Understanding Cloud Licenses

One of the issues for organisations looking to transition to the cloud is licensing. As the number of cloud service providers has expanded, vendors have created new licensing models or adjusted existing ones to provide additional flexibility. However, it could cause some confusion especially for those who are new to the cloud.

Traditionally, there are three basic software and hardware licensing types:

  1. Per user: User is granted a license to use an application or connect to an OS.
  2. Per device: An application or OS is granted a license on a per-device or per-processor model.
  3. Enterprise: This model covers all users and devices.

Purchasing Licenses

When a company wants to purchase a license, it can make the purchase under either capital expense (CapEx) or operating expense (OpEx). As many companies are shifting from a model of hardware and software ownership to a SaaS model, IT and Finance departments must reconcile how best to classify cloud costs.

CapEx and OpEx items go into different budgets, with different approval processes. Capital items generally must be approved through several layers of management (including executive management), which will hold up purchasing until approval is received. Purchasing a license as an OpEx item is generally an easier process, if the item is covered through and budgeted for in the operating expense budget.

For a capital purchase, all money must be paid up front. Purchasing a license on lease or from a hosting company as an OpEx item allows you to pay as you go, on a monthly or quarterly basis. This can free up budget dollars for more bottom line revenue producing projects.

With the changes in cost and use of hardware and software options, the traditional benefits of CapEx may not carry their weight. Using an OpEx solution like SaaS allows organisations to unlock money that was formerly frozen in CapEx purchases on other business needs.

What PointStar Provide

PointStar makes cloud adoption easy. Since 2008, we have transformed hundreds of businesses and institutions. With many deployments under our belts, our consultants are no strangers to the cloud environment. Utilising business best practices and methodologies we have created over the years, our team of certified consultants will support you in the process of change management and adoption strategies tailor-made to your business. We understand that every business’ requirements are unique and will adapt to your specific needs.

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