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Simplifying the complex cloud licensing equation

When it comes to cloud licensing, the devil's in the details -- from support to the fine print. Do you know what to look for to avoid getting burned?

With multiple models and all that fine print, cloud licensing gets complicated quickly. Risks arise when IT isn't...

clear on what's allowed and what's not. And when you're not sure whom to contact for support, the complications only grow.

Prior to cloud computing, perpetual licenses were common. With these licenses, users purchase software and can use it as needed -- subject to other license restrictions. But to ensure you have access to updated software, users may need to pay for ongoing maintenance. Today, cloud creates a need for new licensing models. While it's impossible to completely cover the breadth and depth of cloud licensing complexities, here's what to watch for as you sift through the details.

It's not all bad with cloud licensing

If you use open source software, don't worry about where you're running it. Open source, by definition, is available for use without licensing fees. There are a few open source licenses with rights and restrictions, mostly related to software modifications. But if you're just running the software as-is, you should have no problem hosting it in the cloud.

However, some vendors license open source tools and offer additional features and support. Treat these versions as if they were commercial products. Carefully review licensing agreements to understand your rights and responsibilities when using that software in the cloud.

More good news is that software as a service (SaaS) users typically have a subscription license to run that service. If the service's underlying software requires a license, the SaaS provider should attend to it.

Support and other cloud licensing pitfalls

When you run third-party software in an infrastructure as a service (IaaS) or platform as a service (PaaS) environment, understanding your license is critical.

Major software vendors, such as Oracle and Microsoft, have created licensing structures for the cloud. For example, if you're running an Oracle database in Amazon Web Services' (AWS) Relational Database Service (RDS), you can "bring your own license." This allows RDS customers to use existing licenses or purchase new ones rather than paying for Oracle through AWS. Alternatively, RDS customers can choose a "license included" option for higher hourly rates. Microsoft, for its part, offers license mobility for customers who purchase its Software Assurance volume licensing. These customers can run their software on-premises or in the cloud.

If you don't want to deal with third-party vendors directly, you may be able to find their software in a cloud provider's marketplace. For example, Tibco's Jaspersoft business intelligence tool licensing starts at 48 cents per hour -- plus AWS EC2 fees -- through the AWS Marketplace. Likewise, Alert Logic's Log Manager licensing starts at $675 a month through Microsoft's Azure Marketplace.

Don't expect a cloud provider to answer questions regarding third-party software licensing. In a recent AWS forum post about Microsoft licensing, AWS urged a user: "Please consult your specific Microsoft license agreements for information on how your software is licensed."

Third-party software vendors may restrict support to particular cloud environments or hypervisors. Oracle, for example, supports several products on AWS EC2 servers that use Oracle virtual machines (VM). These products include Oracle's E-Business Suite, PeopleSoft Enterprise and JD Edwards EnterpriseOne.

Read the fine print

Pay attention to the proverbial fine print in your third-party software licenses and cloud provider agreements. Watch for clauses that grant cloud providers rights, including those to make copies of third-party software. Be sure the cloud provider is using the software the way it's supposed to, per the agreement. In addition, look for clauses that indemnify cloud providers for a software license breach. Watch for clauses restricting what you or your cloud provider can do in terms of patching or software modifications. While these clauses are not inherently problematic, they can be if overlooked.

Cloud licensing requires careful attention to detail. Always assume contracts written by another party will favor that party. When in doubt, consult with technical and legal advisers to understand the implications of your license agreements.

About the author:
Dan Sullivan holds a master of science degree and is an author, systems architect and consultant with more than 20 years of IT experience. He has had engagements in advanced analytics, systems architecture, database design, enterprise security and business intelligence. He has worked in a broad range of industries, including financial services, manufacturing, pharmaceuticals, software development, government, retail and education. Dan has written extensively about topics that range from data warehousing, cloud computing and advanced analytics to security management, collaboration and text mining.

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This was last published in January 2015

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