Software Licensing in Cloud Computing : A CASE STUDY ABOUT RELATIONSHIPS FROM ACLOUD SERVICE PROVIDER’S PERSPECTIVE

Abstract: One of the most important attribute a cloud service provider (CSP) offers their customers through their cloud services is scalability. Scalability gives customers the ability to vary the amount of capacity when required. A cloud service can be divided in three service layers, Infrastructure-as-a-Service (IaaS), Platform-as- a-Service (PaaS) and Software-as-a-Service (SaaS). Scalability of a certain service depends  on  software licenses on these layers. When a customer wants to increase the capacity it will be determined by the CSP's licenses bought from its suppliers in advance. If a CSP scales up more than what was agreed on, then there is a risk that the CSP needs to pay a penalty fee to the supplier. If the CSP invests in too many licenses that does not get utilized, then it will be an investment loss. A second challenge with software licensing is when a customer outsources their applications to the CSP’s platform. As each application comes with a set of licenses, there is a certain level of scalability that cannot be exceeded. If a customer wants the CSP scale up more than usual for an application then the customer need to inform the vendors. However, a common misunderstanding is that the customer expects the CSP to notify the vendor. Then there is a risk that the vendor never gets notified and the customer is in danger of paying a penalty fee. This in turn hurts the CSP’s  relationship with the customer. The recommendation to the CSP under study is to create a successful customer relationship management (CRM) and a supplier relationship management (SRM). By creating a CRM with the customer will minimize the occurring misunderstandings and highlight the responsibilities when a customer outsources an application to the CSP. By creating a SRM with the supplier will help the CSP to maintain a flexible paying method that they have with a certain supplier. Furthermore, it will set  an example to the remaining suppliers to change their inflexible paying method. By achieving a flexible payment method with the suppliers will make it easier for the CSP to find equilibrium between scalability and licenses.