Networking has seen a dramatic shift from hardware to software defined networking. I asked Tom Nallen, President of Network Licensing Strategies, to give us the low down on network licensing, software defined networking and the opportunities for Software Asset Managers.
Simply put, network licensing provides right to use entitlements for software used to enable data networking, telecommunications – including IP telephony and online collaboration applications – and all of the expanding forms of network security. These entitlements have traditionally been fulfilled as perpetual licenses delivered with a network, telephony, or security device prior to it being installed at a customer site – much like pre-installed software licenses on a new personal computer you may have purchased. License keys must be activated through a registration process prior to making the device operational in the customer network. Flexera, Gimalto and Nalperion are a few well-known vendors performing licensing and entitlement management services within the networking industry.
It seems I’ve been working with software forever. In graduate school, I sold small business accounting software for a computer time-sharing start up. A bit later, I launched Verizon’s first online shopping directory around the time that large print telephone directories began to fade. A few years after that I helped launch the first Cisco Integrated Services Router (ISR) where advanced security and IP telephony services were delivered in software embedded within a small branch router. The ISR “full service branch” solution was a decade ago and laid the services-in-software foundation for today’s software-defined Wide Area Network (WAN) solutions.
For the last 4 years of my 17 year networking career, I’ve led the Cisco software transformation initiative focused on ELA and new software buying programs. In this role, I built systems and processes that addressed some of the long-standing pain points around software licensing for networks. In doing so I learned first-hand how network licensing works, where it’s going and the potential opportunities and pitfalls for those who work with it. Helping companies navigate this transition is the main mission of our new company, Network Licensing Strategies.
Networking is about moving information between connected devices – say a server and a laptop computer, for example. Information is transmitted in formatted units of data we call packets. Routers, a fundamental networking device, use elements referred to as the control plane and forwarding or data plane to process packets and deliver the information from the server to the laptop. Control plane elements typically run in firmware or software, while forwarding plane elements utilize the underlying hardware capability in the router to provide per packet processing and handling as directed by the control plane.
These key control and forwarding plane elements have traditionally been delivered within the router as a single stand-alone device. Network architects and technologists have recently found new efficiencies can be realized by separating the control plane software from the network device hardware and running that control software in the cloud. This enables more generic, potentially lower cost hardware in the physical network and easier, more cost-effective policy management from a centralized console in the cloud.
This decoupling of control plane software from forwarding plane hardware is a central concept in Software-defined networking (SDN)
Well, it’s pretty clear in the example we just walked through. By decoupling the brains (software) from the brawn (hardware) in the network, one should be able to save hardware capital expense and achieve network administration efficiencies. Another benefit is that network feature-functionality – often enabled in software – is no longer tied directly to the hardware refresh cycle. Of course, it’s never this simple in practice because there are things called ASICS (Application Specific Integrated Circuits) that provide increasing feature functionality embedded within networking devices. Customers also have production networks where previously installed gear must work with newly purchased solutions.
Licensing becomes more important as soon as network software is monetized separately from the hardware – and especially when it’s no longer a perpetual entitlement. Network vendors are already moving to monetize their software separately from hardware – even in cases where the control plane, or embedded software services have not yet been decoupled from the hardware it runs on. Every day it seems we are seeing new software subscription and ELA-like offers from networking vendors and this trend will only accelerate. So, while customers have the potential to save on capital expense with reduced hardware costs, they must watch the recurring software expense line items.
In a subscription or any capped consumption, term-based licensing model such as ELA, entitlement management is critical to enabling the desired business outcome at the planned for expenditure level.
Earlier in this conversation we touched on SDN, or software-defined networking and some of the potential benefits that decoupling control plane software from the forwarding plane in network hardware can yield. IT resource virtualization is a separate technology solution and trend apart from SDN. Most of us are aware of how server virtualization with blade servers, hypervisors and virtual instances improved capacity utilization and the data center cost structure. NFV, or network functions virtualization generally applies this same resource virtualization approach to the network. With NFV, instead of virtual machines, we have virtualized network services such as firewall, switching, server load balancing, application acceleration, etc. all running within a virtual cloud instance or container. The idea is that these virtual cloud instances, which may include access to business applications, can be flexibly provisioned to scalably meet user demand. NFV and SDN can be complementary in that NFV scalably provisions network services on demand, while SDN provides the cloud-based policy decisions to drive cost effective access to and data transport for those services. The virtual network services that are scalably provisioned with NFV and SDN are often delivered in software and thus must be licensed. Efficient and rapid licensing is critical to simplify end-customer activation. Legacy licensing models designed for on-premise, node-locked entitlements are challenged by the need for rapid license deployment, metering, and the ability to redeploy licenses from one virtual instance to another. Emerging network technologies like NFV and SDN will drive the transition from on-premise, node-locked entitlements, to pooled entitlements in the Cloud.
The next generation network will utilize software in the cloud to control and manage access to business applications both within the private network and the public cloud to securely deliver business outcomes at reduced cost compared with traditional on-premise networks. A need for speed and intelligence will spur new cloud-based licensing technologies and processes as well as new network software buying models. Network vendors will share in customer success with new trust-based, pay as-you-grow licensing models that are less tied to a hardware device purchase transaction.
Most of the major business application software vendors like Microsoft, Adobe, Autodesk, and others have already started or made the transition from perpetual to subscription software licensing models. They and their customers are wrestling with the intricacies of managing entitlements for cloud-based applications and software services fulfilled as a subscription. Networking vendors like Cisco, HP and Juniper have only just begun this transition. But it is a transition they must make and make quickly because technologies like SDN are changing the value dynamics in the traditional network. It is clear that the way companies and organizations buy network services will change and they need to be prepared for that change.
Two things come right to mind:
For the last 4 years of his 17 year networking career, Tom led the software transformation initiative at a leading network vendor focused on ELA and new software buying programs. In this role, Tom built systems and processes that addressed some of the long-standing pain points around software licensing for networks. His team delivered 10X faster licensing cycle times, enabling an 11X customer base growth and Tom learned first-hand how network licensing works, where it’s going and the potential opportunities and pitfalls for those who work with it. Helping companies and organizations navigate the transition to the nextgen cloud and software-defined network with an emphasis on licensing and entitlement management is the main mission of our his new company, Network Licensing Strategies.