Defeating the Dark Side of Virtualization Using Software License Management

Jeff Greenwald

Virtualization is on the minds of most IT executives and administrators for several very good reasons, including a reduced data center footprint, lower overall IT costs, simplified server management, improved IT governance, and a greener data center. But virtualization can also make it difficult to track the use of software licenses. While virtualization delivers tremendous benefits, existing virtualization strategies may be putting organizations at risk of violating their software license contracts-a compliance nightmare that could cost hundreds of thousands or even millions of dollars.

Machine virtualization - in which each operating system instance on a physical machine functions as if it were the only operating system running on that machine - offers organizations significant operational benefits and the promise of a significant return on investment. The benefits include:

Cost Savings-Up to 10:1 server consolidation with server utilization moving from 20 percent to 60 percent or higher.

Flexibility-The ability to configure resources to adjust for variations in computing requirements across time periods, departments and geographies.

Governance and Compliance-Providing an effective framework for compliance and governance by allowing IT organization to standardize the native OS and hardware in a back office with no changes to the applications or impact to the end users.

Green Initiative Enablement-Reduced hardware requirements leading to less electricity consumed, lower data center cooling demands, reduced impact fees to offset equipment disposal, and more.

A dark side to virtualization exists, however, and it has many IT organizations cautiously reevaluating their virtualization strategy. The problem is how software licenses are entitled, managed, and negotiated - and how compliance is validated. If IT organizations don't manage software licenses effectively, then some or even all the anticipated savings of virtualization can evaporate.

I believe that these challenges will disappear over the next few years as enterprises pressure independent software vendors to offer license terms that align with the actual environments in which software is being deployed. But what should a business do today if it is struggling to deal with these challenges? Let's start with a closer look at the dark side.

The Dark Side of Software Licensing and Virtual Machines


Here are five ways that machine virtualization can run afoul of current vendor licensing models:

New virtual machines (VMs)-Launching a new VM (a virtual computer with all the software) takes seconds, but each application and OS on each VM is subject to vendor license terms, which may include special virtual use rights and restrictions.

Device-specific license models-These tie the license to a particular computer and may also impose move restrictions. With this kind of license, the dynamic load balancing sometimes used in virtual machine environments can cause non-compliance.

Processor-based license models-These licenses require details related to physical processors in order to determine license compliance, but on a VM the hardware details are often hidden by the hypervisor.

VMs per host license rules-These licenses allow the software to run on only a specific number of VMs for each physical machine with a valid license. An inability to track the actual number of VMs being created can cause non-compliance.

License incompatibility-The licensing terms of many vendors results in exponentially increasing costs when run in virtual environments. For example, Oracle licensing explicitly prohibits VM partitioning as a means for calculating the number of required licenses. Consider the following: a strategic business application is run virtually on a 32-CPU system but is partitioned to only utilize 16 CPUs. According to Oracle, however, all 32 CPUs need to be licensed.

From the customer's point of view, the biggest problem today is a lack of insight and control. Most enterprises begin with a clear and well-established virtualization environment, but because machine virtualization makes it so easy to respond to the changing needs of the organization, many businesses currently suffer from VM sprawl. IT managers may have no idea if or to what degree they may be out of compliance and may inadvertently lead their organization into a budgetary sink hole.

Strategic Software License Management

In order to obtain the maximum benefit from virtualization while remaining in compliance with their license agreements, consider adopting 'strategic software license management' by taking the following steps:

Step 1: Centralize all licensing operations - A decentralized approach to licensing results in a lack of visibility into the complete software license picture: Are some applications being over-licensed while others are under-licensed? Are there opportunities for license sharing? Centralizing licensing not only enables the development of a single, complete picture, but also eliminates the need for multiple licensing experts.

Step 2: Study existing software licenses - Understanding the various software use rights for applications running in a virtual environment is critical. If licensing operations are not centralized, make sure every group is updated on this information.

