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Meta rubbishes Gartner's licensing apocalypse
Just plan ahead and it'll all be fine...

By Isabelle Chan

Published: Monday 29 November 2004

Software costs will continue to increase but not at the rates projected in recent industry reports, according to research firm META Group.

In a study issued last week, Alan Butler, a research director with Gartner, said software licensing costs will rise by more than 50 percent in the next two years, due to emerging hardware trends like the move to multi-core chip architectures and virtualised hardware.

However, Kevin McIsaac, META Group's research director for Asia-Pacific, said the cost increase would be much lower.

"We don't see software costs spiralling out of control. In fact, our research shows that software costs will grow at just about 10 percent per annum," he told silicon.com sister site CNETAsia.

While Gartner's Butler urged users to protect themselves from the rising costs by renegotiating existing contracts with their vendors, McIsaac said users would be able to manage their costs better if they took a different perspective.

"Since software is the second biggest cost after people, users should start looking at managing software as a real asset," he noted. People account for about 45 percent of the total data centre costs, while software, the second biggest component, makes up between 30 percent and 35 percent.

McIsaac emphasised the importance of understanding what software is really used and what can be eliminated, as well as how the licensing model interacts with technologies like multicore and partitioning or virtual machines.

"They need to exploit these technologies to control or reduce costs," he noted.

As an example of better planning, McIsaac said: "If I have four systems with four CPUs, and the vendor charges per CPU, then I pay for licences for 16 CPUs. If these systems are only used 20%, perhaps I can 'consolidate' to one system with 6 CPUs, using virtual machines or partitions, and reduce my licence costs by paying for 6 CPU licences."

Although the future direction of licensing models remains unclear, there are signs of good news for users, such as Microsoft's decision to recognise a multi-core CPU as a single processor.

"It's a matter of time before the other software vendors follow suit," McIsaac said.

And in response to the growing interest in rapid provisioning tools, which help improve the utilisation of hardware resources, IBM has changed its current practice of requiring its customers to pay for all the CPU licences for the full year.

Han Chung Heng, the general manager for IBM Singapore's Systems and Technology Group siad: "IBM is offering per-use CPU licensing, so that a customer can pre-purchase a block of CPU days for a particular piece of software. As they activate additional CPUs to deal with temporary workload spikes, then deactivate, the customers only have to pay for the usage of the software during that period of the spike."