Software licensing: The blind spot in public cloud costs

Software licensing costs can be significantly higher for cloud instances than on-prem servers, or favor one cloud over others

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Over the last five years, as enterprise IT teams have implemented better cloud governance, they have moved from “cloud bill shock” to actively managing and optimizing their public cloud spend. In fact, the RightScale 2018 State of the Cloud Report found that optimizing cloud costs is the top initiative for the second year in a row for all cloud users.

However, the additional costs of licensed software running on public cloud instances is still a blind spot for many organizations. In some cases, the cost of the licensed software may far exceed the cost of the cloud infrastructure on which it runs. Cloud has also become a hub for applications that connect to edge devices for mobile and IoT. These edge devices may also run licensed software components that need to be included in the overall cost of a service. Without a complete picture of all of the costs of cloud workloads, including software license costs, organizations risk ballooning costs caused by un-optimized spend.

While enterprises are leveraging PaaS services (such as database-as-a-service or Hadoop-as-a-service) for some workloads, they are also frequently installing licensed software on cloud instances. Those licenses may be covered by existing enterprise agreements or they may represent net new licenses that need to be purchased.

Because leading software vendors often price software licenses differently for public cloud instances, the software running in the public cloud (even in the same-size virtual machine or on the same CPU chipset) may not cost the same as when running on-premises. In addition, there are often incentives provided by software vendors to run the software on the vendor’s own public cloud. All of these factors should be considered whether you are migrating existing workloads to the cloud, building greenfield cloud applications, or negotiating pricing.

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