November 2, 2020 - Blog

Top 8 Licensing Implications When Moving to the Cloud

Moving your infrastructure to the Cloud has undeniable business advantages; reduction in IT cost and complexity, and the ability to adapt to business change seamlessly, to name but a few.  However, the shift to the cloud has highlighted a need to pay attention to how we measure and manage our software license assets before, during and after the transition.

There are numerous challenges from an enterprise license perspective that should not be ignored as many organisations today can unintentionally create compliance problems that may not be discovered until much further down the project timeline – worst-case scenario, during a vendor audit.

It is important to remember that license deployments, terms, rules, and policies will change for your on-premises enterprise software when you move to the cloud. This post outlines just some of the scenarios to be on the lookout for:

  1. Hybrid Environments

A mixture of on-premises and public cloud infrastructure is a common scenario and can often occur during a migration process (e.g. parallel running), for Disaster Recovery (DR) or backups and archiving. It is important to remember that, if not carefully planned and managed, issues can arise in hybrid environments that could result in license non-compliance and potential vendor fines.

  1. Vendor Behaviour

Depending on your enterprise vendor and the cloud platform you are moving to, you may be subject to an approach by your vendor to understand fully what you are doing, how and when.  This type of project (like any change to your environment) can also trigger a vendor audit at any time, so be prepared and audit ready.

  1. Scalability

One of the major benefits of switching to the cloud is that it is scalable by nature. This allows you to flex cloud resources to fulfil an increase in demand or react swiftly to business infrastructure change – the recent COVID-19 crisis would be an example of this. With an increase in demand, you must consider the cloud resources you deploy and how they affect both your budget and your license compliance position: licenses are typically not scalable in the same way as your infrastructure and cloud resources.

  1. Global Distribution

Another selling point of cloud infrastructure is that it is distributed by nature. Cloud providers such as AWS or Azure enable organisations to easily launch resources across the globe. This allows businesses to deliver fast and reliable service to their customers regardless of geography. Compliance and regulatory problems can arise if you are uncertain of your legal and contractual obligations when it comes to the storage and transfer of data and using licensed applications across international borders.

  1. Shadow IT

As the cloud has become more persuasive, end users have at their disposable numerous cloud services to address a variety of busines activities. Ease of set up means that end users can now implement many cloud services without support from the IT function.  These new levels of empowerment create both financial and security risks. Having a blend of automated asset intelligence and financial data analysis can mitigate risks such as the elimination of duplicate services, waste avoidance and protecting company data.

  1. Profiling & Right Sizing

Adopting a ‘one size fits all’ subscription model for SaaS or performing a ‘lift and shift’ for IaaS, for example, will create significant overspend. Pre-migration profiling of cloud requirements and fine tuning these requirements on a recurring basis sets the foundation for effective cost control. Having a bedding down period before making long term licensing commitments should also be considered.

  1. Subscription Buffers

Acquiring cloud services can be compared to doing a large weekly grocery shop without a list. There is a risk that you might err on the side of caution to meet perceived demand by acquiring surplus capacity that will be ultimately wasted. Having high quality data driven insights can enable robust forecasting that can prevent subscription buffer wastage.

  1. Harvesting

It is a simple concept that you must generally ‘use it or lose it’ when it comes to cloud services. Yet many organisations fail to track, identify, and review inactive licenses. The concept of harvesting cloud assets on a frequent basis will eliminate Zombie online services consuming financial and operational resources. This can include the complete removal of licenses and associated monthly billing or redistribution to meet new demand.

The implications for moving your software license estate to a cloud infrastructure are legitimate, and without knowing it you can expose your organisation to unintended compliance consequences which during these uncertain economic times could be financially detrimental.

Critical to the success of your cloud project is planning your move sufficiently and considering the various implications on your enterprise licenses before, during and after your cloud migration in order to optimise cost as far as possible.

Through the adoption of an effective license assessment, migration, and software asset management approach, Version 1 can support your journey to the cloud, ensuring risk-free migration, unbudgeted cost avoidance, and business case ROI realisation.

If you are considering a move to the Cloud or are in the middle of your project and would like more information on license impacts, then contact us with any questions.

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