Cloud Software Licensing Management – a New Challenge for ISVs

It is true that cloud computing makes big promises, but it also introduces new risks. The first is the control of data, which are now among suppliers. The second, more specific is free software.

Independent Software Vendors (ISV) applications hosted in accordance with the software-as-a-service (SaaS) model include collaboration software and business applications such as e-commerce, customer relationship management, human resources, video conferencing, Web content management and messaging.

The distribution model SaaS uses the Internet to deliver applications on demand. Companies use the payment method after use (pay-as-you-go, monthly payment) for SaaS applications, allowing them to save their capital for core functions. This creates challenges for ISVs to match right software licensing mechanism to ensure that ISVs receive incremental added revenue for on demand software applications.

Managing the software licensing has become vital survival issue for ISVs. Informed customers are demanding software packaging and new and innovative licensing models that allow them to buy exactly what they want, whenever they want, and how they want to utilize. For ISVs, software solutions management is essential to control and manage the demands of their customers and protect their software from pirates and hackers.

As ever demanding technology environment enter the new adoption of virtualization and the cloud, software licensing become an important competitive differentiators for ISVs.

Cloud computing and virtualization offer on demand flexibility approach of moving workload, compliance, hardware, software from one logical and physical space to others. ISVs need solutions that enable flexible licensing to quickly create pricing models and new product configurations if they want to effectively target new market segments. They also need to license compliance solutions that provide security software.

IT managers are looking for certain important factors to make software licensing purchasing top criteria when evaluating which ISVs can be their partners:

Customer Demand Fairness

IT managers are assessing software that can eliminate restrictions on pay-per-use. Restrictions on pay-per-time enable ISVs to limit the time of that application. ISVs have more control on licensing on desktop applications but are failed to accommodate the dominance of the virtual machine.

On Demand Customer Flexibility

Cloud license must include new approach from ISVs to leverage the software level agreement. Business leaders argue that cloud technology is ever evolving and the applications that are deployed now in their environment may not be deployed after some times.

Unfortunately, ISVs are too reluctant to replace old age software licensing model with something else. ISVs need to adapt flexibility attitude to resist changes to their software licensing agreements and models. Vendors need to gradually change the mindset, especially when customers have an alternative in terms of cloud and virtualization.

Software Vendors Need More Collaboration with Cloud

IT managers are determining what software products are installed or used most actively. As they add more layers of virtualization to their IT infrastructure, they need their ISVs to make software purchasing and licensing management more flexible. IT managers are also demanding to automate license management and implementation of reconciliation.

ISVs can fine tune the service level agreement to make it simpler and easier for customers to track existing software licensing management and new ones coming to their environment.

Software industry is beginning to take steps to meet the customers’ software demand to move to cloud. ISV vendors today are seeking comprehensive software management solution covering the three main aspects of software security, software licenses and software packages. Partial or complete support of the cloud is seen as a key strategic initiative by most software vendors. As the software industry becomes more complex, ISVs decision makers need quick wide-ranging software solutions in a dynamic market.

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