When will the traditional model of software licensing die?

When will the traditional model of software licensing die? Surely it is only a matter of time.

This week alone, we’ve seen Oracle accused of costing customers millions of pounds through its “non-transparent and complicated licensing policy”. Legal experts say that firms are being forced to pay huge penalties when using Oracle software in a virtualised environment – a set-up that is increasingly common.

Meanwhile, SAP users in the UK have called for more transparency and better value for money in the supplier’s licensing policies. Here too, a user group survey suggests that 95% of SAP customers believe the firm’s software licensing is too complicated.

Licensing has always been a point of contention for IT leaders. Computer Weekly was writing about how big software firms would rip off customers through opaque terms and conditions as long ago as the 1990s.

But now, with the growth of the cloud and software as a service, those old models of upfront licence fees with annual maintenance payments look increasingly outdated and inappropriate for a modern IT environment.

One of the biggest culprits is Microsoft, but even the world’s biggest software provider is showing early hints of realising the world has changed. CEO Steve Ballmer told shareholders this week that the firm is undergoing a “fundamental shift”, and now sees itself as “devices and services company”.

The implication between the lines, surely, must be that you don’t sell devices and services on the same basis as a conventional software licence. It would be a huge change, with enormous financial implications, were Microsoft to move to a subscription-based model more in tune with the pay-as-you-go ethos of the cloud. It clearly won’t happen overnight – but if that is the direction of travel, then perhaps even Microsoft is starting to get it right.

Of course, supporters of open source will be smiling smugly at the travails of licence-encumbered users. It is no coincidence that most of the new cloud services – Amazon, Google, Facebook etc – are built on open-source principles. Imagine the cost of an Oracle database licence for Facebook’s server infrastructure.  

There’s a bright future for software companies – their products will power the world and our lives. But there are gloomy prospects for any firms that insist on hanging on to outdated software licensing practices from a different age.Enhanced by Zemanta

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