Licensing Headaches: Is VMware Or Microsoft Worse?

Recent VMware pricing controversy shows that software vendors are from Mars and IT is from Venus. But don't let emotion cloud your software plans.

Jonathan Feldman, CIO, City of Asheville, NC

July 25, 2011

3 Min Read

Guess what? There's no obligation. In fact, because the software is hard to swap out, the vendor has more leverage to change the terms and conditions to create more revenue.

So plan for your software license to apply only to the lifecycle of the current version. After that, all bets are off, at least with the way that enterprises now deal with infrastructure software.

Software licensing's not all doom and gloom. Customer pressures have forced vendors to quietly change their policies. Konary cites SAP, which at one point eliminated basic support and forced customers to pay for premium support. "SAP made a bet that customers would want the higher level because environments were getting more complex," she says. But some customers made it clear that they wanted the basic support, and they told SAP to go stick it. Some even filed lawsuits in various countries. "Then about 18 months later, SAP re-introduced the lower tier," Konary says. Same shift could happen with VMware.

Meanwhile, Microsoft, which I've criticized for its treatment of desktop virtualization licensing, announced last quarter that enterprises could, at no extra charge, move their app licenses, including SQL Server, into public cloud infrastructure. Previously, Microsoft didn't allow that entitlement, making it costly and difficult for companies to move apps from a bucket of virtualization or private cloud into the public cloud. Without this entitlement, service providers would have had to buy service provider entitlement--and pass the cost back to the customer, of course.

But wait, there's a catch. You need to be enrolled in Microsoft's expensive Software Assurance program. Buying retail licenses won't cut it. In other words, pay me now or pay me later. For those that are premium customers, it's a benefit, to be sure. For everyone else? Not so much.

Software vendors seek to maximize revenue. Enterprises seek to control their costs. So be an educated consumer.

It's time to treat infrastructure software the same way we treat ERP software. One best practice is to seek consistent maintenance and licensing terms throughout a set period of time, in some cases as long as five years. The tradeoff is to accept some level of annual price increase, either negotiated or based on something like the consumer price index. And if your infrastructure investments are critical enough, keep a pinch hitter on the bench in case your main provider changes licensing terms in an unacceptable way.

There are no vendor heroes or villains. Customers' control over software licenses is only as firm as the market forces reining in those vendors and your ability to negotiate and hedge your bets.

Jonathan Feldman is a contributing editor for InformationWeek and director of IT services for a rapidly growing city in North Carolina. Write to him at [email protected] or at @_jfeldman.

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About the Author(s)

Jonathan Feldman

CIO, City of Asheville, NC

Jonathan Feldman is Chief Information Officer for the City of Asheville, North Carolina, where his business background and work as an InformationWeek columnist have helped him to innovate in government through better practices in business technology, process, and human resources management. Asheville is a rapidly growing and popular city; it has been named a Fodor top travel destination, and is the site of many new breweries, including New Belgium's east coast expansion. During Jonathan's leadership, the City has been recognized nationally and internationally (including the International Economic Development Council New Media, Government Innovation Grant, and the GMIS Best Practices awards) for improving services to citizens and reducing expenses through new practices and technology.  He is active in the IT, startup and open data communities, was named a "Top 100 CIO to follow" by the Huffington Post, and is a co-author of Code For America's book, Beyond Transparency. Learn more about Jonathan at

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