Software licensing models and management tools must evolve to support the dynamism of virtual machine environments.

September 29, 2008

By Jennifer Zaino, Techweb

System virtualization is becoming mainstream, according to a 2007 survey, conducted by Forrester Research, Inc., a research firm based in Cambridge, Massachusetts. The survey found that half of the enterprises polled in North America and Europe were already using x86 server virtualization, and that percentage was expected to grow to two-thirds of all sites by 2009— resulting in a "tipping point," according to the report.

In particular, organizations are using virtual systems for core business applications, such as enterprise back-office systems, portals, security and databases, Forrester said in a March 2008 report that focused on application virtualization.

Yet there is a disconnect that needs to be addressed. While the hardware cost savings of consolidating data center systems seem apparent, an equally significant value of virtualization lies in the flexibility and dynamism it brings to IT environments. To achieve that goal, software licensing and management have to change.

"On the one hand, virtualization gives organizations the ability to change things," such as moving applications, installed on virtual machines onto differently configured physical machines, to accommodate peak load periods, says Tony Lock, program director at Hampshire, U.K.-based Freeform Dynamics Ltd., an industry analyst firm. On the other hand, he says, most software licensing models aren't built for the speed and variability of deployments that virtualization enables. Licenses often artificially cap users' ability to exploit virtualization to its fullest. And immature change-management policies and tools can lead CIOs to lose control of their assets.

Virtual server sprawl

A down side of virtualization is that "it's very easy to find you have deployed many more copies of a particular application than you have licenses for," Lock says. So-called 'virtual sprawl' arises because virtual-machines are easy to deploy and you don't have to go through all the steps that you do with a physical server. When administrators deploy virtual machines without control processes or monitoring in place, it's easy to lose track of how many copies you are actually running. In many scenarios, Lock says, software license costs actually wind up trumping hardware costs in virtual environments, negating any cost-savings realized at the onset.

Not surprisingly, then, when Freeform Dynamics surveyed companies about virtualization issues late last year, changes in software licensing models was a top request. They want to be able to license an application for a short period of time—such as adding resources to deal with a spike in demand, whether that spike is three weeks, three days, or three hours every day.

Dissatisfaction with vendor options is widespread. A European IDC study conducted in July reveals that nearly one-quarter of users who have virtualized servers said their application vendors' licensing approach is still not meeting their needs. Thirty-three percent of large businesses said that this deficiency is limiting their use of virtualization.

The First American Corp., a business information and financial services provider with $8.2 billion in 2007 revenue, has virtualized about 25 percent of its Microsoft and Linux platforms and more applications are planned. The reason goes well beyond lowering costs. "We're seeing the flexibility of virtualization, the [increased] speed of provisioning, and the ease of using these systems dynamically for peak usage [times]," says CTO Evan Jafa. Yet, First American is also cautious about moving forward—especially about promoting virtualization as a road to significant cost-savings. His concerns are primarily around software pricing and management.

Usage-based pricing?

Force-fitting a physical server pricing model to meet virtualization requirements doesn't work for Jafa, though many of First American's vendors are taking that approach. It took software companies decades to develop their current models, he says, and they "are responding very slowly to pricing models and checks and balances for virtualized environments." Jafa would like to see more "dynamic-usage" models. Some providers are more forward-thinking about licenses, he says, and others are starting to stake out positions, "but we've not yet seen a mature pricing model from any of our technology providers that really address virtualization."

One solution that makes sense, says John Sloan, research analyst with Info-Tech Research Group, is per-instance pricing. In this model, a user licenses a copy of an application for its own virtual machine environment, regardless of whether that VM moves to a system with more processors than previously, or whether it's run across multiple servers to form a virtual resource pool. "It doesn't throw up artificial barriers," he says. "The downside, like everything in virtualized environments, is keeping tabs on everything." Sloan says users must adhere strictly to processes for creating virtual machines and auditing them when they're taken off-line, just as they have done for provisioning and decommissioning physical servers.

There's also work to be done to get many current monitoring software activity tools to more comprehensively address the dynamic nature of virtual environments. "We'll see a lot of development and evolution on the management side of virtualization in the course of the next two years," Lock predicts.

Meanwhile, at First American, Jafa is leaning toward metered, pay-per-use licensing. Locke sees both promises in the idea, as well as problems. "Most organizations, large and small, work on fixed IT budgets for the year," rather than having some flexibility for variables they can't necessarily control, he says. A business will have to be thoroughly convinced of the value IT is delivering before these utility models will find acceptance. "Changing IT budget structures inside companies will be more difficult than [adopting] new license models," he says.

Jafa agrees. "If metering has to happen on a daily basis, it won't work out." But he thinks there are ways around this dilemma. For instance, rather than charging for daily usage, vendors can offer customers a six-month plan. During the transition to metering there likely would be some unpredictability, Jafa acknowledges, but as companies get a better picture of how virtualization has settled into their environments, it will be easier to match actual usage with appropriate metering plans, and therefore make IT costs more predictable. He's listening to other innovative options, too-for example, a pay-per-terabyte model based on the collective horsepower of a virtualized environment.

No matter how it's accomplished, software providers have to face the fact that IT leaders are carefully considering virtualization's impact on their business and their budgets, Jafa says.

Jennifer Zaino is a New York-based technology and business writer.