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Managing vendor product licenses during large scale migration to cloud

Public Cloud Services are mature and enterprises are adopting cloud to achieve cost optimization, introduce agility and modernize the IT landscape. But public cloud adoption presents a significant challenge in handling the existing vendor licensing arrangements. Commercial impact varies based on cloud delivery model from IaaS to SaaS and the licensing flexibility. The business case for cloud transformation needs careful consideration on existing software licenses.

Based on our experiences we see software licensing and support by software vendors are at varying stages of maturity. At times, software licensing model can become expensive while moving to cloud. Typically, on premise licenses are contracted for number of cores, processor points or users, whereas the definition of core in virtualized/ cloud world is different.

While enterprises assess the licenses when undertaking the cloud journey, they should carry out a high-level assessment of risks associated with licenses while formulating the business case.

Before formulating a business case it's important to consider the following aspects into the enterprises license transition strategy:

·         Conduct due-diligence of major software vendors to identify any absolute 'show stoppers' for the use of their products such as:

o   Support level in new platform services, license portability and license unit derivation mechanism in cloud.

o   Commercial impact for re-use on multi-tenant cloud platform.

o   Flexibility to reassign licenses as often as needed.

o   Mechanism to check and report compliance on public cloud in an ongoing basis across product vendor licenses.

·         Inventory management of licences and the commercials around these licences.

·         'Future state' services and application stacks should balance between license cost and performance requirements.

o   Negotiate unfriendly product licensing bound to socket or physical hardware level.

o   Evaluate existing licensing terms and conditions for increase in licensing costs.

o   Evaluate / check for mitigation controls and options on public cloud.

o   Plan ahead for the cost implications for reusing converged stack or appliance based licenses on public cloud.

o   Translate the on-premise licenses to public cloud (virtual core).

o   Cloud Service Provider includes operating system licenses - examine the option to reduce the same from existing vendor agreements.

o   Leverage the continuous availability capability of public cloud platforms to eliminate disaster recovery licenses and costs associated with it.

Approaches to overcome public cloud licensing challenges:

To overcome the licensing challenges associated, IT teams can optimize target state architecture, solution blueprints and frameworks with considerations on license/ cost models. Few approaches like:

·         Re-architect existing solutions leveraging event driven Service, Function as a Service, PaaS, Containers and Micro-Services to achieve agility and significantly license cost reduction.

·         Enterprises should consider dedicated hosts or instances / bare-metal options when socket level visibility is required for complying with license usage on public cloud but also weigh the cost impact of these machine types.

·         Embark on Open Source for platforms like database, application server and web servers.

·         If traditional deployment of platform must be moved to cloud, consider creating a pool of platform services rather than services for individual application requirements like common database services. For example: Line of business can consume business applications through centralised platform services across business units in order to achieve greatest cost and agility benefits.

·         Consider solutions with bundled license under usage based pricing models like SaaS, PaaS, Market Place and Public Cloud Native Services.

In reusing "on-premise" licenses, all major software vendors are changing license policies to allow flexibility to port the licenses to cloud but it is not uniform nor all-inclusive yet. Options like vendor allows certain product licenses on cloud but not all, another vendors may allow all on public cloud; and while some vendors allows porting onto authorized cloud environments only.

In summary, migrating like for like will have an impact to licensing costs on public cloud. Understanding the current licensing agreements / models, optimizing application architectures to cloud; negotiating a position with vendors that will be suitable for cloud along with compliance processes in the target state model should hold the organization in good stead. With the cloud native services and open source innovation continues to grow rapidly, enterprises can mitigate traditional licensing constraints by leveraging these technology innovations.

Comments

The practical problem on the ground well explained. Full advantage of Public Cloud can be realized only when the applications are Cloud Native and the vendor licenses support cloud model.

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