Article By: Venkat Madala

Most of the forums today are filled with questions on cloud and software licensing. That’s a complex topic, as big as cloud. We will try to look at some of the aspects related to this area .

The three main models of cloud (IaaS) Infrastructure as service, (PaaS) Platform as a service and (SaaS) Software as a service are less vulnerable to any issues as it license is being handled by the cloud service provider. While referring to IaaS/PaaS customers have a medium/shared control over what is run in the cloud environment. This would also include third party software which are purchased /licensed by the cloud vendor and provided as a service. In most of the models discussed above the client does not have control on the licensing cost and it will be managed by the cloud vendor including the deployed and used applications.

Where the complexity comes in is that software vendors /developers are all over the globe in how they address cloud use in their software licenses. Some base their licensing on the number of users, and those users, in turn, may be named or concurrent. Others charge per processor or core that the software runs on. Still others look at actual usage, a metric that is distinct from number of users. The one thing that these various licensing models have in common is that they are attempts to maximize revenue, and naturally, software makers view the use of their products in the cloud as an expansion of licensing rights that represents an opportunity for increased revenue.

This gets us to a bigger question, Can the customer argue that the cloud does not represent an expansion of licensing rights? It would be difficult. If the customer acquired its software licenses from the vendor under a long-standing agreement ( software’s like Oracle DB/Wl/ SAP, Microsoft Suite, chances are good that the agreement pre-dates the inception of cloud computing. Of course, contracts generally do not address technology offerings that don’t exist at the time of the contract’s drafting, so a pre-cloud software-licensing contract is highly unlikely to contemplate the use of those licenses in a cloud environment. Legally, any rights that aren’t explicitly stated as being granted to the customer in the license agreement are retained by the software manufacturer. In cases like this, customers do not have any pre-existing rights to use their software licenses in the cloud.

Hence as a conclusion, it would be a mandatory process for CTO/CFO/Technical consultants read the fine print of the license information before any assumptions related to cloud.