Enterprises unprepared for software license compliance risk from virtualisation

Tensions between application producers and enterprises around virtualisation are likely to heat up. Many enterprises are not implementing prudent best processes and technology to track and manage licenses for their virtualised applications. This...

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Tensions between application producers and enterprises around virtualisation are likely to heat up. Many enterprises are not implementing prudent best processes and technology to track and manage licenses for their virtualised applications.

This will likely increase tensions between buyers and sellers of enterprise software. As more organisations are found to be out of compliance with virtualisation licensing rules during increasingly frequent software vendor audits, they may pay out steep, unbudgeted “true-up” costs and penalties (often millions of pounds).

According to the most recent Flexera Software 2013-14 Key Trends in Software Pricing & Licensing Report, prepared jointly with IDC, application producers are rapidly evolving their software pricing and licensing strategies - but they are largely unaware of the difficulties their enterprise customers have managing software entitlements. 33% of application producers said they’ve changed their software pricing and licensing models in the past 18-24 months.

Some 48% said their primary reasons for making these changes were to generate more revenue. 43% said their reasons for doing so were in response to competitive dynamics. And 42% said it was to improve relations with customers.

Yet in assessing the impact of those changes on their customers, almost two-thirds of application producers - 59% -- say it is not difficult for enterprises to determine which products they are entitled to use.
In fact, enterprises experience tremendous difficulties managing their entitlements and staying in compliance. As reported in the previous Key Trends in Software Pricing and Licensing Survey on Software License Audits: Costs & Risks to Enterprises, 85% of organisations are out of compliance with their software license agreements.

With 39% of enterprises in the survey reporting that they either don’t manage their virtualised software licenses, or they do so manually - software vendor audits will likely yield increased findings of software license non-compliance.

Here are just a few examples why managing software in virtual environments is so complex - and why enterprises need to be proactive:

  • Virtual Server Environments: In virtual server environments, the ability to move virtual machines from one physical host to another using technology such as VMware’s vMotion, creates risk exposure. The software license may or may not allow such a move. Even if the move is allowed, the number of licenses required may change, depending on the license model and the hardware characteristics of the physical servers involved.
  • Complex Vendors Rules for Virtualisation: Symantec, for instance, defines virtual environment use rights for their datacenter server products. The operating system edition determines the number of virtual machines allowed per license for Symantec Storage Foundation. The Symantec license tiers correspond to the Windows Server virtualisation rights granted by Microsoft. On Windows Server Enterprise edition, the Symantec software may be installed and run on up to 4 virtual machines, whereas for Datacenter edition, the number of virtual machines is unlimited.
  • Desktop Applications: On the desktop, the challenges stem from the fact that the application can be streamed from a central server, rather than being installed on the client device. So, install counts don’t help with understanding license compliance in these environments. And now, users can access software running on their virtual desktop, from their mobile device, home computer, or airport kiosk, in some cases. Microsoft allows these Roaming Use Rights for certain products, such as Office, Project and Visio, under Software Assurance. Software licenses are required for all devices that are used to access virtual images of these applications.
  • These examples illustrate the complexity of the license management problem in virtualised environments. Organisations failing to proactively manage their virtualized software use can expect painful true-ups come audit time.

Posted by Vincent Smyth, Senior Vice President EMEA, Flexera Software

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