The Dark Side of a Virtual World – Software License Management in the Virtual Era – Gearing up for Changes in License Models

By Dr. Christian Seeling, Aspera GmbH

The Future: Virtualization Year 2015

January 2015. In the early morning hours the sales manager of a large bank enters his office. After pouring a quick cup of coffee, he switches on the monitor and starts the hypervisor on a virtual machine and begins to work. He has an important meeting this morning and needs a summary of the account activities during this quarter. He’s tight on time so he chooses the highest level of processing power to generate the information. A worldwide server network distributor makes sure that the key data are on hand in just a couple of minutes. At the end of the month, the sales manager will get an invoice for services from the data center charged by the second and kilobyte. The invoice also includes the proportional costs for operation and hardware use as well as software and databank license fees used to create the account activities summary.

Today, license management of the future presents a key challenge for IT governance. Software manufacturers and customers alike have to adapt to new licensing terms for software run on virtual machines.

Virtualization Mixes Up the Software Industry

Virtualization is the key technology behind this vision. Technological breakthroughs are fostering the development of runtime environments (hypervisors) for software, which are now capable of simulating high-performance hardware environments. A hypervisor, depending on type, can start directly on the hardware or on the operating system (application virtualization). Visor performing virtual machines allow operating systems and applications to be installed in the same way they’re installed on traditional hardware platforms. What’s more, virtual images can be saved at any time, duplicated, or simply set back to their original state when no longer needed.

The accomplished decoupling of hardware and software presents many opportunities: the hardware landscape can be noticeably consolidated, because the individual requirements of each application are achieved through virtualization layers and not through the computer architecture. Deployment and patch management also become much easier. Testing software can be done in the secure “sand boxes” of a virtual machine. Legacy software can take along their virtual images and, therefore, remain applicable in the future. The risks posed by uncertainties in the lifecycle of software are eased by the flexibility of virtualization and service on demand models. Lastly, utilization of storage and computing resources can be optimized through flexible distribution of capacity to virtual machines.

Redefining Software License Management

But virtualization also has a dark side: all issues pertaining to software licensing, which are already perplexing many IT departments in regards to servers, will become even more complex. Similar to the cell phone industry at the beginning, software manufacturers are constantly coming up with new license models. Still, most models can be roughly placed into two categories: licenses based on the end device or licensing by the number of users. User based license models don’t take into account the number of software installations, but focus solely on the number of authorized users. These licenses are best oriented for application groups and directory services. Although the number of maximum users is determined, the customer usually ends up wishing for more precise license terms in which the actual use of the software is measured. More accurately, that the license is based on the length of time used or, even better, on the amount of software functionality put into play during each use. For years, SAP has offered several types of licenses based on the productivity of the processes. However, a precondition for user oriented licenses is having comprehensive, and often complex, data collection methods for software operation, in which continual tracking of the usage data is recorded down to the second, similar to early billing plans in the cell phone industry. Moreover, it is in the interest of manufacturers and vendors that customers not correct their over licensing. Manufacturers prefer more stable and predictable income.

The abstraction of hardware through virtualization means medium term, but nonetheless, retirement of traditional license models. Ultimately, in a virtualized software environment license costs will only be applicable when a program is actually loaded by a user. Compliance with license terms can then be automatically controlled; for example, when the limit of concurrent users is reached, access to the respective program is denied until a space becomes available again. In the future, software asset management will attach high importance to evaluating effective usage and boosting cost optimization, rather than on revealing where a company is under or over licensed.

License Models in Motion

Virtualization is already widespread and most large corporations have already started reorganizing their server farms and IT processes. For at least a good two years now, companies such as Amazon.com and 3Tera have been offering Cloud Computing at inexpensive rates. What it is, is flexible, scalable virtual hosting environments for businesses and home use. Other well known providers of virtual environments are Citrix, LANDesk, Microsoft, Symantec, and VMware.

On the other hand, licensing terms are still adjusting in the face of growing cost pressures and new hardware technologies. Many manufacturers have just recently converted their capacity oriented license models over to multi-core processers. The problem is the new licensing terms have left ample room for legal gray zones.

The numerous proprietary developments of hypervisor concepts, some even application-specific, are fast approaching the need for consolidation and standardization. Asset management systems and configuration databases (CMDB) can help with this. Software tags following ISO/IEC 19770-2, which is now in the final voting stage, increase the accuracy of product identification for inventory. However, to be able to map all manufacturer specific licensing terms to the software, robust license management must be in place and, more importantly, specialized professional expertise and technology are needed to ensure the creation of sound license balance sheets.

“The biggest focus is on the license equilibrium, in other words, the comparison from a legal and business perspective of actual license needs to the content in the user rights. This requires specialized solutions and expert process know-how for virtual environments,” explains Christoph Beaupoil, co-founder and managing partner of Germany based Aspera GmbH (www.aspera.com), an international provider of software license management solutions. “For 2 years now, we’ve lead workshops on this exact topic: server license management and virtualization. We and other providers are closely following the technical and business developments in this area. A provider of software license management tools has to always stay one step ahead of the software market, otherwise, issues like these are a lost cause for business,” stressed Beaupoil.

Until the dust settles, enterprises making the change to virtualization and who don’t have the expertise in-house should find a partner with experience and good references in server license management to work closely with them to ensure the success of their programs. It sounds like a simple, upfront answer and it is; but sufficient time and research should be dedicated to choosing the best partner. In the long run, it will pay off to have company IT professionals trained and regularly updated on changes in software license management.

Until Then…

December 2008. In the early morning hours a sales manager of a large bank enters his office. After pouring a quick cup of coffee, he sits down at his desk, switches on the monitor and starts his computer…