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Virtualization moving to cloud computing pricing models: Is IT ready?

With vSphere 5, VMware adopted usage-based, cloud computing pricing models. But these new virtualization licensing models may not fit in all IT shops.

With vSphere 5, VMware is placing its bet on cloud computing pricing models.

The new vSphere 5 licensing policy takes a more usage-based approach, using the amount of memory assigned to VMs to determine the number of licenses IT shops must buy -- and how much they must pay for them. The goal of cloud computing pricing models is to more closely align costs with usage, and VMware is embracing this mantra as more virtual infrastructures evolve into private and hybrid clouds.

Some IT shops, however, may not be ready for these new virtualization licensing models -- either because they’re not moving to the cloud, or because the licenses will get too expensive, or both. Members of our Server Virtualization Advisory Board discuss the influence of cloud computing pricing models and what they mean for these IT shops as they answer this question:

What are the implications of usage-based virtualization licensing models on IT shops?

Rob McShinsky, Dartmouth-Hitchcock Medical Center
As VMware leads the drive towards the global eventuality of metered service -- and as they try to capitalize on their current market dominance -- expect to see further refinement of their pricing and licensing model. As for Hyper-V and XenServer, licensing will stay fairly simple (and host based) in order to try to undercut VMware primarily on price, at least for now.

Metered pricing will necessitate changes in management applications to further monitor usage, and in turn, costs. Server sprawl will now equate to increased costs, so additional controls on self provisioning will be critical. Responsible vendor coding and remediation of leaky applications will also be necessary to keep unforeseen costs down.

As utility-based licensing models begin to proliferate, cost savings focus less on hard dollars and more on ease of management. With this change, finding the sweet spot in terms of price and performance will determine the future success of your IT projects.

C.J. Metz, First American
A usage-based licensing model greatly reduces the cost benefits of virtualization as a whole. As it stands today, you are able to purchase a license based on your total number of sockets, and it is up to you as the admin to ensure that you are getting your best return on investment. With usage-based licensing, however, the flexibility to optimize your environment is based in part on the level of licensing you are able to afford.

Customers who were on the verge of implementing a virtual environment may pause and reconsider their options based on the new costs. And customers who are using a platform with usage-based licensing will begin to look into solutions which do not require these added expenses. This may be the tipping point at which some of the lesser-adopted hypervisors get more serious consideration.

Shannon Snowden, New Age Technologies
Usage-based licensing makes total sense if you are running a services-based business. However, that model isn’t a great fit for every scenario. In fact, it doesn’t fit most enterprise models right now.

The IT department in most organizations is not a profit center, and it often is looked at as a necessary evil. If you are a business that is not driven by a services-based infrastructure, then you are looking for an annual dollar amount for licenses to put in your budget for next year.

One of the primary reasons to go with a service is because you don’t want to own and manage the back-end infrastructure, so you pay more per instance in licenses to cover whoever is running the back end.  The net effect is many organizations will pay more for licenses and not get any more benefit, because they are in a license model that is mismatched with their usage. The only winner is the software vendor.

Dave Sobel, Evolve Technologies
Ideally, usage-based models allow for better alignment with cloud computing. When building a virtualized infrastructure, you generally are linking that to some idea of cloud, even if it’s a private cloud. Allowing licensing to be done on a usage basis opens up a number of possibilities for solution providers and thus enables IT professionals to deliver even more on-demand solutions.

On-demand computing, driven by a usage model, will increase potential management issues, but with the robust suites we have now for virtualization management, I see this simply opening up new ways for business to be enabled.

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