Cloud licensing without secrets: SAM challenges in SaaS and IaaS environments

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Specifics of licensing models in the cloud ecosystem (SaaS, PaaS, IaaS)

“90% of large enterprises will have adopted a multi-cloud infrastructure management approach by 2025.”

— HashiCorp, State of Cloud Strategy Survey 2024 | Source

Understanding the fundamental differences in cloud service delivery models is key to understanding the specifics of their licensing. Each of the main models - SaaS, PaaS and IaaS - is characterized by different responsibilities for the provider and the customer, which directly affects how the software and its licenses are managed.

In the Software as a Service (SaaS) model, the customer is given access to a ready-made application running on the provider’s infrastructure, usually via a web browser or a dedicated client application. Examples include CRM systems (e.g. Salesforce), office suites (e.g. Microsoft 365, Google Workspace), video conferencing tools (e.g. Zoom, Microsoft Teams) or HR systems. SaaS licensing is based almost exclusively on subscriptions, most often billed monthly or a

ually. Key licensing metrics are typically the number of users (named or active), level of functionality (different pricing plans offering different feature sets), disk space used, number of transactions or other application-specific metrics. SAM’s main challenge in a SaaS context is managing a large number of, often decentralized, subscriptions, identifying and eliminating unused or redundant accounts (e.g., after an employee leaves), optimizing the selection of rate plans based on actual user needs, and controlling automatic renewals that can lead to u

ecessary expenses. Compliance tracking in the traditional sense is less important here, as the SaaS provider usually takes care of the legality of the software on which its service runs itself. However, the customer must adhere to the terms and conditions of service use set forth in the subscription agreement.

The Platform as a Service (PaaS) model provides customers with an environment to develop, test, deploy and manage applications without having to build and maintain their own infrastructure (hardware, operating systems, middleware). Examples include database platforms (e.g., Azure SQL Database, Amazon RDS), application runtime environments (e.g., AWS Elastic Beanstalk, Google App Engine) or development and analytics tools. Licensing in PaaS is more complex than in SaaS and depends on the specific platform components used by the customer. These can include fees for computing resources used, network bandwidth, disk space, number of database queries, or subscriptions to specific platform tools and services. SAM challenges in PaaS include accurately monitoring the consumption of individual components, optimizing configurations to minimize costs (e.g., choosing the right types of database instances), and managing licenses for third-party software that can be integrated into the PaaS platform. Special attention should be paid to development and test environments, where separate, more favorable licensing terms often apply, but their improper use in production environments can lead to non-compliance.

The greatest flexibility, but also the greatest responsibility on the customer’s side, comes with the Infrastructure as a Service (IaaS) model. The IaaS provider provides the fundamental computing resources, such as virtual machines, storage, networks and operating systems, on which the customer can run any software, including its own applications. Examples include Amazon Web Services (AWS EC2), Microsoft Azure Virtual Machines or Google Compute Engine. In the IaaS model, the customer is fully responsible for licensing all operating systems (unless they are part of the IaaS offering) and applications installed on the shared infrastructure. This is where the Bring Your Own License (BYOL) concept comes in, which allows customers to use on-premise licenses they already own in a cloud environment, as long as the licensing terms of the respective vendor allow it. Alternatively, customers can purchase licenses directly from the IaaS provider (pay-as-you-go model or subscriptions) or from other partners. SAM’s main challenges in IaaS include accurately tracking which software is installed on which VMs, ensuring license compliance for each of these products (taking into account complex metrics such as per virtual CPU core), managing license mobility between on-premise and cloud environments, and optimizing costs through appropriate selection of VM types and sizes (right-sizing) and leveraging pricing models such as provisioned or spot instances.

Key challenges for SAM strategies in cloud environments

Migration to the cloud, despite its many benefits, presents traditional SAM strategies and processes with a number of significant new challenges. Organizations need to be aware of these obstacles in order to effectively manage their software resources in the new paradigm.

