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Predictions for 2010: Enterprises gain the upper hand in virtual environment spending

What do Virtualization and Cloud executives think about 2010?  Find out in this VMblog.com series exclusive.  

Contributed article by Jeff Greenwald, Director of Enterprise Product Management, Flexera Software

Predictions for 2010: Enterprises gain the upper hand in virtual environment spending

Two recognized enterprise IT trends are currently butting heads. In one corner is the increasing pervasiveness of virtualization across the datacenter. In the other corner is software vendors who eye software license audits to prop up balance sheets in the  face of a sluggish economy and reduced revenues. The conflict arises because vendors now recognize the difficulty of accurately tracking software licenses for their applications running in a virtualized environment. This puts enterprises at a huge disadvantage. Fortunately, 2010 will be the year when enterprises can gain the upper hand.

Virtualization results in two common violation scenarios. The first is "soft" server partitioning. In many organizations, there's a disconnect between the person negotiating software license contracts and the administrator responsible for deployment and use. When the administrator opts to use virtualization to soft partition a server instead of using hardware partitioning, he may have no idea he's heading into a violation. Let's say the administrator has a 24-way server and hard partitions four CPUs to run an instance of Oracle or a Microsoft application. The list price for a software license for Oracle, for examples, is currently $47,000 per CPU, so the cost would be $188,000. But the software license agreements of both companies don't recognize soft partitioning as a method of isolating application instances and would require counting all 24 CPUs on the server. In the above example, instead of being liable for $188,000, the company would find itself liable for a total cost of more than $1.1 million.

The second violation scenario involves load balancing. Let's say an ecommerce division within a large enterprise uses virtual servers to upgrade its load balancing capabilities for an Oracle database back end. The site administrator purchases VMware licenses and creates virtual machines, each automatically running an instance of Oracle as the current load requires. Unfortunately, because the administrator likely has no idea how many Oracle licenses are being consumed by the virtual machines, the enterprise may quickly be in violation of its Oracle software license agreement.

To make the problem even worse, software vendors and enterprises often don't agree on a licensing model. Enterprises have embraced virtualized licenses as a way to reduce software costs, while vendors see it as increased functionality and a way to justify a higher prices. Even in traditional deployments, when licensing terms are in theory clearly understood, most companies lack mechanisms to ensure compliance. Virtualization makes this very real problem even trickier, and the virtual environment may be violating license agreements the moment it's turned on.

In 2010, as more and more organizations begin to recognize the huge potential costs of software license violations in their broad virtual environments, they will look to establish best practices that will eliminate uncertainty, ensure compliance, and keep them prepared for audits. We believe the following best practices will accomplish this.

Software License Compliance Best Practices

  • Think creatively about how to do more with less during these challenging times. Many enterprises are turning to SaaS as a means to do so. However, without a means to monitor usage they may inadvertently be getting into the same shelfware predicament with on-premise solutions. For example; let's say an organization is paying a monthly fee based on a 10000 user license. By monitoring the traffic, i.e. usage, to a specific SaaS solution they could identify that during the last 3 months only 8,500 employees are actively using it. With this new information at hand organizations could change their license subscription.
  • Collect complete, granular information. Large applications are often deployed across multiple platforms and include a wide range of options, entitlements, and utilities. Only granular information provides sufficient visibility into the complete deployment and provides the accurate information negotiators need. Once an application heads for the "cloud" without that usage information, enterprises and their vendors will be struggling to understand the impact on license entitlements.
  • Use a regularly scheduled, automated process to reduce the impact on staff, eliminate business disruption, and ensure accuracy. A third-party "agentless" software solution is the best way to add this capability without adding additional management complexity. Virtualization typically helps enterprise IT reduce complexity, so having this agentless optimization and usage tracking tool dovetails well with that strategy.

 

Enterprises have begun to accept that they will eventually be audited but can't predict when it will happen. They are also recognizing that as their virtual environments grow, they are increasingly susceptible to unknown degrees of software license compliance violations. Taking steps to ensure compliance before the audit hits can save them hundreds of thousands or even millions of dollars. When tools from Flexera Software and other companies are used in the context of the above best practices, enterprises can precisely track usage in virtual environments, make better predictions of future needs, and actually gain the upper hand in their license contract negotiations.

About the Author

Jeff Greenwald is a senior director of product management at Flexera Software. With 11 years experience in the licensing and software lifecycle management space, Greenwald is responsible for aligning customer needs and market direction with Flexera Software's FlexNet
Manager Suite for Enterprises. Greenwald publishes widely on enterprise license optimization issues, especially concerning high-value software applications such as SAP Business Suite, Oracle databases and eBusiness Suite, and engineering applications. He has contributed to articles on how to prepare for potential software audits, virtualization risks for enterprises and other topics. He holds his B.S. in Computer Science from DePaul Univ.

Published Tuesday, December 08, 2009 5:34 AM by David Marshall
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