Virtual Savings – Yea or Nay?

Virtualization has become one of the biggest trends in IT in the last eighteen months, with Gartner predicting it to be the single most important technology for IT Departments by 2010. As more and more organizations hop on the Virtualization bandwagon, the question that should be asked: Does virtualization really lead to significant cost savings? Most IT and finance managers will say yes, but there seems to be a big misunderstanding as to what a virtualized environment means in terms of costs savings – particularly when it comes to software licensing. Because usage on virtual environments is difficult to measure and the premise encourages multiple usages of one license – in the long run – it could actually end up costing more for licenses year over year.

In the new, more consolidated data center – vendors are fighting to protect revenues and have yet to figure out a way to accurately license virtual environments. And, each software vendor treats virtualization and licensing very differently. Microsoft, for example, has faced scrutiny over its licensing schemes and has succumbed to pressure, changing its 90-day rule for re-assigning server applications. On the other hand, VMWare is considered soft partitioning and under Oracle's standard licensing policy, “soft partitions are not an acceptable means to limit licensing requirements.” There are a variety of partitioning scenarios even within this policy, but each has its own challenges and each situation should be viewed separately for licensing compliance.

Consider the traditional methods of software licensing – you buy one license and are given the right to install that license on one computer or server. When one physical computer is divided into multiple virtual computers and can be moved around or destroyed with the click of a button, what happens to the applications running in that environment? Should every instance of the use of that license be charged as a separate license? If so, we are talking exponential fees, particularly for large organizations that could potentially deploy hundreds of virtual computers and/or severs.

Should customers pay for each separate virtual computer and its subsequent application usage? The answer is no, usage may appear to go up, when in fact it doesn't – it has only changed. We must also remember that virtualization hardware itself comes with a hefty price tag. Of course, the issue is to make a distinction between hard and soft partitioning and aligning the environment with licensing compliance rules.

Licensing in a virtualized environment adds to the already complex world of enterprise software licensing. So, let's look at the cost savings that we know.

Hardware

Turning five physical servers into four virtual and one physical will obviously cut down on hardware costs. The caveat – the machines required to run your new virtual environments are much more expensive.

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