Software Licensing got you down? Get your SaaS in gear and go cloud

We don't need to go shooting any lawyers, and you don't need a licensing expert to figure things out for you. The answer is clear: Move as much of your software to SaaS and to the cloud as you can.
Written by Jason Perlow, Senior Contributing Writer

My ZDNet colleagues Ed Bott and David Gewirtz are both fed up with Microsoft over software licensing issues, albeit for different reasons.

Ed is annoyed with Microsoft over its poor communication of its Windows editions and David just wants to line up Microsoft's legal department in front of a firing squad.

Let's be absolutely clear -- figuring out software licensing, regardless of which vendor you are dealing with, is never fun. I never enjoyed it when I was an IT consultant in the financial sector, I hated it when I worked as a systems architect at IBM, and I certainly don't enjoy it today in my role at Microsoft.

Dammit Jim, I'm a technical solutions professional, not a lawyer!

I can't tell you how many times a week I need to have conversations with my partners about things that are possible from a technology standpoint, but impossible to do from a licensing standpoint.

More often than not, I need to bring in a licensing specialist to clarify language. And then if we can't figure it out, the specialist has to reach out to others that are SMEs on the specific product licensing that can give me an official reading.

This problem is not unique to Microsoft; this is a problem that is endemic to the entire enterprise software industry.

Why is software so complex to license correctly and why are there are so many SKUs and editions? Let's count the reasons -- localization issues and judicial decrees, different sets of customers having different sets of needs and being in different sectors (public vs. private) -- but the real problem stems down to compliance.

I can't go into exact detail how much revenue is lost by large software vendors by incorrectly reported software usage -- whether intentional or unintentional -- but what I can say is that the reason why the legal teams for these enterprise software companies are so large is that quarterly/yearly compliance audits and settlements with large companies can often shift revenue reporting in a business segment from "meh" to "good" or "good" to "excellent".

On the consumer side of the business, software piracy is also a very serious problem, one that directly affects the bottom line. These lawyers that you hate allow these large software companies to continue to produce the software that you as consumers and businesses use, by going after the bad guys.

Compliance and anti-piracy efforts can make the difference between hitting your numbers as a business and not.

Part of the reason that these compliance audits have to occur is that reporting is often a manual process. It's hard for enterprises to inventory their software and OSes and get an accurate picture of their usage, particularly when you start looking at licensing models that dive into the number of cores per server you are using rather than the number of seats.

There is a solution to this, and it's called moving to cloud and SaaS-based software.

The traditionalists, perhaps even the consumers and hobbyists or even small business owners that read this column, will cry foul, because they don't want to pay a bill every year for their software usage when they can just write off their software licenses as a one-time capital expense (CAPEX) every four years or so.

I would say to these folks that if you want to reduce your support burden and have the latest and greatest software with all the patches and features, then you need to look at SaaS (Software as a Service) and cloud-enabled solutions where the licensing is baked into the model a lot more closely. That model also makes it a lot clearer how many seats and what usage rights you have based on your subscription package.

There are many advantages to doing things this way, particularly if you are short on IT staff. Ideally you want your applications and end point/on-prem devices to be managed.

If you're a small shop with 100 seats or less, what happens when your main IT support guy decides he wants to take a better job down the street? Now what do you do? Who supports your software then?

From the large enterprise perspective, CxO's like SaaS and cloud, particularly where it makes sense. CAPEX of software licensing is becoming increasingly unpopular, and it's a lot easier to justify SaaS as a recurring expense. Licensing couldn't be clearer, either.

You don't pay your bills, your software gets turned off. Period. No lawyers to deal with, no compliance headaches. It's no different than paying for the electricity and water utilities that come into your facilities.

Obviously, not everything today is available as SaaS or subscription based. Operating systems, in particular, unless they are running within public cloud infrastructure, are not licensed that way yet. But it's clear this is the way the industry is going. You'll have your apps and OSes in subscriptions, and you will pay for what you need, based on the SaaS SKU you buy.

This is no different from the cord-cutting that is occurring on the content side. Why pay for Showtime and Starz when you just want HBO?

And the lawyers will be able to sleep in their beds comfortably without fear of being lined up in front of a firing squad.

Is SaaS and cloud the future of resolving licensing agita? Talk Back and Let Me Know.

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