By Ian Moyse, Eurocloud UK Board Member and Cloud Industry Forum Governance Board Member

How many IT staff fully understand (or indeed read) all the legalities behind the agreements? Software licenses are written for a legal audience and they may not always be as clear as they could be to the IT audience.

Software licensing and maintenance is a feat in itself: costly, complex and administrative. No matter which of the many different licensing mechanisms and approaches you take, be it volume, site, or concurrent licensing, the path is not always straightforward

In today’s challenged times businesses are looking to simplify process and minimise cost. One area where savings can be made, license-numbers minimised and the responsibility of licensing shared with the vendor, is that of Software as a Service (SaaS).

In a nutshell, SaaS minimises the technical burden for businesses and maximises budget. It removes the need for software installation and maintenance, enabling shorter deployment time alongside the ability to deliver not just a local, but a global, solution.  SaaS allows businesses to focus their technology investment on delivering competitive advantage rather than maintaining infrastructure.

Such benefits make it easy to understand why Gartner predicts 30% of all software will be SaaS-delivered by 2010. Whilst SaaS will not completely replace traditional licensing models, its presence will grow across the business environment as its role in simplifying licensing complexity and reducing the costs and overheads associated with managing traditional licenses becomes more widely understood.

So what are the differences between software and service licensing - and how can gains be made?

Software licensing is undergoing change. The days of businesses purchasing a licensed copy on CD ROM are becoming a distant memory. With the majority of today’s computers connected to the web, it has become simpler for software vendors to distribute and update software (and perhaps even keep an eye on how often their software is used).

First came the ability to download software from the internet, followed by the capability to subscribe to automatic software and signature updates. SaaS takes the model a step further.

The core licensing difference of SaaS is that it is provided as a subscription-based model (per user per month licensing contracted over a set license period ) rather than the traditional single up-front license fee with software sold for perpetual use. Many SaaS vendors are already starting to introduce interesting new models of licensing depending on their technology sector and ability to measure usage. These include features and function models, time-based subscription models  usage-based transaction models  transaction numbers (based on the number of events) – or, even more creatively, advertising-funded revenue models.

Another advantage is that SaaS vendors can also allow customers to administer and monitor their licensing centrally, removing the burden of managing software usage .  Finally, SaaS delivers the business with an additional financial proposition.  By treating the service as ongoing cost to the business, the customer is able to migrate costs from their Capital Expenditure (CAPEX) budget to Operating Expenditure (OPEX), an attractive benefit in today’s pressured environmental climate.

By Ian Moyse, Eurocloud UK Board Member and Cloud Industry Forum Governance Board Member

There’s been a thunderstorm of growing noise surrounding cloud computing in the past 24 months. Vendors, analysts, journalists and membership groups have all rushed to cover the cloud medium, although everyone seems to have their own opinion and differing definition of cloud computing.  Similar to many new sectors of technology, the key is to separate the truth from the hype before making educated decisions on the right time to participate.

While still evolving and changing, cloud computing is here to stay. It promises a transformation – a move from capital intensive, high-cost, complex IT delivery methods to a simplified, resilient, predictable and a cost-efficient form factor.  As an end user organisation of different sizes, you need to consider where and when cloud may offer benefit and a positive edge to your business.

Cloud computing is a new concept of delivering computing resources, not a new technology. Services ranging from full business applications, security, data storage and processing through to Platforms as a Service (PaaS) are now available instantly in an on-demand commercial model. In this time of belt-tightening, this new economic model for computing is achieving rapid interest and adoption.

Cloud represents an IT service utility that enables organisations to deliver agile services at the right cost and the right service level; cloud computing offers the potential for efficiency, cost savings and innovation gains to governments, businesses and individual users alike. Wide-scale adoption and the full potential of cloud will come by giving users the confidence and by demonstrating the solid information security that it promises to deliver.

Computing is experiencing a powerful transformation across the world. Driven by innovations in software, hardware and network capacity, the traditional model of computing, where users operate software and hardware locally under their ownership, is being replaced by zero local infrastructure.  You can leverage a simple browser access point through to powerful applications and large amounts of data and information from anywhere at any time, and in a cost effective manner.

Cloud computing offers substantial benefits including efficiencies, innovation acceleration, cost savings and greater computing power.  No more 12-18 month upgrade cycles; as huge IT burden like system or software updates are now delivered automatically with cloud computing and both small and large organisations can now afford to get access to cutting-edge innovative solutions.  Cloud computing also brings green benefits such as reducing carbon footprint and promoting sustainability by utilising computing power more efficiently.

Cloud computing can refer to several different service types, including Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). SaaS is generally regarded as well suited to the delivery of standardised software applications and platforms, like email, CRM, accounting and payroll. The development of the SaaS business model has been rapid and it is now being used to provide high performance, resilient and secure applications across a range of company sizes and industries.  So when should you consider a cloud service and what should you look for in choosing a vendor partner?

Cloud or SaaS does not provide one-size-fits-all solutions, and not every application in the cloud will be right for your business. You should consider in what areas it makes sense to utilise the cloud.  Where can your organisation gain improvement in areas of business efficiency, resilience and cost reduction? Look to others in your sector and what they have done, and look for simplicity and obvious choices in your first cloud solution adoptions. Review your shortlisted vendors carefully and compare them across multiple areas but not just price. With cloud computing you need to ensure that you validate who you are dealing with, what their reputation is and the quality of service you will receive.

Things to consider when looking for a cloud service vendor:

• Review your vendor and its financial viability – its profitability is an indication of its strength and stamina and reflects the strength of its business model and ability to execute as a long term supplier to your business.
• Look at its technology (function/protection) and match it with your business requirements – look at the fundamentals such as safety and reliability first, as you would when buying a car, then consider the extras.
• Study the roadmap and service enhancements your business will benefit from – what reputation does the vendor have for consistent delivery and innovation in the past few years?
• Research the vendor’s reputation for support and service provision – how good are the SLAs (Service Level Agreements) and what is its capability to deliver results?  How big is the support team?  Are they located in your region, and are they employed directly by the vendor?

Ignoring the cloud or moving everything to it in a race are both perilous positions. Taking educated steps to the cloud will ensure you gain the benefits that it can bring and that you don’t end up in a technological storm.