The cloud has changed everything. But does it promise new dangers or clearer skies for your bottom line and your Software Asset Management program?
Brighter horizons: The cloud is an easy and efficient solution for your software, platform, and infrastructure needs. And you don’t have to wait for central IT and procurement — with long approval and deployment processes — to access top-of-the-line solutions.
The cloud empowers your business units and employees to make IT decisions better and faster.
Rougher seas: But ease and flexibility come with a big price tag. Increased flexibility can cause costs to spiral quickly out of control when you consume more than you’ve budgeted for, or if you haven’t right-sized your environment. With cloud-based Software Asset Management, navigate your way past the dangers of high costs to the safe havens of increased revenue.
What does Gartner say about Software Asset Management in the Cloud?
Get your complimentary copy of the 2019 Gartner Report on Software Asset Management for the Cloud: Consumption Management and Optimization Take Center Stage. Exclusive, limited-time offer.
- Fewer audits can still mean increased costs
- The cloud: A salad bar for your business
- 4 “flavors” of cloud services
- Paying for your plate of salad
- Expand your horizon with our cloud specific blog posts
- License only what you can eat
- Cloud licensing can get cloudy
- 7 To Dos for SAM in the Cloud
- SAM in the cloud is the only way to ensure that you're driving revenue, not costs
- Webinars & blogs that help in any kind of weather
Cloud providers know what you’re using. Because everything is hosted on their servers, they don’t need to do invasive and costly audits. The benefit is that your organization saves time and money in audit preparations and associated costs. But it’s not because cloud vendors want to be nice. Cloud providers no longer need to look into your environment to see how their software and servers are being used. Your servers are their servers, and they can see your consumption and configurations without leaving their office chairs. The cloud is also a steady source of revenue, so providers don’t need to do audits to generate more profit.
According to Gartner, between 2015 and 2020, “SaaS growth will be 19.3%, and can be expected to reach $76 billion by 2020.”
And that’s just for Software as a Service (SaaS). That’s serious money for cloud providers, and a significant spend for your organization. Protecting your investment means going back to the basics of SAM. Know what you have, how you’re using it, and how it’s configured.
Maximize your resources, avoid license waste, and keep your IT environment free of costly clutter. Read our white paper, The Data Dilemma: Doing the Cloud Jigsaw, to learn how solid data can drive SAM in the cloud.
Think of the cloud like a salad bar. It offers an unparalleled variety of choices for your business. They’re flexible, easy to access, and demand fewer in-house resources. You don’t have to cook, clean, or plan a menu, and there’s something for everyone. It’s a delicious win for even the pickiest eater. Cloud services come in three main varieties: Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). Each service comes with its own licensing types, benefits and challenges. And then there’s the hybrid cloud, which combines the best of cloud and on-premises services. Let’s take a look at what’s being served.
SaaS is a browser-based application that you might use for normal daily work. You log into the vendor’s website and use software that is hosted remotely by that vendor.
Examples: WebEx, HubSpot, Salesforce, Google Apps, Aspera SmartTrack platform
Benefits: Low initial costs, continuous upgrades and support, easy customization.
IaaS gives you a virtual server OS environment or raw computing capacities. You rent servers that are offsite, and monitor them with applications as if they were on-premises.
Examples: Amazon EC2, Microsoft Azure, Rackspace Cloud
Benefits: Easily scalable, enhanced flexibility, better disaster recovery infrastructure.
PaaS gives you an environment to run custom applications without you having to maintain the underlying platform.
Examples: Microsoft Azure, Oracle Cloud, Force.com, Google AppEngine, Kubernetes
Benefits: Enhanced agility, maximized uptime, easily scalable.
Hybrid cloud is a blend of SaaS usage and physical installation. Some hybrid products are subscription licenses, some are a cloud workspace.
Examples: Microsoft Office 365, Adobe Creative Cloud
Benefits: Can be used on-premises and on-the-go.
Dr. Matthias Vianden, Head of Solutions Development, talks about the changes of SAM and cloud challenges companies will face concerning Saas, IaaS, and PaaS.
Some salad bars are all-you-can eat, some charge by the plate or the weight, and some combine traditional restaurant menus and table service with the option of going to the salad bar for all of those little extras. It’s all about what you — the customer — wants and needs.
Similarly, there’s a variety of ways to license your services in the cloud.
The four main licensing models are:
- Subscription model – You pay monthly or yearly for access to a cloud service. You’re not tied to long-term and expensive contracts, and can cancel at the end of a project or if you’re dissatisfied with the service.
- Pay-as-you-go model – You pay for the use of a specific instance, such as CPU capacity, memory, or storage. You’re charged only for how much you use.
