Your new cloud boss? Your old software boss

Your new cloud boss? Your old software boss

Summary: Traditional enterprise software vendors are bundling---and in some cases mandating---that licenses are attached to their cloud offerings. Welcome to the new software and services model with the same old lock-in.

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Cloud computing may become a case of having a new boss that's the same as the old one. And that reality is starting to become increasingly clear as technology buyers and CXOs start negotiating software and cloud deals.

Here's a tale from one CIO's dealings with Oracle, cloud providers and how lock-in and licensing fit into the equation. The key moving parts go like this:

  • The company was looking for new HCM system. 
  • The company is primarily an Oracle shop for ERP and financials. 
  • However, the aim was to use more cloud resources and be more nimble. 
  • Workday and Oracle Fusion HCM were evaluated as the company eyed a move off of PeopleSoft. 
  • In this CIO's view, Oracle HCM has come a long way and closed key gaps. 
  • Workday was lacking two must have processes for the company. 
  • Oracle had those processes and integrated tightly with Oracle Financials. 
  • A cloud deployment was preferred.
  • The path of least resistance was to use Oracle's cloud. 

This CIO noted a few key wrinkles as she shopped around with legacy providers and their cloud services. For instance, Oracle mandated that its cloud be used if the company were to keep her HCM license.

The company decided to remain on the Oracle stack---including the cloud---because it had already invested tens of millions of dollars in Oracle's software. Integration ease was a bonus, but ultimately the company was a bit stuck. "What were we going to do rip out our Oracle infrastructure?" she said.

In addition, she also looked at using IBM's cloud for ERP. There was a catch there too. IBM required that the company move from Linux to AIX to use its cloud. The CIO shot that down largely because just a few years ago her company moved from AIX to Linux.

These buying cycle moves are clearly driven from the vendor point of view. The big question going forward is whether customers will fight back against the new model (cloud) with the same lock-in.

Add it up and the reality is that the cloud isn't exactly screaming freedom. Lock-in works in the cloud just as well as it does with enterprise software. For good measure, smaller specialty vendors she's dealing with have similar arrangements with cloud lock-in. Sure, this CIO will get significant discounts, but she also realizes her buying choices are limited due to previous tech purchases.

Now the CIO isn't sure that these cloud dealings will continue, but she noted that licenses will ultimately turn into services and established vendors will continue to do well. In five years, it's quite possible that we'll find this so-called cloud revolution was basically more of the same for large enterprises.

Her strategy is to architect the company's IT infrastructure so proprietary applications can hop clouds, say Oracle to Rackspace to Amazon Web Services, but she's limited given her previous technology buying choices.

orclcloudlogo

The aforementioned CIO tale puts some color around Oracle's cloud strategy and the partnerships that have been announced. For Oracle, the strategy is relatively simple. First, Oracle wants to keep its existing customers on its cloud. Tethering licensing and cloud computing is a blunt instrument to make that plan a reality.

Oracle's other move is to partner to make sure it is able to acquire new customers on multiple platforms. Partnerships with Salesforce and Microsoft in addition to an existing deal with Amazon Web Services illustrate how Oracle can sell licenses. After all, you need to tote your licenses along to use cloud services. If Oracle can keep its base as license and cloud customers and acquire a few new ones it's set.

Microsoft is in a similar boat. Any cloud where you use Microsoft software requires a license. Microsoft doesn't care where you go---although I'm sure Azure is preferred by the software giant---the company will garner license revenue. If you're a Microsoft shop there will be plenty of breaks to go with Azure.

Oracle and Microsoft look like they have models that can transition to the cloud, but what will a company like HP do? What is the lock-in mechanism for HP's cloud without applications? Perhaps HP Cloud becomes a preferred venue for SAP. The problem: SAP has been a really strong Amazon Web Services partner.

