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Software licensing has always been a point of contention between software vendors, device manufacturers and their enterprise customers. The fact is that enterprises hate licensing. From the start producers have required their enterprise customers to standup and maintain the infrastructure to support a license server. The reality is…enterprises want licensing to be transparent. They don’t want to purchase and support the infrastructure to maintain a local license server, let alone the staff to support it. In addition, with the virtualization of data centers the costs to host local license servers becomes significant. Lastly, many device manufacturers want to provide a “inside the box” licensing solution – they don’t want to require additional hardware to host the license servers.

The good news is that until now they didn’t have options, but with the introduction of cloud licensing services we are seeing a definite shift to managing licenses in the cloud. By eliminating the software licensing headaches of the past, the enterprise focus shifts to the value that the software delivers. Utilizing a cloud licensing service is also a win for the producer, because they can eliminate the engineering and support resources required to create, package and support a local license server capability in their products.

Another benefit of using a cloud licensing service is that it offers a great way for software vendors to prevent “out of compliance” and “revenue leakage” from virtual machine cloning. Additionally, for device manufacturers that are looking to introduce new Internet of Things offerings, they can protect their virtual appliances against revenue leakage. In both these cases, having the license server in the cloud can prevent accidental (or intentional) cloning of the virtual machine (or virtual appliance) —ultimately helping the enterprise stay in compliance and enabling the vendor to protect and monetize their intellectual property (IP).


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One interesting use case for a cloud licensing service was for a software vendor that was finding it difficult to manage multiple local license servers across their global workforce. They wanted to adopt a “follow-the-sun” licensing model to optimize the value of their investment in the software by ensuring their 24×7 teams could use floating/concurrent licenses in the most cost-effective way possible. They also wanted to make sure they were staying in compliance. Using a cloud licensing service they were able to accomplish their goals as well as provide their enterprise customers with a simplified licensing experience.

In our own case here at Revenera when we were looking to introduce our newest release of FlexNet Connect (our software/firmware updating and installed base insight solution) which included two (purchasable) add-on modules, we had three main software licensing solution goals:

  • Provide our enterprise customers with a transparent software licensing experience
  • Simplify the product activation process
  • Ensure only entitled (paying) customers had access to the add-on modules

We chose to implement the FlexNet Cloud Licensing Service to accomplish our goals. As a result we were able to simplify the customer experience by reducing the number of activation IDs required to activate the modules – now regardless of the number of add-on modules customers purchase, only a single instance ID is required; when new modules are added, customers no longer have to go through an activation process, it will automatically activate on the next call to the Cloud Licensing Service; and lastly if a customer buys a subscription license and the license expires they will automatically get a new expiration date on the next call to the Cloud Licensing Service (previously they would have to go through another activation process).

Of course there are arguments for still using a local license server or a combination of both local and cloud, but what is your vote – Local License Server vs. Cloud Licensing Service or Both and why?