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Enterprise cloud licensing basics

Managing software licenses is challenging, and cloud only increases that complexity. Start early; keep licensing models in mind when building clouds.

Managing licenses has never been an easy process. It requires administrators to analyze concurrent licensing models, user accounts, various levels of licensing for a given product and upgrade paths for future software packages. Once cloud computing came on the scene, one thing became clear: Technology has changed; most licensing structures have not.

With the introduction of cloud-based infrastructures, software licensing complexity has increased. A key issue with licensing in a cloud environment is how software is purchased, allocated across instances of the cloud, and how the use of licenses is monitored and tracked.

In both cloud and virtualized environments, license management includes vendor, procurement, maintenance and legal implications. The biggest advantage of cloud computing is that it allows users to launch virtual instances or workloads on-demand. This benefit, however, creates the challenge of managing all of the licenses associated with those workloads and applications that are pushed into the cloud.

One of the major obstacles to using commercial applications in a distributed architecture like the cloud computing is that the technology relies on software licenses to dictate or control the use of the application. Most software vendors have released cloud-based licensing models. Microsoft's Enterprise Agreement is a great licensing program for companies looking to standardize their IT across the enterprise, yet retain the flexibility of having an on-premises presence.

Using Microsoft's EA, administrators have the ability to:

  • Flexibly transition to cloud services
  • Use a single company-wide agreement to simplify license management
  • Move users back and forth between on-premises software and cloud services
  • Match and adjust online service plans to meet users' needs
  • Add and adjust new online service users above the initial EA commitment

Think about licensing when building your cloud 
The best cloud designs are those that consider licensing from the very beginning. For example, it's important to know how many end users will access a particular application at a given time. Then you'll need to prepare for fluctuations during peak use times.

No enterprise wants to be caught mid-audit with hundreds of users violating an end-user license agreement. By involving companies like Microsoft, Citrix or VMware early in the project, administrators can retain a better grasp on their licensing situation.

Oracle has its own specifications for licensing in the cloud, specifically with Amazon's EC2 services. The licensing structure requires customers running a cloud environment to count each virtual core as a physical core. It's helpful to become knowledgeable in Oracle's specifics on cloud licensing with Amazon EC2. Unfortunately, not all licensing models are as thorough as Oracle's; many companies have yet to come up to speed in this regard.

Managing cloud licenses
There is no single best way to manage licenses in a cloud environment. However, enterprises can take steps to control application use within the cloud.

Technology has changed; most licensing structures have not.


  • Sync all license renewals. By terminating licensing renewals at the same time, administrators tasked with managing licenses become more aware of looming renewal dates. This is especially important if the number of end users in an enterprise fluctuates throughout the year. With many different cloud licenses, a team can sometimes forget one or two renewal dates or improperly renew a license.
  • Negotiate your agreement. When working with a vendor, always negotiate licensing counts, costs and levels. Cloud vendors want your business and often will work to find the right price and licensing level to meet your enterprise's needs.
  • Research licensing models before buying. One cloud vendor's licensing model will vary slightly from another's. VMware licenses its hypervisor in a per-socket model, for example, while Citrix XenServer uses a per-server model. Depending on the number of virtual servers required and the overall infrastructure, one model may be a better fit.
  • Use a hybrid licensing model. Some applications are licensed on a per-user basis, some are bundled per-device and others may have certain levels (standard, gold, platinum or enterprise). Each enterprise cloud licensing model has its benefits. For workloads that will be used by a large number of users, it may be beneficial to negotiate for and work around an Enterprise Agreement that allows for a very high number of users to access the instance.

    On the other hand, if there is a piece of software that only a few users access, it might be best to install it using a per-device license. Every environment is unique; take the time to consult with virtualization and application teams to understand how workloads will interact with the end user base.

With careful planning, you can effectively manage cloud licensing. Research licensing model types to help you make a decision that not only your takes your environment and users into consideration, but may also save the company money.

Bill Kleyman, MBA, MISM, is an avid technologist with experience in network infrastructure management. His engineering work includes large virtualization deployments as well as business network design and implementation. Currently, he is a Virtualization Solutions Architect at MTM Technologies, a national IT consulting firm.

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