Cloud Licensing in Your Environs

One of the first hurdles you'll face when migrating to The Cloud is the bewildering variety of license options available. While working with financial and legal terms can be excruciating, it can also help you choose the right provider and save money for your small business. To understand Cloud licensing, use this beginner's guide to get a better feel for how software licenses work.

The Permanent License

Previously, there was a perpetual license, whereby your software was stored on a physical disk and you were allowed to use it for an unlimited period under the terms of the End User License Agreement (EULA). Think of the EULA as the rule book for software; it tells you things like how many machines the software can install, how long you could have access to free updates, and how much liability the company is willing to shoulder if something goes wrong when you use the software.

Permanent licensing is still alive and well today, but as more and more software providers transfer their wares to The Cloud, it becomes less and less relevant.

The Site License

As the use of software increased over time, companies often required a license for more than one person. For instance, a Microsoft Word set-up for a PC would require a site license.

This works much like a continuous permit - the only exception being that it can be used by everyone in your workplace. The biggest difference was that as the number of people using the software increased, the price per user decreased. This was - and still is - called a volume discount.

The Seat License or Nominal User License

Before the advent of The Cloud, there was an intermediate stage in which the software lived on local servers and could be accessed by a number of people. A company would pay to use the software for ‘post'. In other words, the number of seats purchased was the number of licenses they obtained for that software or the number of people who could use the software.

With the rise of Cloud technology, software licenses have changed, mainly due to the nature of online work and to drive product adoption on a daily basis. While the seat licensing model is a slow transition (mainly due to volume discounts), many companies are actively moving towards Cloud licenses to gain a new market share.

Subscription Licenses

Thanks to The Cloud, customers have now have the opportunity to pay month by month and cancel at any time if they're not satisfied with their experience. These expectations have led to recurring types of licensing models.

Monthly and yearly premium licenses are standard Cloud rates. Purchasing these regular rates allows you to use the software or service for the following month or year respectively. 

Note:

  • Paying monthly gives you the flexibility to change providers or stop using The Cloud for a particular service. This is a significant advantage over previous types of licenses, whereby you paid a higher single rate in advance.
  • Paying for an annual license can generate significant cost savings, as many suppliers discount the price per month considerably if you do so.
  • Many providers allow you to start with a monthly license and switch to a proportional annual one.

Examples include:

  • Office365 is a user-based subscription model for setting up and managing a secure office for your business.
  • Meylah mobile ready store is a subscription-based solution for managing your online business. The solution serves the freemium pricing model to the premium price model ($ 20 / month).
  • Canva.com provides a great way to produce creative content and simple designs for everybody, including web or print projects, Facebook covers, presentations, posters, flyers, invitations, blog graphics, and much more.

Pay-As-You-Go Licenses

Technological advancements have allowed suppliers to accurately track the use of their software and services, opening the door to a different type of license: pay for use.

Pay-as-you-go is just that: you'll only pay for the amount you use. This use can be measured in many ways, including:

  • Number of processes performed on the provider's server
  • Amount of disk space used by your company
  • Database size and / or number of database queries

Note:

  • This licensing structure allows your startup company to maintain growth without having to buy hardware or infrastructure. As your business grows and subsequently uses more software or hardware, you will pay accordingly.
  • Providers often use this licensing model to create specific offers like ‘Forms A and B, but not C'. This is beneficial for your small business, because you are only paying for what you need to use.
  • Pay-per-use licenses allow providers to track usage on all devices, eliminating the hassle for both the customer and provider, in terms of trying to license the software on each device separately.

Examples include:

https://www.synapsesearch.nz is an open, flexible, enterprise-class Cloud technology platform. They offer SQL databases, virtual machines, active directories and much more to run online applications.

  • Rackspace Inc. is a Cloud technology company and enables the ‘Fan Support' offering to focus on Cloud services and support.

Payment Licenses Per Instance

The final type of license applies more to Cloud services, such as IaaS and PaaS.

In this scenario, you have to pay for both servers that the provider allocates you.

Note:

  • This licensing pattern has similar benefits to the pay-per-use license, as you only pay for what you need and / or use.

Examples include:

  • Private Cloud to host applications for your business
  • Install Power BI for your company to create panels and reports
  • Custom application for internal use conclusion

While Cloud licenses might seem initially confusing, it's useful if you subdivide them into the types mentioned above. This way, you can evaluate the pros and cons of each option more clearly.

One last warning: no matter what type of license you select, be sure to read all the fine print to avoid any surprises in the future. If you are confused with your Cloud license and need assistance, sign up for a free 1: 1 Cloud consultation for your business.