Software Licensing – the Public Cloud model

Managers in the Public Sector are wrestling with the wide range of options provided by the evolving Cloud services paradigm. Most are now familiar with the three Cloud service models (SaaS, PaaS, IaaS) and more than a few are testing the waters. The proliferation of Cloud services from a wide range of name brand vendors and the success stories from commercial companies provides a certain level of confidence that government agencies can realize similar economies in shifting to the Cloud for at least some IT services. Indeed, OMB, in its ‘Cloud First’ policy, has mandated serious consideration of the Cloud by agencies as the federal Data Center Consolidation initiative is implemented. In addition to the key issues of security, portability and interoperability being discussed in public sector forums, licensing simplicity is often mentioned as a desirable benefit of moving to the Cloud. In what way is licensing simplified? Let’s review the Public Cloud model and take a look at two SaaS scenarios being offered today to see which is closest to the model and offers the simplicity that IT and business managers want. NIST, who have the Federal government lead in defining the Cloud and working through issues related to the adoption of Cloud services, have defined the Cloud as follows (my emphasis): “Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” NIST further identifies five characteristics of Cloud computing: On-demand self-service Broad network access Resource pooling (location independence) Rapid elasticity Measured service A SaaS offering conforming to the NIST definition would allow a government user to access a provider’s central ordering portal, select the service he or she wanted, indicate any options desired, submit payment, and immediately receive a login for a service provisioned to his or her specification. The capability to allocate cost to the appropriate cost center actually using the service in the ordering organization is another important standard feature. When Apps.Gov was launched last year, GSA required a rigorous review of SaaS offerings to ensure compliance with the NIST model. However, a recent scan of the services now being permitted on Apps.Gov reveals SaaS services offered at over $ 1 Million, and at least one with a price of over $4 million to initiate the service. This licensing scenario, in my view, is inconsistent with what agencies are expecting. For a clean SaaS scenario, review Google Apps. The pricing per user is under $50 per year. Some aspects of a licensing model that would not be consistent with a Public Cloud service would be: Multi-year commitment High minimum cost High number of minimum users Inability to readily increase or decrease the number of users Inability to do the transaction online Inability to configure the service online. All of the above indicate that the buyer is, in effect, paying for a customized hosted service and a traditional license.