The promise of moving your company's software and data systems into the cloud grows more enticing by the day. Virtualization, cloud computing and grid networks have a lot to offer enterprise users. But you could put your company and your job at risk if you fail to consider certain factors that are key to getting the right license at the right price.

Whether you plan to use your own grid infrastructure or someone else's cloud computing platform, your licensing structures must accommodate the applicable virtual environment. Although many factors should be considered when licensing software, we'll focus on the available framework for licensing proprietary software, with virtualization and grid computing in mind.

Unlike in a typical computing environment, virtualization, coupled with grid computing, enables the disaggregation of operating systems, middleware, data stores and application software from the limitations of physical machines and the local-area network. This new world is colliding with traditional vendor licensing practices, producing software compliance nightmares for both licensees and licensors, and often resulting in irrational license fees.

Legacy Licensing Practice

Traditional licenses fall into one of these three categories:

The CPU license is typical for operating system software, middleware and some application software. It enables licensees to use the software on one machine and often identifies specific compatible-equipment configurations. Any equipment configuration limitation is generally based on design, not license compliance. For some software (for example, certain middleware server software), the licensed product may support alternative or enhanced server configurations, but separate license entitlements must be purchased.

Under a CPU license, the fee may vary based on the processing power of the designated CPU. The number of users who access the licensed software is irrelevant.

The biggest problem with CPU licenses in a grid or cloud context is that licensors expect licensees to buy additional licenses for each processor (by number and type) that executes the licensed software. This is true even if multiple virtual machines or processors are simply sharing the load -- without increasing capacity or transaction volume -- of a much smaller number of legacy physical machines or CPUs. In a cloud environment running multiple virtual machines, license fees can easily rise because various processors are running the licensed software.

The seat license designates the number of "seats" that can use the software. The license entitlement doesn't flow to any specific users. There are two common seat license methods.