How to Protect your Software Investment in the Cloud

Cloud & Services CxO Governance Home IT Asset Management IT Contract Management Risk & Audit

by | September 28, 2018

According to a recent Reuters report, the Israeli Finance Ministry will not renew its Microsoft contract for “various desktop software”. The news is a bit surprising as just two years ago, Israel struck a deal with Microsoft to host some of its national services on Azure.

The Reuters notice is scant on details, but it lists three concerns motivating the Israeli Finance Ministry’s decision:

Moving data to the cloud

For the moment, we can only guess at what the specific concerns are, but it seems clear that the ministry is worried about giving up control of its estate to Microsoft. The Finance Ministry might also be worried about being locked into a high cost Microsoft licensing agreement with little say as to how the apps are developed and licensed, and how their data is stored.

Losing control in the cloud

Reuters compares the situation to owning vs. renting a house. While this isn’t quite accurate – even with perpetual licenses Microsoft still owns the software – it’s still a helpful analogy. Essentially a perpetual license for on-premises software is like owning a house whereas cloud apps are like renting. This means that the landlord (Microsoft) can place more limitations on what you can do with your home (the cloud apps) and make more sudden changes to the lease (license).

In the cloud, you’re often subject to changes in the app whether you want them or not. If Microsoft decides to make changes to the background technology of the cloud app, you’re stuck with whatever consequences that might have for your organization. With their existing perpetual licenses, at the very least Israel can keep what it has for the time being and doesn’t have to worry about Microsoft’s whims.

Avoiding software vendor lock-in

A further and perhaps more critical problem for Israel is cloud vendor lock-in. Getting data into the cloud is easy, but getting it out can be a real challenge. Companies move their software licensing to the cloud to save money on their own infrastructure.

If the decision is made to move from one cloud provider to another, the data may first need to be migrated from the current provider’s servers before it can move to the next provider. But if an organization has already reduced its infrastructure, they may not have the capacity to handle the data and may therefore need to find an intermediary solution for its migration – a potentially costly move.

Similarly, not all cloud providers store the data in the same way. A migration might require that your data is first manipulated before being moved, a process that may again require an intermediary solution and lead to additional, unplanned costs.

The barriers to migration between cloud providers are substantial and can lock companies into specific vendors regardless of how expensive they might become in the long term.

While it might make short term sense for Israel to continue using its perpetual on-premises licenses, in the long term they will likely need to find a cloud solution to meet their changing needs. Until cloud providers become more adept at handling migration requests and making their developments more responsive to customer needs, customers must learn how to empower themselves in the cloud.

Protect your software investment with a cloud exit strategy

There are three ways for customers to empower themselves in the cloud:

Develop an exit strategy. Before migrating to the cloud, make sure to have an exit strategy in place. Know in advance what infrastructure you might need to support migrating from one cloud provider to another, and be sure you understand and can make any necessary changes to the data.
Build your cloud exit into your contract. Be upfront in contract negotiations about the possible need to switch vendors. Guarantee that your data will be easily accessible, stored in a usable format, and backed-up regularly. Where possible, make sure that your contract includes a data extraction utility that supports numerous data formats.
Get a Software Asset Management solution. By having instant and immediate access to usage data and contract terms and conditions, you’re able to know whether your cloud provider is meeting your needs. As cloud apps change, you can make strategic decisions about whether to stay, and can begin planning your cloud migration in advance.

Despite the complexity of exiting the cloud, there’s no reason to be caught unprepared. Developing an exit strategy should be a part of your migration to the cloud, and doing software license management in the cloud is one of your first and best lines of defense against vendor lock-in.



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