Information Age: News, analysis & insight for IT & business leaders

Ask British Airways' CIO Paul Coby which industry figures he admires most, and two names come to the fore. The first is perhaps predictable: that hero of the frictionless supply chain, Michael Dell. The second is more of a wildcard: Marc Benioff, the founder and CEO of Salesforce.com, the provider of CRM applications as services over the Internet.

"I like 'the end of software' [idea]; its a great line. In the past, you might have paid millions of dollars for something like a Siebel licence; now you can pay a couple of dollars a pop every time you use the online application. If you think of the really interesting players around at the moment, they are [providing applications as a service]: the eBays, Googles and Salesforce.coms of this world. Those companies are actually reinventing the industry and they are arguably beginning to change the paradigm."

That underscores the major shift that is underway in how users pay for software functionality. As our cover story highlights, this is being ushered in by several technological changes - the availability of universal broadband enabling the delivery of applications as services over the Internet; the move to running (and paying for) IT on demand over utility or grid networks; and the adoption of web services and service-oriented architectures which use application components dynamically.

That is inducing some big headaches, as Microsoft's head of server software, Eric Rudder, attests: "The [hard] thing for customers, for Microsoft and for the industry is dynamic workload. Where you've got a bunch of hardware that runs Windows for six minutes a day or six hours a day, or 60% of the time, what do you do? Do you charge customers for a full copy of Windows?"

He gives an illustration. "Say you have a [retail] website that is running SQL Server 51 weeks a year. Then Christmas comes and you need to roll out another SQL Server just for a week. Should you pay one fifty-second or half or maybe the full $25,000. What is fair? [Without the extra licence], your whole system would have crashed and you wouldn't have been able to take any orders. The whole concept of use is a tough one."

Our analysis does not come up with all the answers, but it does show how the licence debate will evolve in the next few years and the upheaval that will ensue, concluding that the models applied to software will be much more fluid - as will the fees that organisations end up paying.

Editor: Kenny MacIver