The Cloud Lead Lining
August 9, 2010 Leave a comment
Enabling technologies such as virtualisation and hardware are no longer the biggest obstacle to adoption in the cloud model. Instead, cloud providers are encountering a whole new set of challenges.
One of the biggest issues currently is how progress is being held back by overly restrictive Enterprise Software Licensing (ESL) models.
With Gartner predicting the cloud market to triple and hit $150 billion by 2013, ironing out these final licensing niggles will be vital for the curators of private and public clouds to maximise their returns on the service.
Many software providers have products that are perfectly designed and engineered for cloud adoption but they are now starting to face issues caused by an increasingly archaic ESL model.
Oracle is a good example of why ESL licensing models are coming under scrutiny and why software providers in such situations have to take a really close look at how they manage their licensing processes and relationships.
For Oracle, migrating licensing models to a regime of utility-enabling subscription will not be an easy task as it faces pressure to protect its annuity fees, satisfy shareholders and remain competitive. However, unless licence and support fees are reduced with lowered consumption, this fundamental cost saving benefit of cloud computing will evaporate.
The Cloud’s Silver Lining
Oracle’s recent quarter on quarter history shows persistent growth of new licence revenues, annual fees and earnings per share, all based on traditional licensing. Until demand for utility orientated ESLs to support the cloud becomes competitively divisive with Oracle, it will hang on to what works.
Oracle knows, in the land of the blind, the one eyed man is king, and having a deep insight into Oracle licensing, deployment and consumptions trends will provide enterprise clients with the grounding for effective renegotiations and lobbying.
The best advice for enterprises and cloud vendors at present is to get smart – understand licence grants and how to measure actual usage. Only with this more mature knowledge of enterprise software asset management, will companies get everything from the cloud that it promises to offer.