“There must be an awakening to the crisis, followed by action” W Edwards Deming
The parallels between the movie, The Matrix and the impact of virtualization on the software industry have been documented and drawn upon before. Whether or not the software is running on a real physical machine or a virtual machine is an obvious parallel, with a somewhat reversed perspective – we have historically lived in “The Matrix” of physical machines, and we’re now entering the virtual world.
However, the more interesting comparison occurs early in the movie when the lead character Neo (played by Keanu Reeves) is given a choice by the character Morpheus (played by Laurence Fishburne). Neo is offered either the Blue Pill to return to his existence where he has built on a life based on his current beliefs, or the Red Pill which would provide simply “the truth.” The Red Pill is typically offered only to those younger than 18. After that, the risk of denial and psychotic episodes from the reality of separation is much higher.
For the software publishers, the emergence of virtualization has many software vendors at this philosophical crossroads. In a recent study conducted by Acresso among a variety of software publishers, we found that 62% of software publishers believe that their customers are using software in a virtual environment, yet, 57% of them have not adopted any policy changes to accommodate virtualization. Many software vendors are at a standstill.
For software publishers, the uncertainty over change and disruption caused by virtualization appears greater than the possibility of gaining a market advantage or seeding new opportunities. However, the study found that 13% of software producers believe there may be opportunities with virtualization, so there are positive signs that virtualization is being embraced.
The major stumbling block is the impact of virtualization to what is known as the “license metric,” that part of the license model that is a measure of usage and to which pricing is applied. A license metric is identified by such terms as: named user, concurrent user, or number of cores. Clearly, any change to how software is licensed and priced is not something taken lightly, especially if the license metric is based upon a characteristic of the hardware. But a failure to do anything can result in lost revenue or risk to customers who are trying to do the right thing, but aren’t given any guidance or support by their software vendor and face the financial risk that non-compliance can bring.
Unfortunately, there are no magic pills to address virtualization, but if you do decide to take the Red Pill, there are some basic steps you can take, as described by Jim Geisman (of Software Pricing Partners) in a recent webinar we presented on the topic:
· Embrace Virtualization. Virtualization is here to stay, acknowledge it, it’s a part of today’s computing fabric.
· Get ready to Virtualize. Review your pricing metrics and update your entitlement and support models.
· Commit to a Position: At a minimum, establish a platform neutral position where your customers are not at a disadvantage for using your products in a virtual environment. However, seek ways to find competitive advantages: Offering your products as “virtual appliances” or using virtualization as an entry to cloud computing are possible starting places.
· Establish a Compliance and Enforcement Philosophy: Determine your position with balancing customer experience with the need to manage revenue. Do you have trusted customers who simply want to be compliant in a virtual world; or do you have problems with intentional software theft or piracy? Once you’ve characterized and segmented your market, you can then apply the correct level of technical enforcement.
· Partner for Success: Companies like Acresso can help you map out a roadmap and provide you with the technology that you may require to rapidly meet your market requirements.
With Morpheous at your doorstep, remember that there are not magic pills, but the Red Pill will lead you to the truth.
Are you debating which Virtualization pill to consume? Let us know!