One of the fundamental challenges is the loss of traditional visibility and direct control over IT resources. In the on-premise model, IT had physical access to servers and workstations, which facilitated inventory and monitoring. In the cloud, infrastructure and software are often managed through vendor interfaces, and access to low-level data can be limited. This makes traditional discovery and inventory tools less effective or may require special configurations and integrations.

The dynamic and flexible nature of cloud services, which is one of their greatest advantages, paradoxically makes it difficult to forecast and control costs and manage licenses. Resources can be started up and shut down in a matter of minutes, and their configuration can be changed in real time. This leads to a situation in which the number of active software instances or services used can fluctuate rapidly, complicating ensuring consistent licensing compliance and accurate budgeting. Pay-as-you-go models, while flexible, can lead to uncontrolled growth in spending if not closely monitored.

Another challenge is managing the multitude of subscriptions and the often complicated automatic renewal mechanisms. For SaaS services in particular, organizations may have hundreds or even thousands of individual subscriptions for different users and applications. The lack of a central system for managing these subscriptions, tracking their expiration dates and renewal terms, can lead to paying for unused services or to unfavorable automatic renewals on existing, often already suboptimal terms.

The complexity of contracts with Cloud Service Providers (CSPs) and their billing models presents another major challenge. These contracts are often lengthy, written in specialized language and contain many nuances regarding, for example, security responsibilities, service availability (SLA), data processing rules or licensing terms for software provided by CSPs. Pricing models can sometimes be very granular and difficult to fully understand, making it difficult to predict costs and compare offers from different vendors. There is also **the risk of “vendor lock-i **, ” or dependence on a single cloud provider, which can limit a company’s flexibility and negotiating power in the future, affecting costs and optimization opportunities.

A key aspect, especially in the context of IaaS and PaaS, is ensuring licensing compliance for third-party software in the BYOL (Bring Your Own License) model. The licensing terms of many software vendors (e.g., Microsoft, Oracle, IBM) regarding the portability and use of their on-premise licenses in cloud environments can sometimes be very restrictive and complicated. They often depend on the type of cloud (public, private, hybrid), the specific IaaS provider, and even the configuration of the virtual machines. Misinterpretation of these rules or lack of proper documentation can lead to serious compliance issues during an audit.

The “Shadow IT” phenomenon, which is gaining momentum in the cloud era, also caot be ignored. The ease with which business departments or even individual employees can subscribe to various SaaS or PaaS services on their own, often with a credit card, without the knowledge or approval of the IT department, leads to loss of control over the software used, uncontrolled spending, data security problems and the risk of licensing non-compliance.

Finally, data security and regulatory compliance issues (such as RODO/GDPR, HIPAA, PCI DSS) take on particular importance in the context of storing and processing corporate data in cloud infrastructure, which is often outside the physical control of the organization. The SAM strategy must be closely aligned with the security and data protection strategy, taking into account regulatory specifics and requirements such as data localization or data protection measures.

Adaptation of SAM principles and processes to the realities of cloud computing

Traditional Software Asset Management principles and processes, while still an important foundation, require significant adaptation and expansion to effectively meet the challenges posed by cloud environments. Organizations need to rethink their existing approaches and implement new controls and analytics.

Above all, there is a need to expand the scope of traditional SAM practices to include cloud-specific aspects such as subscription management, real-time monitoring of cloud resource consumption, cost analysis in pay-as-you-go models, and BYOL license compliance management. Periodic inventory is no longer enough - you need continuous insight into a dynamically changing environment.

This often requires the development of new roles and competencies within the team responsible for SAM and IT. In addition to traditional licensing specialists, there is an emerging need for Cloud Cost Analysts, FinOps specialists (a term that combines finance and IT operations in the context of the cloud), or cloud architects with deep knowledge of individual vendor licensing models. The ability to analyze large data sets of resource consumption and costs is becoming crucial.

