Cloud Licensing Models That Exist Today

The topic of "Licensing in the Cloud" is probably the most interesting business-technology topic, according to me. If you are an enterprise customer looking to migrate your applications to the cloud, licensing is probably one of the first topics you would want to discuss.

The Amazon Web Services team is working with many third-party ISVs to smooth the migration path as much as possible. There are different licensing models that exist today. The ones that I know are:

1. Bring Your Own License (BYOL) Model
   AWS has teamed with variety of ISVs who have permitted the use of their product on Amazon EC2. This EC2-based license is the most friction-free path to move your software into the cloud. In this case, you purchase a new license the traditional way or use your existing multi-year highly-discounted license and apply it to the product which is available as a pre-configured Amazon Machine Image. Oracle, Sybase, Adobe, MySQL, JBOSS, IBM and Microsoft have made their software and support available in the AWS cloud using the BYOL option. If you don’t find the software that you are looking for in the AWS cloud, talk to your software vendor about making their software available in the cloud. The AWS Business Development Team is available to help you with this discussion.
2. Utility Pricing Model with a Support Package
   In the cloud, if you are not paying for your infrastructure up front, why should you pay for software licenses up front? AWS has teamed with forward-looking ISVs and they are offering their software as a Paid AMI (using the Amazon DevPay service). This is a Pay-As-You-Go license in which you do not incur any up front licensing cost and only pay for the resources you consume. ISVs charge a premium over and above the standard Amazon EC2 cost which gives you an opportunity to run any number of instances in the cloud for the duration you control. For example, RedHat, Novell, IBM and several others offer pay-as-you-go licenses. ISV's typically, offer a support package that goes with these type of licenses.
3. ISV SaaS-based Cloud Service
   Some of the ISVs have offered their software as a service and charge a monthly subscription fee. They offer standard APIs and web-based interfaces and are fairly quick to implement. This offering is either fully or partially managed inside the AWS cloud. This option is often the easiest and fastest way to migrate your existing on-premise installation to a hosted on-demand offering by the same vendor or an equivalent offering by a different vendor. In most cases, ISVs or independent third-party enterprise cloud services integrators offer migration tools that can help you move your data. For example, Mathematica, Quantivo, Pervasive and Cast Iron provide a SaaS offering based on AWS.

If your enterprise applications are tightly coupled with complex third-party enterprise software systems that have not yet been migrated to the AWS cloud or if you have already invested in multi-year on-premise licensing contracts with the vendor, you should consider refactoring your enterprise applications into functional building blocks. Run what you can in the cloud and connect to the licensed software systems that still run on-premise. Amazon VPC may be used to create an IPSec VPN tunnel that will allow resources running on AWS to communicate securely with resources at the other end of the tunnel in your existing data center.

What do you guys think? Are there any other interesting cloud licensing models that exist today?

- Jinesh Varia

Comments

[tk]

I wouldn't mind if DevPay was opened up to individuals and businesses outside the U.S.. That would really help.

[Ernest Mueller]

We have a couple SaaS offerings on AWS, and are thinking about making other software products available as AMIs. This brings up some questions though.

1. Why is the AMI listing page so bad? You can't even search it any more. It seems very hard to determine what all ISV offerings there are in the space without paging through 57 pages of offerings (and I'm not convinced most are listed; I know Jive and Atlassian do it and I don't see them in there). That seems like a missed opportunity to drive people to Amazon-based solutions. It's the diametric opposite of an "app store." (I'm reasonably sure there's online store expertise there within Amazon!)

2. It seems like there's not as many people doing it as I'd expect; I'd think many ISVs would find it a useful alternate delivery method especially for demos, short term usage, etc. What are the "gotchas" that I don't know that is preventing more adoption? Is there some kind of gating that makes only the IBM/Oracles able to swing it? How is customer adoption of AMI-based software delivery?

Thanks...

[Miha Ahronovitz]

I just learned about the BYOL and ISV-SaaS based business models for billing in addition Pay-As-You-Go. It shows how AWS responds quickly to the needs of doing business in different way. I am pleasantly surprised.