Elastic Cloud? Not so Fast…

Friday, August 21st 2009 | Ismael Ghalimi

Earlier this week, I attended a very interesting CEO roundtable organized by VMware. Around 40 VMware customers and partners (including Intalio) sat down with Paul Maritz (VMware’s CEO) for an hour of discussions about virtualization and cloud computing. Listening to customers, I developed a better understanding of the challenges lying ahead for Private Cloud Computing, and the critical role to be played by Open Source software in this radical transformation of the IT landscape.

In a nutshell, the hypervisor (VMware vSphere, Microsoft Hyper-V, etc.) is the next operating system, and it brings elasticity to corporate IT from a technical infrastructure standpoint. Thanks to such elasticity, corporate customers can build private clouds on top of the virtualization infrastructure, leveraging hardware virtualization for multi-tenancy. The challenge in doing so is not so much a technical one, but a business one: licensing elasticity — or the lack of it. Let me further explain.

Most enterprise software at the platform layer (including the database) is licensed per CPU today, which makes it fundamentally inelastic. By that, I mean that customers have no way of knowing how much the cloud will cost to operate if they are using commercial software for their database or application server. While they’re comfortable paying for the underlying hardware (which is getting cheaper by the day) and for business applications on top (on a per user basis), they’re very concerned about the fact that deploying traditionally-licensed software like the Oracle database will lead to exploding bills. This is where Open Source has a critical role to play.

From a practical standpoint, virtualization software such as VMware vSphere and vCenter makes it relatively easy to build an elastic Infrastructure as a Service (IaaS) layer, taking advantage of live Virtual Machine (VM) replication for dynamically resizing VM sizes and properly balancing loads across a pool of commodity servers. But from a business or financial standpoint, this is scary as hell: if improperly configured, your IaaS layer might instantiate a handful of Oracle database servers that you have no licenses for, and before you know it you owe Larry’s company quite a bit of money that you have no budget for. This is precisely the kind of nightmarish scenario that has VMware customers concerned today when talking about Private Cloud Computing.

You can’t have elastic computing with inelastic licensing.

Essentially, the pricing of database and middleware software sold through perpetual licenses is fundamentally inelastic, which makes such software rather unsuited for Private Cloud Computing. Ideally, you want this software to be licensed as a component of the overarching business application (as is the case when using public cloud offerings such as, which runs on top of the Oracle database), or to be licensed through a utility-based pricing model, by the drink. Unfortunately, changing pricing models is very challenging for software vendors, as history as shown repeatedly — remember what happened to CA’s former CEO? This is precisely where Open Source delivers a systemic competitive advantage. In most cases, commercial Open Source software is licensed through CPU-bound yearly subscriptions, which could easily be adapted to support a GHz-Hour or GB-Hour utlity-based pricing model.

Open Source software, and especially Linux, Apache, and MySQL, played a critical role during the Web revolution of the past fifteen years. Similarly, Open Source software should play a critical role in the Cloud revolution during the next fifteen.

And Intalio is at the forefront of this revolution…

Entry filed under: Cloud Computing

One Comment - Add a comment

1. Sebastian Stadil  |  August 25th, 2009 at 11:45 am

I agree Ismael, licensing needs to be flexible. Open Source software has an advantage there, and proprietary software will have to shift to a “wattage” model. However you’ll find that many companies have site-wide licenses that though proprietary are indeed flexible. It’s an all-you-can-eat buffet.

We discussed this at TiEcon last year.

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