It is also necessary to implement or modify key management processes. A central catalog of approved cloud services should be created to help standardize the technologies used and control their procurement. A formal process for approving and provisioning new cloud resources should be defined that addresses both technical and financial and licensing aspects. It becomes crucial to implement mechanisms for continuous monitoring of resource utilization and related costs, which will allow rapid detection of anomalies, inefficiencies and uncontrolled growth in spending. An integral part of a cloud SAM strategy must also be regular optimization of the resources used, including, for example, identifying and shutting down unused instances, adjusting the size of virtual machines to the actual load (right-sizing) or selecting the most cost-effective pricing models.

Of particular importance is the close cooperation and communication between IT, finance and the various business units that are consumers of cloud services. This is where the FinOps approach, which aims to bring financial discipline and accountability for cloud costs to the entire organization by combining technology, financial and business perspectives, is gaining popularity.

Tools to support license and cost management in the cloud

Manually managing resources and costs in complex, dynamic cloud environments is virtually impossible. Therefore, the right technology tools that automate processes, provide the necessary analytics and support optimization decisions play a key role.

Cloud service providers (CSPs) themselves, such as AWS, Microsoft Azure and Google Cloud Platform, offer native cost and resource management tools (e.g. AWS Cost Explorer, AWS Trusted Advisor, Azure Cost Management and Billing, Azure Advisor, Google Cloud Billing, Google Cloud Recommender). These tools provide basic information about consumption, costs, and often some optimization recommendations. They are a good starting point, but if you are using multiple clouds (multi-cloud) or have more advanced analytical needs, they may not be enough.

That’s why specialized Cloud Management Platforms (CMPs) and Cloud Cost Management (CCM) tools have appeared on the market. CMPs offer a broader range of functionality, including not only cost management, but also provisioning automation, configuration management, security and compliance in multi-cloud environments. CCM tools focus primarily on monitoring, analyzing and optimizing cloud expenses, often offering more sophisticated predictive algorithms, recommendations for savings (e.g., purchase of provisioned instances, use of spot instances) and the ability to allocate costs to individual projects or business units.

It is also worth watching how traditional SAM tools adapt to manage cloud environments. Many leading SAM platform providers are extending their functionality with cloud-dedicated modules in an effort to provide a consistent view of on-premise and cloud resources and integrated license management across both worlds.

Key functionalities to expect from modern tools supporting SAM in the cloud include: automatic discovery and inventory of cloud resources across all platforms used, real-time monitoring of expenses with the ability to categorize and tag them, advanced cost analysis to identify trends and anomalies, intelligent optimization recommendations based on analysis of usage patterns, budget management and configurable alerts to report overruns, as well as the ability to automate optimization activities, such as. automatic shutdown of unused instances at specific times.

Strategies to optimize licensing and control costs in the cloud

Monitoring and reporting alone is not enough. The key to effective SAM management in the cloud is to implement specific optimization strategies and techniques to take full advantage of the cloud’s cost-saving potential without losing control of compliance and performance.

One basic strategy is to consciously take advantage of the flexible pricing models offered by cloud providers. Instead of using the most expensive on-demand instances by default, it is worth exploring the use of Reserved Instances (RI) or Savings Plans, which, when committed to a certain level of usage over a longer period (e.g., 1 year or 3 years), offer significant discounts compared to on-demand pricing. For loads that tolerate outages, you can consider using even cheaper Spot Instances (Spot Instances).

It is critical to constantly strive to “right-size” resources. This means systematically analyzing the actual demand of applications and systems for computing power, RAM, disk space and network bandwidth, and then fine-tuning the size and types of virtual machines and other cloud services used to meet those needs. Very often, companies run over-powered resources in the cloud (over-provisioning), generating u

ecessary costs. Monitoring and analytical tools can help identify such cases and recommend optimal configurations.

Effective management of data lifecycle and cloud storage is another area where significant savings can be achieved. Policies for archiving and deleting u

eeded data should be implemented, and different classes of storage should be used (e.g., cheaper options for archived data that is accessed infrequently).

Many organizations can also benefit from automating the processes of turning cloud resources on and off according to work schedules. For example, development and testing environments often don’t need to run 24/7. Turning them off automatically during off-hours or on weekends can result in noticeable savings.

Do not forget about the possibility of negotiating individual terms with cloud providers, especially for large contracts. Partner programs, framework agreements or special discounts for large customers can be a source of additional savings.

