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A little of this, a little of that


By David Rubinstein
February 15, 2010 —  (Page 1 of 4)
Software-as-a-service, virtualization, multicore and “the cloud”—not to mention the worst economic climate since the 1920s—have changed the way businesses deploy the applications they use. They want to pay as they go and eliminate the “shelfware” problem by licensing only what they need when they need it.

By the same token, these new technologies have changed the way software providers must license their products. With their customers having to do more with less, software providers must create packages that allow for use of the new technologies in a way that helps those customers gain greater flexibility.

“The days of [software] companies bullying customers into one-size-fits-all arrangements are over,” said Amy Konary, director of software pricing and licensing research at technology research firm IDC.

"A critical mass has built up, so customers are pushing back and saying, 'We want to do a better job of aligning what we need with what we use.' Pay-per-use models are high on the list of what companies are looking for.”

Virtualization has been a “game-changing event” for software providers, Konary said. “Their initial response was, ‘Wow, this is really complex. Our approach [to licensing for virtualization] would have to be so onerous that it’s not worth it.’ They would have to license software for the time it’s on a VM. But what if there are four VMs, then eight VMs?

“So vendors have come up with different editions,” she added, such as data center editions or enterprise editions that allow for unlimited or limited virtualization of the software.

According to Aidan Gallagher, CEO of Ireland-based software license protection provider InishTech, the older software providers “are coming under pressure by new entrants [into their markets] selling less configured software in a SaaS model. It’s starting to eat into their business. Startups are smart about how they build and sell their software. They’re building one product and selling it in lots of different ways.”

As software makers begin to market in different ways, consumers of that software are using it in different ways as well. InishTech, which was spun out of Microsoft (still a significant stakeholder in the company), said organizations have to manage the software on three levels: the instance of the software in the cloud, the configuration for using that software on the business level (either via subscription or user-based licenses), and role-based access.

 Related Search Term(s): SaaS

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