On Aug. 1, under the guise of easing management, Microsoft announced
several significant licensing changes for its on-prem and cloud-based services. Starting with launch of its Azure Dedicated Host services and Azure Hybrid Benefits program, Microsoft changed its definition of outsourcing on-prem software licenses being hosted on some of its biggest rivals (Amazon Web Services, Alibaba, etc.). After Oct. 1, the often-touted cost benefits of using a bring-your-own-licensing (BYOL) model for Microsoft software in the public cloud will fall,
victims of monetization, and it’s striking fear in the hearts and budgets of enterprise IT.
Let’s be honest, this isn’t an unexpected move by Microsoft -- nor would it be for any of the major hosted providers. Licensing has become a highly complex dance as the cloud era matures, creating a challenge for enterprise data centers.
Basic Models for Cloud Licensing
Just a few short years ago, licensing in the cloud was far less complex. With four basic models and the ability to connect with a wide variety of vendors of choice, often the only concern was cloud platform compatibility. As market competition matured, licensing costs, metrics, and terms became as varied as the providers that market them.
That isn’t to say the four basic models have gone away. At the highest levels, infrastructure as a service (IaaS), platform as a service (PaaS) to software as a service (SaaS), cloud licensing typically follows these models (although vendors may have their own “names,” such as component, for them):
- Usage Based – Based on the amount of resources consumed and often the foundation of storage, virtual machine space, etc.
- Instance Based – Based on the number of CPU cores and/servers (either physical or virtual)
- Subscription Based – Based on the term length and number of users accessing the software
- BYOL — Taking on-prem licenses already owned or purchased into a cloud environment for use
Cloud Licensing, Not That Simple
Sounds easy, right? Not really. Let’s uncover some additional licensing metrics with these questions:
- Will usage-based licensing bill to the closest second or minute — or is it structured to round to the nearest hour? What add-on features will you need to activate, and even more important, how easy is it for users to inadvertently engage unauthorized features?
- How many cores (physical or virtual) will you have access to with your instance-based license, and what are the vendor minimums for core licensing? Do you need reserved instances for mission-critical applications or auto-scalability or will an on-demand environment in the public cloud suffice? If on-demand works, what controls will you secure from the public cloud provider for movement of licenses among its cores to ensure that you’ve disclosed the necessary number of licenses?
- What geographic restrictions apply to your subscription-based licenses, and will those affect performance or usability to your users? How many additional subscription licenses will you need to account for seats or named users that were previously pooled on a server-based, on-prem environment?
- Do the on-prem licenses you’re taking to the cloud carry restrictions or prohibitions against outsourcing or co-locating? Are they platform compatible?
- Can you consider integrated system licensing – leveraging your current on-prem or partner-based licenses – to gain additional discounts? Can non-critical applications run at off-peak times to leverage cost savings with your cloud provider?
As these are basic, non-vendor specific considerations for licensing, it’s easy to see how complex the cloud licensing environment is to navigate during procurement and how difficult it’s to remain compliant once deployed.
4 Steps to Maintain Cloud Compliancy
But fear not! There are ways to keep on the right side of ever-changing license conditions to remain as compliant as possible. While none of this is really “new” to data center pros, a few of them – especially the first and second one – bear repeating:
- Restrict user software download permissions, and log all downloads. Whether a seasoned IT professional downloading software into a sandbox for environment testing or an analyst looking for an easy way to model data, users have become blind to click-through licensing agreements – and software vendors know it. A 30-day free trial to get the exact software the user wants right now? “Accept.” Failure to remove it in 30 days? You’re out of compliance, and many times, subject to a vendor audit.
- Sync license renewals – all of them. It’s worth the time and energy expended to negotiate and pay the appropriate fees to sync up every available license – on-prem or in the cloud – to a targeted timeframe. From the data center to the desktop, in most enterprises, this can be a costly proposition and generate a large initial expenditure, but it will also ensure that no license is left behind to generate a large vendor penalty, loss of use, or hefty re-renewal payment.
- Negotiate, negotiate, negotiate. From true-up provisions extending the amount of time to allow compliance without adding extra cost, to vendor license movement restrictions to limiting cores, use the leverage of the procurement process to mitigate as many risks as possible at the outset.
- Audit your ecosystem, before your vendor does. Given the complexity and flexibility of licensing, and the ease with which new services can be spun up or down, make it a practice to run internal licensing and software asset management audits regularly. Whether you deploy an internally written script, engage an audit consultant, or purchase any number of applications to crawl your system, the cost of regular internal audits is significantly cheaper than being found out of licensing compliance.
Ultimately, navigating cloud licensing and its implications isn’t for the faint of heart. Microsoft’s shot across the bow of hosted/outsourced BYOL is just the latest in a long line of rapid, enterprise-affecting changes. As a result, oftentimes enterprises choose to rely solely on their vendors to present proper licensing metrics, appropriate features, and discount opportunities that align with enterprise cloud strategies and architecture. Recognizing that this allows “the cat in the hen house,” IT leaders often feel as if their options are limited. As Microsoft has shown, these feelings just might be validated.
"SCTC Perspectives" is written by members of the Society of Communications Technology Consultants, an international organization of independent information and communications technology professionals serving clients in all business sectors and government worldwide.
