Oracle And the Cloud’s Lead Lining

Years ago, the idea of utility based IT that could be scaled up or down in real time to match demand seemed like a dream. But today, a very real cloud computing market is providing a greater competitive edge and customer satisfaction for those who choose to embrace it.

Cloud computing is fast becoming the territory of “shared win” outsourcing. In practice, this means that if a roll-out or project is successful and transaction levels reach or exceed expectations, the client pays more and both parties are happy.

If, for whatever reason, the project or roll-out fails, the cloud provider handles less demand and charges less. Clients are relieved that their committed costs are much less than if they had made their own provision for possible peak levels

In the cloud model enabling technologies like virtualisation and hardware factors are no longer the biggest limit to adoption. Instead, with this new level of maturity, cloud providers are encountering a whole new set of issues and challenges.

One of the biggest issues currently is how progress is being held back by overly restrictive Enterprise Software Licensing (ESL) models.

With Gartner predicting the cloud market to triple and hit $150 billion by 2013, ironing out these final licensing niggles will be vital for the curators of private and public clouds to maximise the returns on this new tech.

Leaden Licensing

Many software providers have products that are perfectly designed and engineered for cloud adoption but they are now starting to face issues caused by an increasingly archaic ESL model.

For example, Oracle’s products are world class in terms of resilience, flexibility and security, making it perfect fit for cloud deployment – its recent Sun acquisition only strengthens this case. However, its software-licensing regime is predominantly about ‘high water marks’ and ‘perpetual right to use grants’.

While the products are a perfect fit for the cloud model their restrictive licensing regime isn’t keeping up with the new age of computing.

Support and maintenance costs are linked to net licence numbers, meaning that fees paid to Oracle will typically ratchet upwards year on year irrespective of actual usage or benefit.  As a cloud provider or enterprise client, whether public or private, this business model can be a showstopper.