Post number 10 in a series of 12 from one of our provider partners, NTT.
A reduction in software costs might be a less obvious advantage of using cloud vendors, however much of the software that is purchased in large enterprises today is underutilized or not used at all. When buying servers, operating system and software packages need to be purchased to support the hardware. Software maintenance contracts need to be purchased as well. Many large organizations have significant buying power with their software vendors, which helps reduce the cost of licensing, but they are ultimately responsible for the cost of the licenses whether they are used or not.
One of the more recent benefits that is starting to show up in the cloud provider space is the use of bundled open-source software packages that have all of the operating components of an application already installed in a cloud image. This enables some of the newer applications, such as blogging or webserver software, to be deployed quickly without having to match up dependencies for the software. While this may not initially help migrate existing applications into the cloud, it provides a future development and deployment path for applications. If you use, for example, Jumpbox, Bitnami, or Turnkeylinux.org platforms for initial release, there is less concern about the portability of the applications to different cloud platforms. Keep in mind when looking at these providers that most of their application stacks are Linux-based and use open source software. It is free to put together these packages for independent organizations, so the cost to put an image out there is based on time and the cloud resources needed to test it out. There is an additional cost for doing this with paid vendors, which may be unacceptable for larger organizations that need a higher level of support from the application rather than community-based support forums. However, this may be a viable option for larger organizations wanting to test environments. Many enterprise applications are starting to offer their product in a SaaS capacity as well, which can help with issues around development.
I am a firm believer that while many applications are currently being deployed locally, the majority of software packages available in the near future will be cloud-based (SaaS). In a separate post I will describe this in more detail, as well as how SaaS providers will probably end up using IaaS providers for their service.
Something that is not always taken into account when looking at software costs is the cost to acquire and set up the software. If you look at the buying process for most companies, there is an initial period where the vendors meet with members of the staff. This may consume many hours of employees’ time. Then there may be time needed for comparisons, bakeoff, demos, and pilots that need to be completed. Once the software is acquired, there is typically a rollout plan created, and if the software provides similar functionality to something that already exists then migration plans need to be put in place for the employees.
Cloud providers may be able to provide better pricing because:
- They have economies of scale with software vendors.
- There is a licensing agreement know as a Service Provider License Agreement (SPLA) that large cloud providers can take advantage of. This license may provide a lower price point for the customer.
- Cloud providers may also bill for the software only when it is used.
In addition to being able to reduce prices, you also can get the following software benefits:
- A relatively low-cost, low-risk approach to trying out new software.
- Having the ability to set up a low cost sandbox environment to help users understand a product without the fear of “breaking” something.
- A low cost training area based off of production images stored in the cloud.
If your company is looking at alternatives for your software licensing, you should definitely be looking at SaaS companies and companies that provide IaaS. One of these days, that will be the preferred method of for buying and managing software.
Next Post: Moving Enterprises to the Public or Hybrid Cloud Part 11 –Disaster Recovery
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About the author: Ladd Wimmer
Ladd Wimmer is a valuable member of the NTT Communications team. He has over 15 years of experience implementing, architecting, and supporting enterprise servers, storage and virtualization solutions in a variety of IT computing and service provider environments. He worked as Systems Engineer/Solution Architect in the Data Center Solutions practice of Dimension Data, most recently serving as technical lead for the roll out of Cisco’s UCS and VCE vBlock platforms across the Dimension Data customer base. Ladd has also run two IBM partner lab environments and worked for an early SaaS provider that created lab environments for Sales, QA testing and Training.
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