The cloud offers a number of benefits over the standard physical server model and the virtualization platforms that many providers are now offering. The most often-cited reason that companies are moving to a cloud option is cost, which can be significantly reduced in a company that has a large number of physical servers. In addition, the cloud also offers scalability, reliability and the potential to offer access from anywhere in the world to companies that need to access data on the go. But for all the cloud can do, there are a number of things that can still be prohibitively expensive for a company in the cloud space, most notably software licensing.
CRM is a good example – many companies like Salesforce offer ways for businesses to streamline their customer service management, but the cost of a licensing something in the cloud is not always what it appears. This stems from the nature of the cloud, which is elastic. A traditional software license would cover a certain number of machines or pieces of hardware, and this would dictate the price of the license overall. Now, the cloud makes it difficult for a company to determine what cost should be charged, as the amount of machines the software is being run on will fluctuate, as will the extent to which it is being used.
In this new landscape, many software providers are charging companies a great deal more than has been seen in traditional models, as both they and the industry as a whole attempt to determine what is “reasonable”. Currently, companies should be leery before agreeing to any software license agreement and have it reviewed to determine how their use of it in the cloud will impact costs.