Software Licensing in the Virtualization Age

We’re all familiar with the many benefits of virtualization. In terms of ROI, going virtual can pay off big, but only if your company’s software licenses are correctly managed. Otherwise, the costs saved by consolidating hardware can be lost in inefficient software license management.

License models are traditionally hardware oriented (number of installations, CPU capacity, core processors, and so on). But with virtualization the hardware relationship is lost. There is a direct conflict between software licenses and emerging technology meaning all issues pertaining to software licensing, which are already perplexing for most customers, will become even more complex with virtualization.

Certain licensing terms of top manufacturers become detrimentally expensive when run in virtual environments. For example, Oracle licensing explicitly bans virtual machine (VM) partitioning as a basis for calculating the number of required licenses: “As a result, soft partitioning is not permitted as a means to determine or limit the number of software licenses required for any given server.� (Source: http://www.oracle.com/corporate/pricing/partitioning.pdf) Say a business application is run virtually on a 16 CPU machine, but only utilizes 14 CPUs. If the remaining 2 CPUs are used to run Oracle Enterprise Edition on a second virtual machine, according to Oracle’s licensing all 16 CPUs have to be licensed. The problem is that costs US $760,000 according to the current Global Price List!

How should you proceed without sacrificing your ROI?
Enterprise users should examine the license conditions of all manufacturers affected by their virtualization program, and if needed renegotiate terms. Licensing mistakes can lead to costs which significantly exceed the savings in hardware expenses.

Going back to the Oracle example, if the manufacturer is unwilling to negotiate, a second strategy is to check whether partitioning on the hardware side can be arranged or run the application on a separate server with two CPUs. In this case, the license costs sink to a reasonable $95,000 on the price list.

Software License Management
A software license management tool should be implemented to provide decision makers with the required information. Without license management, decisions will be made based on purely technical data. In other words, the perceived savings achieved by eliminating one server can create a license expense increase of $665,000. Not very effective.

Companies who don’t already have a capable license management tool in place should find a provider with experience and good references in server license management to work closely with them to ensure the success of their programs. It sounds like a straightforward answer and it is; but ample time and research should be dedicated to choosing the best provider. In the end, it will pay off to have them train your company’s IT professionals in the processes and regularly update them on changes in software license management.

» posted by kcweinberg

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