The onset of cloud computing has introduced an entirely new way for organizations to deliver applications, reduce costs, improve efficiencies and serve as perhaps the ultimate competitive equalizer.
The latest predictions from IT researchers show that enterprise spending on cloud is growing faster than overall IT spending – a trend that’s posing a challenge to legacy hardware and software makers. In fact, IDC (News - Alert) estimates IT cloud services to reach $55 billion by 2014 representing a compound annual growth rate of 27.4 percent over five years.
Why is the growth of cloud computing a threat for appliance makers? As the recent SafeNet (News - Alert) whitepaper, “The Impact of Virtualization and the Cloud on Software Entitlements” points out, appliances delivered on the promise to eliminate the need for expensive servers to install and run software, and software vendors were able to create purpose-built solutions that provided a lower total cost of ownership.
“Virtualization allows the same customized, ‘tailored-to-fit’ appeal of a hardware appliance, but without the actual hardware,” according to the whitepaper. “The same appliance can now be delivered as a virtual image. And virtual images have the added advantage of being delivered electronically rather than shipped, physically, resulting in time-to-market advantages.”
In fact, IDC predicts that by 2012 virtual machines will outnumber physical machines by two to one.
The shift to cloud technology from virtualized environments is similar to the transition to appliances in data centers. At this stage, it is not a matter of “if” but “when” the shift to cloud comes, as more businesses develop strategies to adopt cloud-based technologies and services.
“One of the challenges faced by ISVs is how their offerings need to adapt to run in the cloud and in a virtual environment. This primarily comes down to a problem of resources and technology,” according to the whitepaper. “It can be solved, and is really a matter of how much time and expenditure is involved. The real problem, and unfortunately the one that gets deferred somewhat, is dealing with how the products are to be priced and packaged when running in these new environments.”
What this means is that a complete software monetization solution – that includes both licensing and entitlement management components and is capable of meeting the specific needs of cloud environments – is critical in the launch and optimization phases of any cloud service.
Software monetization is the adoption of any variety of measures a software company takes in order to increase the profitability of their intellectual property, according to SafeNet, which offers software monetization services for small and medium-sized businesses (SMBs) up to large enterprises.
SafeNet enables licensing and protects data, logic and other intellectual property for many of the world’s leading software vendors. SafeNet’s suite of Sentinel solutions are designed to meet the unique license enablement, enforcement, and management requirements of any organization, regardless of size, technical requirements, or organizational structure.
With SafeNet’s SaaS licensing, software vendors are able to address their anti-piracy, IP protection, license enablement, and license management challenges while increasing overall profitability, improving internal operations, maintaining competitive positioning and enhancing relationships with their customers and end users.
Edited by Peter Bernstein