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I pity the CIO who assumes software licensing is 'Like for Like' in the Cloud

The rush to migrate to the cloud is the de-facto strategy for many Chief Information Officers (CIOs) eager to take leverage of the economies of scale and drive down IT Spend. However, this enthusiasm can lead to major cost overruns as a result of inadequate preparation, something known as “Cloud Billshock”. The one aspect that is frequently overlooked is software licensing. Often the software stack is many multiples of the cost of the underlying cloud platform.

The primary reasons for the lack of software licensing preparation are

1: the misconception that the cloud automatically takes care of software licensing compliance.

2: it’s a ‘like for like’ migration into the target cloud environment.

The assumption amongst CIOs is that moving their applications and services to the cloud means they don’t need to worry about licensing. However, this assumption can result in unexpected financial and legal consequences for organisations.

However adequate planning can cost little and deliver significant cost savings as well as avoid programme ending issues.

Don’t be a fool – prepare for your cloud migration effectively.

To mitigate for this misunderstanding, a comprehensive licensing software review should be conducted prior to migration. All the in-scope software applications and licenses the organization currently possesses should be identified, and a clear understanding of the product volumes, and the terms and conditions for these licenses should be obtained. With a clear understanding of the ‘use rights’ for software assets, CIOs can then work with the Internal ITAM Teams, the migration Project Manager, the Architecture team and cloud service provider to ensure that the migration adheres to licensing agreements. This may involve purchasing additional software licenses or opting for cloud-specific licensing agreements.

Another common mistake is overlooking the intricacies of multi-cloud environments. In a multi-cloud setup, organizations use compute and services from multiple cloud providers. Each Software Publisher may have different licensing models and terms for the target cloud landing zones. CIOs must take into account these variations and manage software licensing across multiple clouds effectively. This can be achieved through specialized cloud management tools, a clear strategy, effective management of the software assets, and a clear understanding of the software ‘use rights’ to ensure compliance across all cloud platforms.

Furthermore, organizations should consider adopting a Software Asset Management (SAM) program to monitor and ongoing software license management. Properly managed SAM tools can help CIOs keep track of license usage, optimize software deployments, and ensure compliance, even as their cloud environment evolves.

In conclusion, the omission of software licensing strategy during cloud migration is a critical mistake for CIOs. With careful planning, an understand of software ‘use rights’, having sound licensing advice, CIOs can mitigate these issues and ensure a smooth and compliant transition to the cloud while avoiding unexpected software and legal costs. Proper preparation is key to harnessing the full benefits of the cloud while staying within the contractual terms of licensing agreements.


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