It is also fundamental to **constantly monitor and ruthlessly eliminate unused or u

ecessary cloud resources (so-called “cloud waste”)**. This can include forgotten virtual machines, unconnected disk volumes, unused IP addresses or outdated snapshots. Regular “cleaning” of the cloud environment is essential to keep costs under control.

ARDURA Consulting’s role in navigating the complexities of cloud licensing

The complexity of cloud licensing models, the dynamics of technological change, and the plethora of available services and pricing options leave many organizations feeling lost and in need of expert support to realize the full potential of the cloud without falling into cost and licensing traps. ARDURA Consulting, with its extensive experience in Software Asset Management and strategic IT consulting, is the ideal partner to help you navigate this complex ecosystem safely and effectively.

Our consultants help clients gain an in-depth understanding of the specifics of the licensing models of individual cloud providers (AWS, Azure, GCP and others) and the licensing terms of key software vendors (Microsoft, Oracle, SAP, IBM) in the context of their use in IaaS, PaaS and SaaS environments. We assist in analyzing existing licensing agreements and evaluating the feasibility of moving them to the cloud (BYOL), identifying potential risks and benefits. We also help you select the most optimal cloud services and subscription models, tailored to your individual needs and business strategy.

ARDURA Consulting offers support in designing and implementing dedicated SAM and FinOps processes tailored to the realities of cloud computing. We help define appropriate policies, implement controls, select and configure tools to manage cloud costs and resources, and build the necessary competencies within the organization. Our goal is not only to help with one-time optimization, but first of all to implement sustainable mechanisms that will allow continuous monitoring, control and optimization of the cloud environment in the long term. We also support you in negotiating with cloud service providers, helping you get the best possible contract terms.

Cloud as an opportunity for efficiency - subject to conscious management

Cloud computing undoubtedly opens up tremendous opportunities for organizations in terms of innovation, flexibility and potential cost optimization. However, in order for these promises to be fully realized, an informed, strategic and disciplined approach to managing cloud resources, including in particular software licensing and expense control, is essential. Lack of a proper SAM and FinOps strategy in the context of the cloud can quickly transform it from a business driver to an uncontrollable source of costs and risks. The key to success is to understand the specifics of the cloud, adapt traditional SAM practices, implement the right tools and processes, and constantly strive for optimization. Only then will the cloud become a real opportunity to increase an organization’s efficiency and competitiveness.

The key to mastering SAM in the cloud

Effective software asset management (SAM) in dynamic and complex cloud environments (SaaS, PaaS, IaaS) requires a new approach and expertise. Here are the key elements to help your organization master this area:

Understand the specifics of licensing models: Each cloud model (SaaS, PaaS, IaaS) and each provider (AWS, Azure, GCP) has its own unique service licensing and billing rules that you need to know.
Adapt traditional SAM processes: Inventory, compliance management, cost optimization - these goals remain valid, but the methods to achieve them must be adapted to the cloud.
Implement dedicated tools: Take advantage of native CSP tools and specialized CMP/CCM platforms to monitor, analyze and optimize cloud resources and costs.
Focus on continuous optimization: Regularly analyze resource utilization, use “right-sizing,” leverage flexible pricing models (reservations, spot instances) and eliminate “cloud waste.”
Integrate SAM with FinOps: Collaboration between IT, finance and business is key to effective cloud financial management and informed decision-making.
Don’t forget about security and regulatory compliance: SAM management in the cloud must be closely aligned with data security policies and regulatory requirements.
Control the “Shadow IT” phenomenon: Implement processes for managing your cloud service catalog and approving purchases to avoid uncontrolled use of applications.

Remember, conscious license and cost management in the cloud is not only a way to save money, but also to increase security, efficiency and the organization’s ability to innovate.

If the complexity of cloud licensing seems overwhelming and your organization needs support in developing and implementing an effective SAM strategy for SaaS, PaaS or IaaS environments, contact ARDURA Consulting. Our experts can help you turn cloud challenges into real business benefits.

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