Step 3: Automatically detect applications runing on VMs-A next generation software asset management tool (see below) should be used to automatically and accurately detect software installations on VMs and reconcile what is found with purchasing data to understand the level of non-compliance. Accuracy is essential. Even a five percent error margin can result in costly mistakes. For example, if an organization with 4,000 licenses, each costing $5,000 has a five percent error in peak usage data, the company may be liable for more than $1 million of unnecessary costs over the life of the license contract.

Step 4: Use detailed reports to monitor changes and address pain points - Once the applications running on VMs have been identified, the management tool should automatically monitor changes to those environments. Detailed usage reports can be used to reduce spending on unnecessary software purchases and effectively manage peak demand, especially for shared licenses, such as floating, named-user and node-locked licenses. This information can also be the basis for automating license sharing across the enterprise and for setting up departmental chargebacks.

Step 5: Negotiate agreements based on actual usage - Armed with detailed, accurate information on actual usage, companies can negotiate or renegotiate the terms of their agreements with their vendors based on how the software is really being deployed and run in virtual environments.

Selecting the Right Software Asset Management Tool

A successful software management strategy requires effective tools that reduce the burden on administrators. An effective software asset management tool should:

Generate accurate and complete usage data, down to the feature and module level, that both software vendors and customers can trust.

Be able to give license priority to critical users and exclude unauthorized users from access to software licenses.

Use alerts to notify administrators of potential problems and job schedules to automate routine maintenance and generation of usage reports.

Generate advanced warnings when licenses are about to expire.

Allow administrators to stop unlicensed applications from running if such use violates licensing terms.

Solutions that meet these needs are called Enterprise License Optimization, or next generation software asset management, solutions. 

There's no doubt that virtualization offers tremendous opportunities for IT, but to take full advantage and avoid unnecessary costs, enterprises should adopt strategic software license management, utilizing a complete, flexible next generation software asset management tool.
 



Add Comment      Leave a comment on this blog post
Jul 12, 2010 7:07 PM Dominic Haigh Dominic Haigh  says:
This is indeed a hot topic among ISVs too, as we are seeing as a supplier of license management solutions. In fact, this was the subject of a recent Agilis blog - http://agilissoftware.wordpress.com. Agilis's license management solutions allow ISVs to enforce license limits on virtual systems, just as they would on real systems. Apparently, we hear some licensing systems out there just offer the option of preventing the licensed application from running on a virtual system at all. This seems to be working against the ISV's interests: ISVs presumably want their users to get maximum benefit out of their product within the license terms. Dominic Haigh Agilis Software www.agilis-sw.com Reply
Apr 21, 2011 1:04 PM Peter Peter  says:
Virtualization of licensed software can be easily managed. Currently we're using LM-X License Manager in order to protect the software from potential overuse. Additionally we have installed License Statistics software- license monitoring and tracking tool showing current license usage and providing customers with various type of useful reports. For more info go to www.x-formation.com Reply
Apr 22, 2011 7:04 AM Peter Peter  says:
Virtualization of licensed software can be easily managed. Currently we're using LM-X License Manager in order to protect the software from potential overuse. Additionally we have installed License Statistics software- license monitoring and tracking tool showing current license usage and providing customers with various type of useful reports. For more info go to www.x-formation.com Reply
Apr 22, 2011 7:04 AM Peter Peter  says:
Virtualization of licensed software can be easily managed. Currently we're using LM-X License Manager in order to protect the software from potential overuse. Additionally we have installed License Statistics software- license monitoring and tracking tool showing current license usage and providing customers with various type of useful reports. For more info go to www.x-formation.com Reply
May 31, 2011 9:05 PM John Browne John Browne  says:
Compliance from the customer's end is certainly important; but equally important is the need for tools to help ISVs understand and enforce license terms in a virtual environment. The good news is that new payment models are providing exciting sales opportunities for ISVs, such as pay per feature, software leasing, license borrowing, and maintenance periods. But without secure license management and enforcement tools and solutions, ISVs are in the dark about whether their customers are in compliance or not. Wibu-Systems' CodeMeter architecture is unique in its ability to support strong, unobtrusive software license security on terminal server sessions and in helping ISVs get real control over virtualization. Learn more at htp://www.wibu.us and http://www.wibu.us/virtualization Reply

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