Grid computing puts licensing in limbo

Licensing models and grid computing are about to collide. Don’t take my word for it, though. Read what Larry Ellison said to me when I interviewed him last month.

“You will see an alternate pricing model per user and per processor. And [it will be done] on an annual basis: so much per employee per year.”

Think about it. If an enterprise is going to the hosted model, well, that’s easy. The software-as-service (or the utility) model allows the ASP to charge on a per-employee, per-month basis no matter, in theory, how many CPUs are needed to run the application at any given time.

However, sometimes a company doesn’t want its mission-critical applications hosted, but does want to use, say, Oracle 10g, which parses out compute power on an as-needed basis. What is the software licensing model in an environment where every CPU is available to use?

Should that company be charged for the upper limit of CPUs it may use to run an application? Or should it be charged by the number of processors it actually uses per day to run it? Although Ellison suggested that the former approach might work in the short term, he offered no definitive statement on the licensing except to clearly say that the entire model needs to be rethought.

Ellison also said that “hardware [usage] cost can’t be a barrier to grid. It will be easier to count employees.” But what if there is no employee? What if the user is a machine?

I wish I had made that smart retort to Ellison, but the question did come later from Alan DeClerk, global relationship director for Oracle at Sun Microsystems.

DeClerk oversees every aspect of the long-term Sun-Oracle relationship. Sun and Oracle are working together to follow the new IT message to lower management and deployment costs in the datacenter and to wring more performance out of underutilized hardware. Both vendors believe grid computing will play a key role. DeClerk also reminds us about how serious a change this is.

“There are entire business valuations based on licensing models,” he said.

What Sun calls the OS for the multivendor data center, N1 will help to automate the administration of Sun’s hardware, virtualizing compute, storage, and network assets and provisioning them as if they were a single unit allocation. Oracle’s Grid Control is for the Oracle assets.

But the question remains: What is the software licensing model in an N1 or 10g architecture where every CPU is available to use but may or may not be used? Licensing is traditionally static, linked to a hard asset. The license doesn’t move around a corporation and prior to the concept of grid, the hardware assets were very identifiable.

The question that intrigues DeClerk is how does the business model follow the technology transition when all the assets become a virtual hole from which to draw storage, compute, or network resources?

Licensing pegged to the upper limit of CPUs that may be used goes against the grain of the potential limitlessness of grid computing. Per-user charging doesn’t take into account unattended systems.

It is obvious that software as a licensed product is obsolete. So here’s a revolutionary idea. Software will have to be treated like every other commodity. You buy it once and it’s yours. End of story.