No Such Thing as 'Simple' Software Licensing

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When it comes to what constitutes a "good" story, most folks like either insanely happy ones or horror stories, both of which leave a lasting impression. I'm no different.


Thus I was quite taken with a nightmarish tale about software licensing authored by InformationWeek's Secret CIO, a real-life CIO of a big company who writes under the pseudonym John McGreavy. His company recently bought almost a million dollars worth of software, after reviewing the solutions of three vendors. He notes that all three vendors were offering 80 percent to 90 percent off the list price. So his folks had to "hunt through the contract for future fees that are based on the list price," the maintenance and other gotchas.


Purchasing multiple different software modules presented additional complications. He writes:

Some parts of the suite are licensed by a named user--straightforward enough. But we're running a browser interface, and one user will access the system from many different browser-enabled devices. Does such usage require more than one named user license? Meantime, some software modules require a different level of named user license. And we need multiple levels of named user licenses, depending on the function of the user. Other modules within the same platform are licensed by company size--number of employees. Another module is licensed by CPU sizing. And yet another's licensing differs if you already own certain of the vendor's products, or if this is a new installation throughout the enterprise.

He says software vendors are vying with cellular carriers for what he calls the MLPMOTP award, "Most Ludicrous Pricing Model On The Planet." He wraps his tale with a suggestion:

I understand that our software vendors must earn returns that support continued investment and innovation. But how much time and effort would be saved by both parties with simpler, more transparent licensing methods? It's time for a change.

It's funny "McGreavy" mentions cellular carriers. I think Vonage is targeting them, at least in part, with new ads promoting their Vonage World plan, which offers unlimited calls to more than 60 countries for $25 a month.


I've written before about how software-as-a-service business intelligence is winning fans, thanks largely to its ease of use. This is also true of open source business intelligence software, although to a somewhat lesser degree. In many cases business units buy their own solutions without assistance from IT, a trend that has its downsides.


In addition to ease of use, I wonder if folks sometimes opt for open source or SaaS because of their perception they'll jump through fewer licensing hoops. Perception may or may not be reality. Both SaaS and open source present licensing issues of their own.


Open source licensing issues can sometimes get you sued, as legal consultant Katherine Chin Quee wrote in an IT Business Edge guest opinion. That shouldn't, however, scare folks from using open source software. Simon Phipps, chief strategy officer for open source middleware provider ForgeRock, has a nice rundown on the differences between buying proprietary software and buying open source software on opensource.com.


Added flexibility rather than lower cost is the biggest benefit of using open source software, says Phipps:

... You can choose to hire or assign your own staff to cover some of the support. You might choose to have your own developers work in the community for part of the lifecycle. You can turn the support agreement on and off throughout that lifecycle without losing the right to use the software. And the chances are that the market for delivering a subscription on any given open source project will be competitive, keeping costs down as a consequence. No proprietary lock-in means your suppliers have to stay lean and effective.

Though SaaS vendors like to tout the simplicity of their products, THINKStrategies Managing Director Jeff Kaplan told me folks buying SaaS must still conduct thorough due diligence. Pay-as-you-go is a "relative term," he said:

... Many of the services are genuinely pay-as-you-go, while others will require a certain amount of up-front commitment. Some require a first year commitment. So that kind of thing has to be carefully evaluated. [SaaS will] still be more flexible than the traditional approach, but they may not be as on-demand or as easy to pay for as you think.

And licensing gets more complex elsewhere in the cloud "stack" with infrastructure-as-a-service and platform-as-a-service products, as I wrote last month. ComputerWeekly.com Editor Bryan Glick recently opined that confusing licensing terms and conditions are "the biggest commercial impediment" for large organizations considering the cloud.


Let's hope open source companies and cloud vendors recognize the opportunity to win customers by offering licensing terms less complicated than those of their proprietary and on-premise competitors.