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Want to ditch those software licence blues?
Could software as a service be the answer?

By Will Sturgeon

Published: Monday 22 May 2006

The purported benefits of the software as a service model, such as cost, scalability and time to implementation, have been well documented. But a hidden benefit could soon become a strong selling point, according to some experts, as companies look to alleviate their asset management headaches and vendors look to stamp out piracy.

A move away from packaged software, with CDs in shrink-wrapped boxes, towards applications which are accessed online, hosted by the manufacturer would mean fewer opportunities for pirates for whom copying a CD is still alarmingly easy. But it would also mean companies wouldn't have to keep track of which CDs are installed where within the enterprise.

Andy Burton, founder of asset-management firm Centennial and a newly appointed director at the Federation Against Software Theft (Fast), said: "Most companies today I believe fall foul of compliance issues because of poor management rather than malicious behaviour but equally piracy is a growing issue that CD or web delivery struggles to combat."

As such he said the software as a service model could have a lot to offer in terms of protecting revenues for vendors as well as relieving the asset management headache for end users.

Burton said: "In a perfect world the on-demand model would stop piracy in its tracks. When organisations choose to go down the software as a service route, compliance is passed on to the vendor or provider so they are no longer accountable for licence compliance."

James Governor, analyst at Red Monk, said a hosted offering would definitely "provide some benefits to asset management". However he added: "I'm a big believer that when you add simplicity to one place, complexity will pop up somewhere else."

Despite predicting complexity related to on-demand, as companies would be forced to overhaul their IT strategy, Governor agreed that the added benefit of lessening asset-management responsibility would be another reason why companies should at least assess the benefits of a hosted service.

He said: "I don't think licence management will go away altogether but this is a great chance to look at what the software as a service vendors are doing."

Governor added: "It really is a great justification for running a trial software-as-a-service project."

He said it will also encourage companies to look at the way all software is used within the company - a process of understanding that could itself deliver savings.

Whatever companies opt for, Governor said he'll not be surprised to see a move away from current licensing models, whatever the motivator.

He said: "The current licensing model is a total mess. It's a shambles.

However, he questioned the appeal of the anti-piracy angle to a number of vendors. "Any asset management company will tell you the majority of Microsoft software goes unused," said Governor.

Although he said the economics may not match penny-for-penny, he suggested Microsoft may lose enough money from users only paying on-demand for what they actually use to make it realise lost revenues to piracy remain a cost of doing business in a shrink-wrapped and licensed fashion.

Fast's Burton said he doesn't foresee the day when companies go for hosted solutions for their entire IT real-estate, adding that the headache of licences will never go away completely.

And Burton said, on the question of revenue protection, he suspects crime will also find a way: "Without a doubt people will try to find a way around the on-demand model to get out of paying for their software."