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Software Licensing and Cloud Service Models 101

by Mitchell Tweedie, Dec 05, 2017

There has been a tech-wave in the past several decades that has ushered in a virtually new world.
Tech is rising. Apple is king and the Blockbusters and Borders of the world are disappearing; struggling to compete with more agile and digitally mature tech rivals.

Invent, Invest, Adapt… or Die

Venture Capitalist John Doerr said it was best to invent innovations and second best to invest in them, and he should have kept going, because adapting to innovation is better than the alternative.

Blockbuster had the chance to buy Netflix in 2000, back when it was a DVD mailing service, but passed on the opportunity. In 2007, that DVD mailing service pivoted and started online streaming. It invented something new and within 3 years Blockbuster was bankrupt.
Blockbuster didn't invent, invest or adapt, and so it died.
Well, better late than never to catch up on the cloud and software licensing bandwagons.

Cloud Service Models: SaaS, PaaS and IaaS

Critical to a discussion of the types of licenses are the types of cloud service models through which some licenses are delivered.

The 3 main types of cloud service models are:
  • Software as a Service (SaaS)
  • Platform as a Service (PaaS)
  • Infrastructure as a Service (IaaS)
Some advocate the "everything as a service" model, or EaaS, but cloud-computing providers slice and dice services into the above 3 types (SaaS, PaaS and IaaS).

While SaaS services are typically run on top of PaaS services, and so on, this is not always the case. SaaS services can be run directly on hardware and programs can be run directly on IaaS services.

Software as a Service (SaaS)

SaaS examples: Gmail, Microsoft Office 365
Common SaaS use-case: Replaces traditional on-device software

When people talk about cloud applications (e.g. Gmail), they are talking about Software as a Service (SaaS).

SaaS represents the largest, but slowest growing cloud marketplace. The SaaS marketplace is also the most fragmented with thousands of players ranging from internet heavyweights to startups.

SaaS uses the web to deliver applications that are managed by a third-party vendor but accessed client side. Most SaaS applications can be accessed within a web browser without any downloads or installations required, but some require plugins.

Because of the web delivery model, SaaS eliminates the need to install and run applications on individual computers, however, some SaaS products can be accessed in-app (e.g. iOS) as well as in browser (e.g. Gmail).

Platform as a Service (PaaS)

PaaS examples: Codebots (aPaaS), Apprenda
Common PaaS use-case: Less time coding and more time creating (see Codebots)

Cloud platform services, or Platform as a Service (PaaS) typically include an operating system, programming language execution environment and a web server, but there is more than 10 subcategories of PaaS, so things are a little bit messy.

Generally, PaaS is used to create, deploy and manage SaaS. It represents the smallest, but fastest growing of the 3 main cloud marketplaces. 

When developing an application using PaaS, you can embed middleware (elements of the PaaS) into the app. This allows the application to inherit certain characteristics, such as library or piece of code.

Many businesses choose PaaS because it reduces the amount of coding needed to maintain and update apps. This is one of the advantages of being powered by Codebots.

Codebots is a Brisbane based Application Platform as a Service (aPaaS) startup. WorkingMouse uses Codebots, which is a team of uniquely skilled and talented robots that can code, to plan, build, and deploy web applications to the cloud.

Infrastructure as a Service (IaaS)

IaaS examples: Amazon Web Services
Common IaaS use-case: Hosting web-based applications

Cloud infrastructure services, known as Infrastructure as a Service (IaaS), allows users to access, monitor, and manage remote assets to compute or store data. This can is done in lieu of buying physical hardware.

IaaS users manage applications, data, runtime, middleware, and OSes. IaaS providers manage virtualization, servers, hard drives, storage, and networking.

Many IaaS providers also manage databases, messaging queues, and other services above the virtualisation layer. Some people call this IaaS+.

IaaS represents the least fragmented cloud marketplace, with Amazon Web Services commanding an almost 50% market share.

Types of Software Licenses

Software licensing has been around since the dawn of computing. What's different now is the types of licences that are gaining traction. Subscriptions are in and CDs are out. These subscription licenses leverage modern technologies (such as the above cloud service models) and align with modern consumer habits.

Deloitte estimates that 40% of workers in the US will be freelancers by 2020! This is part of the reason why the Adobe Creative suite went subscription only in 2013.

The future of work is trending towards freelancing, working from home, coworking, try-before-you-buy and instant gratification. More people need more apps and they need them yesterday.
The main types of software licences are:

Proprietary License

Most software licenses are "proprietary" licenses. This means the software publisher grants a license to use one or more copies of the software while retaining ownership of the software.

GNU General Public License (GPL)

"Open source" software is often licensed under a GNU GPL. End users can update the software's source code and distribute new versions of the software, but all updates must also have a GNU GPL.

End User License Agreement (EULA)

EULAs are agreements between the publisher and the end user (versus a business).

'Specific Use' Licenses

Some licenses are based on specific use-cases. Site licenses allow unlimited use from a single location (e.g. a coworking space). Workstation licenses allow unlimited use from a single, specific device. And concurrent use licenses allow unlimited use in terms of locations and devices, and instead cap the number of concurrent users who can access the software using your license. Specific use licenses can be tailored to align business and end-user goals, which is an awesome advantage.

These are a sample of software licences, and the differences between licences within a single one of these categories can be large.

Cloud technologies are enabling business much more latitude in terms of licensing. So embrace software licencing and discover which licences work for your business and customers.