Managing Software Licensing In the Cloud

Managing Software Licensing In the Cloud - License DashboardAs everything seems to gravitate toward IT being delivered in the internet ‘universe’, Enterprises are more and more going to be posed with the difficulty of managing application licenses in the cloud.

Succinctly, cloud delivery models that bring with them the most software licensing challenges are Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). These are the forerunners for applications in being driven by the ‘Internet of Things’. Software as a Service (SaaS) is less likely to cause your organization problems because the software is part of the cloud provider’s services.

For IaaS and PaaS, the Enterprise has shared control over what is being delivered in the cloud environment with any third-party software. The IaaS customer neither manages nor controls the underlying infrastructure, but could have control over operating systems and deployed applications. Whilst for PaaS customers, the opposite is true; the Enterprise typically will not have control over the operating system, but it may have control over the deployed applications.

The complexities of software licensing models

Software licensing is currently delivered by software publishers using various and complex license models. Some manufacturers base their licensing on the number of users, and these, in turn may be named or concurrent users. In other cases, manufacturers charge per processor or core based on the software. Lastly, there are others who look at actual usage, which is completely divorced from the number of users. Customers have to keep in mind the one ‘strapline’ each of the various licensing models has in common: They are attempts to maximize revenue. Simply put, publishers want you to move to the cloud to increase the necessary licensing rights, which means you’ll have to spend more money.

Is the cloud an expansion of software licensing rights?

A question many organizations should be asking in this changing world of IT. In a nutshell, legally,any rights that aren’t explicitly stated as being granted to the Enterprise within a license agreement are retained by the software publisher. In the cloud scenario, the Enterprise does not have any pre-existing rights to use the software licenses in the cloud.

At License Dashboard, we want to address one of the main concerns highlighted by many of our clients, to help clarify part of the complexity your publisher expects your organization to operate under.

The cloud vendor and third party accessCloudPost

We have seen agreements stating that if the customer signs any third party solution agreement, the chosen cloud vendor has the right to access, copy and sometimes even modify the software when used within their agreement. This means that the customer’s license agreement with the software vendor includes the rights for the cloud vendor to access third party software and to impinge possible rights of use. Simply put, the customer grants permission to the cloud vendor to carry out any software changes on their behalf – but who is liable in the event the vendor contravenes their own licensing and other third party licensing? Is it the cloud vendor?


To cover their backs, the vendor will also state they take no responsibility for any effect this has on the customer’s agreement with their third party provider. Once again, the cloud vendor is saying that if its use of the software in providing the services causes any noncompliance with the terms of the software license agreement, then the cloud vendor is not liable for any adverse consequences. The customer takes full responsibility regarding the effective functioning, or any impacts of malfunctioning, of the software.

The moral of the software licensing story

Whilst moving to the cloud does benefit most Enterprises, the management of licensing does not become less difficult! Knowing the agreement that your organization has signed; the implication of the license model; and the effect on your rights are all important. Monitoring usage is paramount, and then relating this back to the agreement is imperative – as with any type of license management. Every element of your organization’s software licensing must be managed under an onsite software agreement, but it must also include agreements for the software potentially being used externally as well.

Ben Eagling

Ben Eagling

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