Software Licensing & Master Service Agreements : Chicago Software Licensing Lawyer & Attorney : Sam Conforti Law Firm : Master Service Agreements, Negotiations, Outsourcing : Cook County, Illinois

As many of you know, SandHill.com is the online resource created for enterprise software executives. Kamesh Pemmaraju heads cloud research for the SandHill Group and writes a weekly report on the latest happenings influencing the cloud computing community. His latest report entitled Top 5 Cloud Strategies for CIOs is based on a survey of 511 software executives. The survey deals with these executive’s perceptions of cloud computing, their initiatives, implementation issues, and any perceived benefits. His report presents the top 5 strategies CIOs should follow when considering cloud computing. I will present a brief synopsis of those findings here as follows:

1.       Treat this decision like any other business decision:  Pemmaraju simply means to look at all the alternatives and do a traditional compare and contracts analysis. Look at the ROI and weigh the risks.

2.       The cloud is coming – Embrace it: Pemmaraju quotes one executive, “The cloud will come - it's happening now even if it is coming with a lot of hype and a lot of buzzwords. It's a very logical transition - like we are going from individual car craftsmanship into the era of the industrialization of IT services.” A large amount of the survey respondents have already started trials and pilot projects to jump start the learning curve for their personnel.

3.       A sandbox spurs innovation: Create an innovation sandbox in the cloud. The drag on spending due to maintenance is lifted. This new found freedom allows IT departments to redirect efforts from infrastructure constraints to more creative ways to run the business model.

4.       Cloud computing is a furtherance of Outsourcing trend: With this in mind, Pemmaraju presents a short checklist when evaluating whether to move in this direction:

a.       Perform your due diligence and pick a good cloud computing vendor.

b.      Confirm that support levels are adequate.

c.       Obtain copies of vendor certifications (i.e. SAS 70 etc.)

d.      Is your data retrievable in your desired format?

e.      How is your data isolated and protected from others?

5.       Retrain your IT staff: As one CIO respondent succinctly stated, “The jobs of people who sit there patching thousands of servers each time there is a change—those jobs are going away.” The focus will turn from infrastructure to vendor management, and program management, and business analysis.

Pemmaraju concludes his report with an analysis of the impact open source is having on cloud computing. He states that proprietary licenses are lagging in their offerings for cloud computing and so many cloud platforms are run on top of open source stacks. This will have an effect on hardware sales as most companies will be trying to avoid the big expenditures on infrastructure.

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Nobby Akiha reports in SandHill.com on Gartner’s Top Ten “HOT” technologies for 2009. Included in this top 10 list is Business Intelligence (“BI”). Akiha lists the 10 predictions for BI and how BI will surge in 2009 and they include the usual suspects, “The Recession” and “Going Green”; however, the list also gives us some insight into the other salient issues that will cause the use of BI to swell in 2009. For the complete story read Nobby Akiha’s article 10 Predictions For Business Intelligence. Here is a short-hand version of the list:

1.       More Open Source Collaboration: Blogs, online communities, and social networking will help spur the development and use of BI tools.

2.       Rich Internet Applications (“RIA”) for consumers influence the Enterprise:  Workers start to demand the same web applications used at home for the workplace.

3.       The Cycle Goes from Applications – to – Users – to - Better Applications:  It becomes a self-fulfilling prophecy.

4.       A Recession Fighter: BI provides the competitive advantage to analyze costs, margins, and channels to better gauge profitability.

5.       Green: BI assists in the allocation of resources. “Plus, ‘going green’ fits with consumer sentiment and conserving resources conserves cash.”

6.       Regulations are coming: In light of the financial melt-down on Wall Street, it is a foregone conclusion that the Feds will be writing more regulations and these regs will most assuredly require companies to retain and disclose data. BI will help with the data management.

7.       Globalization Increases Competition: BI makes it possible for business decisions to be more informed and in real time.

8.       Wider Access to the Analysis: Decision makers are enterprise wide and as BI gains wider adoption these decisions makers will have access to the informed analysis.

9.       Flexible Reporting: Siloed data isn’t much help to the enterprise at large. BI makes it possible for data to be scalable and viewable in various formats.

10.   More Open Source Deployments: These solutions will be customizable for business decisions.

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If my previous post on 12/22/07 Open Source Violation Could Get You Sued did not spark your curiosity, well then maybe this one will make you sit up and take notice. McAffee, the company use to warning their customers about potential problems in their customer’s own software, now has issued a cautionary note to its investors about possible risks (that means litigation) as a result of Open Source software in its own products. Jason Haislmeir deftly explains this issue in his article McAffee Issues Risk Factor Over Open Source Licenses.  

It appears that the risk stems from the 2^nd version of the General Public License (“GPL”) as yet untested by the courts. Since the GPL imposes an obligation on its users of Open Source to make such software available at no additional charge and also make available software that relates or interacts with the Open Source software, it is easy to see that McAffee’s concern is genuine.   Haislmeir goes on to describe how others such as Tivo and Microsoft have encountered GPL license issues and have issued similar warnings to their investors.         

Until these issues on use of Open Source software and what obligations attach to the users of related products containing such Open Source software are settled, it would be a very prudent approach for companies to ramp up their compliance programs. At the very least this could help identify a possible violation and allow the company an opportunity to formulate a response or make any necessary adjustments to avoid the aforementioned risks.

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There’s no such thing as a free lunch.  Read Sean Michael Kerner’s article about a possible infringement of Busybox’s GPL license. In it he details how four companies (Monsoon Multimedia, High Gain Antennas, Xterasys, and Verizon) have been sued and two of the four have already settled.  Kerner points out that some companies might not even know they are in violation, or worse yet, not take such compliance issues seriously.  The next logical step is to develop tools that can identify these license violations.  Kerner’s article identifies three such vendors, OpenLogic, Black Duck, and Palamida. With the apparent enforcement actions of these types of alleged copyright violations, there should be a boon to law firms' Open Source practice.

As Jason Haislmaier, an attorney with Holme Roberts and Owen LLP representing High-Gain Antennas, states:

"While there are a number of companies that have implemented very robust open source compliance programs, many more have not.  This means not only that these companies are at increased risk of an open source violation, but that the recipients of any of their products containing open source are also at increased risk, many times unknowingly. This is the case in more than one of the BusyBox cases.  If the BusyBox lawsuits have demonstrated one thing it is that remaining ignorant of existing open source software usage and potential open source software license violations can be expensive."

I remember receiving a call in my office from a client a while ago asking me to look at a GNU license that he was given and to let him know if it was OK to sign it.  After a cursory first read through, I was skeptical.  Why would anyone give me free software?  And if I modify it, I have to make those modifications available to others?  What happens to my competitive advantage?  The businessman in me quickly transformed from a skeptic to a cynic.  After regaining my composure and doing a little research, I came to understand the motive.  The idea is to encourage development and evolution of the code and not the profit that could be garnered.  For a good annotated definition of Open Source see the Open Source Initiative web site.  To learn more about the GNU General Public License (GPL) and the Free Software Foundation (FSF) visit the GNU website.

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