- Pay-by-instance model – You pay for each server or server instance the vendor spins up for them. These Reserved Instances are contracted for specific periods of time (1 to 3 years), and they run 24/7.
- Bring-your-own license (BYOL) – You can use cloud software for which you already have a “perpetual” license that never ends. Keep the terms and conditions never change you know, so there are no hidden or accidental costs.
All-you-can-eat salad bars have fixed prices. Of course, when you pay by the plate or its weight, then you have to watch how much you take. Too much, and you’ll waste money on uneaten food. Too little, and you’ll miss out on volume pricing. The same is true with cloud licensing. To get the best pricing on your services you have to “eat” only what you need. Otherwise, your cloud costs will encourage license waste and eventually drive down revenue. Your goal is always to get the licenses that meet your organization’s needs and help drive revenue, but also keep costs down.
To choose the right cloud licensing model, you have to know what you need in advance. This means having solid data about your employees’ cloud usage and the company’s required server capacity or usage. Let’s look at two examples:
Pay-by-instance: A pay-by-instance model for IaaS is a smart choice if your usage demands it. If you need the servers to run constantly, then paying to keeping them on 24/7 makes sense.
However, if you’re not using the servers all of the time, then why keep them running? In this case, pay-by-instance is the better choice. Instead of paying for continuous access to the salad bar, just turn on the restaurant lights when you’re really hungry.
Pay-as-you-go: The pay-as-you-go model provides flexible computing resources at any time, and is especially useful if you’re covering workloads that will require ad-hoc capacity. But if your workloads are predictable and fixed, then a subscription model is more cost efficient.
SAM is your best strategy for navigating the salad bar of cloud licensing choices. Follow these seven to-dos to decide which license model best fits your business needs.
Knowing how much of the cloud you use can help you decide on the best cloud licenses. Usage is based on many metrics such as:
- the number of per user licenses
- disk space and storage space
- the number of servers or instances
- number of processes
- size of database and number of database queries
Each of these usage metrics can be tracked with a SAM tool that gives you an accurate picture of current and projected needs.
Start your cloud migration by identifying the problems that cloud services can solve. Do you need more ad-hoc computing power? If the answer is yes, then knowing how much and how often you need that power can help you decide between pay-as-you-go and pay-by-instance licenses. Or do you need software programs that can be installed on-premises but are also available on the go? Then a hybrid cloud option might be the best fit. Figuring out a business case for the cloud will help you analyze your current infrastructure, platform, and software concerns, and guide your organization in making the right license purchasing decisions.
The cloud is the newest frontier for SAM managers and means many changes for your SAM program. What are the new processes that SAM managers need in order to steer SaaS costs? How should they best handle them?
Whether you’ve already migrated or you’re thinking about it, your existing terms and conditions with a vendor might give you pricing advantages. Make sure you know exactly how to use your existing contracts to your advantage.
For example, Microsoft customers who have purchased three years of Software Assurance can move to the cloud at a lower price.
When you migrate to the cloud, make sure that you’re paying for only what you will need and use. The size and number of your servers, instances, and virtual machines will vary depending on your needs. For instance, consider whether you can redistribute your cores to fit in different sized and potentially cheaper instances. Don’t pay for 100% of a server if you’re only going to use 30% of it. Figure out in advance of your migration exactly how much server space you’ll need, and make sure to pay just for that.
If your cloud servers and instances don’t need to be on during certain times of the day, then get a cloud license that will allow you to turn them off or spin them down. Shifting consumption to off-peak hours can save money in the long run. Capacity management can also result in refunds. For instance, Google Cloud Platform customers are entitled to a refund if their cloud resources are not available in accordance with their Service Level Agreements. Regularly reviewing your downtime logs can help to recoup costs for any violation of the SLA.
When employees leave the company, or if they no longer need regular access to a cloud program, their existing licenses should be deactivated. This is license reharvesting. It prevents people from gaining access, returns usable licenses to the library, and makes them available for allocation to other employees. Instead of buying new licenses, you can better manage the ones you already have.
Many organizations encounter this licensing problem with Salesforce. Employees change roles or jobs but they continue to have an assigned Salesforce license. If someone else needs a license and there are none available, then new licenses need to be purchased. By reharvesting licenses, you will save money by eliminating unnecessary license spend.
Maintain flexibility without losing financial oversight. A central license overview can help you keep track of which business unit is using and purchasing licenses. Use that information to decide how to better budget for license purchasing, and to make sure licenses aren’t being wasted. For example, business unit A has 15 unused Salesforce licenses, and business unit B needs 23. Unit B can take the 15 unused licenses and only has to purchase 8 more. Without a central license overview, the organization would have wasted resources on licenses it didn’t need.