at Hampshire County
Council, said server licence management had been "a headache" over
the past few years.
Hampshire County Council shares services between Hampshire
District and Borough Councils and various local NHS organisations.
It is a Citrix user with a 250-machine server farm, running
Microsoft Office applications over the Citrix virtualised
environment.
"With our shared services agenda, getting an organisation like
Microsoft to understand that we need to license Office desktops for
NHS departments and district and borough councils was difficult,"
he said.
"We negotiated a very open Enterprise Agreement with Microsoft
six months ago to ensure we can do that. In the Citrix world, they
have been very flexible with us from the beginning."
Another organisation, the Association of Teachers and Lecturers,
has been using virtualisation to help it to recover quickly from
systems failures and maintain business continuity. It faced
licensing issues when it implemented a VMWare virtual
infrastructure in July 2005.
Ann Raimondo, the ATL's head of IT, explained that, early on,
some application suppliers were reluctant to support the
association running their applications in a virtual environment
because of the licence and support complications.
Server virtualisation
Server virtualisation technology allows users to pool their
computing, storage and other resources across a number of hardware
platforms to make more efficient use of those platforms.
It uses the concept of virtual machines - software compartments
that allow software to run independently from the hardware they
reside on.
From a software licensing perspective, the issue is that
virtualisation allows users to run multiple instances of an
application, or shift it from one machine to another, which can
violate some licensing agreements.
Neil Macehiter, partner at analyst firm Macehiter Ward-Dutton,
said, "Server virtualisation is undoubtedly forcing software
suppliers to reappraise their licensing models. Though the
technology is nothing new, the licensing models of many software
suppliers do not allow for flexibility."
For example, with situations where the user licenses the
application by the number of processors they are using (per-CPU
licensing), if the user moves their software from a two-processor
machine to a three-chip machine, or if they run it on two virtual
machines, they could violate their licence.
Roy Illsley, senior research analyst at Butler Group, said
Microsoft was one of the few suppliers that have addressed the
virtualisation issue.
In October 2005, Microsoft said, "The licence for the upcoming
Windows Server R2 enterprise edition will allow four virtual
instances at no extra cost."
Illsley said, "This will inevitably lead other suppliers to
review their licensing policies."
Multicore processors
Multicore processors have multiple processing units, or "cores".
They work in conjunction with hyper-threading technology, which
allows applications to be run as simultaneous "threads".
Multicore processors pose a similar licensing conundrum to
server virtualisation for suppliers, and consequently for IT
managers.
Because applications are often licensed per processor, if the
user were to run them on a multicore chip, some suppliers would
consider this to be equivalent to running them on multiple
processors. So, in effect, it means the user is not paying in
proportion to what they are using.
"There is no standard way to deal with this yet - unless you are
a games player. The Playstation 3 will have eight cores, using
multiple cores to parallelise processing. But the enterprise
software companies are lagging behind [games producers] and have
not even got an idea of what it means for the user," said
Macehiter.
Some suppliers, like Microsoft, have decided to charge per
processor, rather than per core. Others, such as Oracle and BEA,
will charge a percentage of a licence per additional core. And
others, including IBM, have different licensing plans depending on
the operating system that is in use.
"A price delta for additional cores is reasonable, such as the
25% charged by BEA," said Andy Butler, vice-president at analyst
firm Gartner. "The additional core does not provide double the
performance."
Ilsley said, "What suppliers are going to come up with is a
number of different ways to license software. Virtualisation and
multicore will really test the market."
Software as a service
Along with virtualisation and multicore processors, several
developments are affecting traditional licensing models. One
prominent example is software as a service, which delivers a hosted
application over a network and gives the user a fixed monthly fee
for their usage.
"Software as a service has changed the licensing paradigm," said
Macehiter. "As with many services, if you think of your mobile
phone service or your utility bill, the licensing is based on a
subscription, and it is paid for on a monthly basis for as long as
you use the service."
Grid computing
The software grid, which uses virtualisation to run software
over many servers, is another technology that makes licensing
problematic. Grid computing raises the same licensing issues as
server virtualisation.
Capacity on demand
Hardware capacity on demand is another potentially thorny area
which may require application licencers to change their charging
models.
This is where hardware suppliers such as IBM and Sun supply
hardware with spare processors that can be turned on or off as they
are required. Like software as a service, the user theoretically
pays in accordance with their usage.
Gartner research vice-president Alexa Bona said, "Although these
developments can reduce hardware costs, software licensing charges
have not been addressed. The software suppliers generally charge
for the total potential capacity, irrespective of what is used.
There is no recognition of the utility-based pricing approach.
"Moreover, no mechanism is in place for software suppliers to
measure when and for how long these temporary capacity on demand
processors were active. Consequently, potential savings in hardware
can be eliminated by rising software fees that are based on the
total potential system capacity."
Macehiter said that one way forward for software licensing may
be to licence in terms of the individual functions an application
carries out.
"It is having an impact on the traditional software licensing
models, because you are looking at a capability, rather than some
larger suite. For example, a licence could cover the capability you
get from a piece of database," he said.
This type of licensing model, championed by the open source
world, may provide the way forward. "This is on the negotiating
table. Both users and suppliers are moving to a model where you do
not have to guess your software usage," Macehiter said.
Another alternative is to license monthly. "We are increasingly
seeing a transition away from the perpetual licensing model to a
subscription model - Sun with Solaris 10 and Java Enterprise
System, and Red Hat with Linux charge a monthly subscription.
"It makes it more predictable, and there is not a big price to
pay up-front. It also spreads the payment," said Macehiter.
Microsoft's Software Assurance illustrates this shift in thinking,
he added.
"The challenge is that many of the more traditional suppliers'
business models are not fundamentally geared to this approach,"
said Macehiter.
However, Illsley said he thought that the industry was unlikely
to find a consensus over licensing - certainly not from the
users.
"I do not think a user-led standard will be established. It
would be useful to have one. For one thing, it would help the
little guys that do not have the clout to go to a company and
demand an enterprise deal," he said.
Tips for managing licences on emerging
technologies
- For multicore processor licences, use Microsoft and BEA's
per-processor charging policy to negotiate a maximum of 25% uplift
for dual-core processors
- Encourage software suppliers to price by the socket (or module
where two CPU chips can share a socket)
- Negotiate contracts that recognise partitioning of servers
- Demand to know suppliers' utility/virtualisation pricing
strategies
- Investigate the suitability of alternative licence metrics
offered by suppliers
- If you are looking for databases for ERP or other business
applications, investigate buying them through the application
supplier.
Source: Alexa Bona, research vice-president,
Gartner
Read article:
How software licence buyers can flex their
muscles
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