Existing enterprise software vendors such as Adobe have already made the license to cloud turn, but you'll also see a bevy of cloud partnerships modeled after Oracle's moves. Add it up and it's highly likely that your new cloud boss will be the same as your old software license and maintenance one. The cloud may not be the lock-in cure originally foreseen.

Related:

Topics: Enterprise Software, Cloud, Microsoft, Oracle

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11 comments
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  • Encrypted non sensitive storage, that's it

    While the cloud has some benefits for the end user, what it's about and always has been about is increasing profits (on the providers end) with data mining/surveillance.
    Michelle8999
    • Whats the problem here at ZDNet????

      Your comment contains words or phrases associated with spam and will not appear on the site until it has been checked by a moderator.

      Someone has got to fix this problem. Its sick man!
      Cayble
      • words or phrases associated with spam and will not appear on the site

        Excuse me

        (LauraFenster) can99.ℂ­om that is belowe this looks like spam, he is not linked to me, period.
        Michelle8999
        • That wasnt the issue...

          ...the issue was that trying to post in that location was blocked with that comment from the website.

          I think its fixed.

          Lets try reposting the same thing....
          cayblex1
        • Nope. Still broken.

          Your comment contains words or phrases associated with spam and will not appear on the site until it has been checked by a moderator.

          Not sure why ZDNet cant fix this when at the same time they still get real spam posted here. Oh well.
          cayblex1
  • So it is time to ...

    "Welcome to the new software and services model with the same old lock-in."

    When are you going to start complaining then, Larry?
    When?
    When?
    When?

    After it's too late?
    When?
    When?
    When?

    When MSFT and ADOBE have implemented their subscription model?
    When WINDOWS OS has a subscription price?
    When MSFT and APPL take 30% from all software sales?
    When MSFT, GOOG, APPL and AMZN have locked you into an expensive subscription future ... just like the music industry before them?
    When everything has been converted to the cloud ... owned by MSFT, APPL, GOOG and AMZN?

    When are you industry media 'experts' going to start ******* complaining?
    jacksonjohn
    • SaaS

      SaaS benefits the vendor more than the user because of the more consistent income stream. Users are more tightly locked into a vendor which leaves them vulnerable to rapidly rising subscription rates.
      Linux_Lurker
    • Companies are in the business of making money

      I feel your pain, but in the end the goal of all businesses is to make money (and at a minimum be profitable). We want businesses to make money so they can pay their employees, like you and me. If it weren't Microsoft, Apple, or Oracle taking your money and locking you into their cloud, it would be a new company (ala Workday, NetSuite, SalesForce). There is no free lunch!
      krisoccer
      • Pofitable is nessary, but

        I've never begrudge anyone or (evil empire) for making a profit, but then there are just plain old greedy money grabs.
        Michelle8999
  • Wonderful!

    This posting below was rejected by ZDNET because: "Your comment contains words or phrases associated with spam and will not appear on the site until it has been checked by a moderator."

    Y_o_u g_e_t "l_o_c_k - i_n" j_u_s_t l_i_k_e b_e_f_o_r_e, b_u_t n_o_w y-o-u a_l_s_o g_e_t a_l_l t_h_e e_v_i_l_s a_n_d p_r_o_b_l_e_m_s o_f t_h_e c_l_o_u_d o_n t_o_p o_f t_h_a_t!

    G_e_t r_e_a_d_y t_o s_h_e_l_l o_u_t a l_o_t m_o_r_e m_o_n_e_y f_o_r a_s_p_i_r_i_n, 'c_a_u_s_e y_o_u_'_r_e g_o_i_n_g t_o h_a_v_e m_o_r_e h_e_a_d_a_c_h_e_s.

    I had to put in the underscores so my comment would be accepted. I challenge you to find the "spam" words in there.

    This is ridiculous. Innocent comments get kicked out, while real spam comes through daily.

    Doc


    Doc
    Doc.Savage
  • All locked in and no place to go

    Ah yes, the cloud. Where you're locked into an application service provider, and you don't even have physical possession of your own data.
    Dr_Zinj