Software License Optimization

M&A is a Major Source of Software Compliance Problems

By Randy Littleson

There's a great article on the FinancialDirector site entitled "Don't let software licensing fall between the M&A cracks" that clearly illustrates how M&A is a major source of software compliance problems.

As we talk to companies, a huge part of the problem is that they don't have a sufficient software asset management program in place to begin with.  So, when you add an acquisition to the mix, things get really bad.  The article rightly points out that understanding software licenses needs to be a part of the due diligence process.  But doing so without a software asset management program already in place that is delivering continuous software compliance and optimizing your software spend for your entire software estate will still leave you with major problems.

A good place to start is by viewing our webinar series on Software License Optimization, starting with "How to get started with a software asset management program."

Garnering CxO Support for Software Asset Management Investments

By Lisa Erickson-Harris

Software expenditures for most large corporations are sizable, if not dominant, expenses in the IT budget. New models for software licensing are evolving and arriving on the scene with cloud computing, software-as-a-service (SaaS) and other utility-based computing models offering lower points of entry and more flexibility for software acquisition. Yet, the total amount being spent on software is not expected to decline; in fact software spend is growing at about a 7% compound annual growth rate according to industry analysts. Software will remain a costly expense.

When it comes time to ask for budget dollars for a product that enables IT to manage its software assets, a strong case is needed, none the less. Corporate executives may be reticent to spend money on software whose main purpose is to manage license compliance for its applications and tighten control of these expenses. Yet, perhaps these two points are exactly the justification that will sell executives on the investment in software asset management (SAM) and license optimization.

Technologies such as network management, performance management and DevOps can be viewed as esoteric to those without direct need, making it difficult to build the case for products that are strictly behind the scenes. SAM, on the other hand, has the ability to show direct return on investment. Cost savings are easily achieved through the implementation of an effective software asset management and license optimization program supported by software and analytics. CxOs will always be open to improving financial results through reduced expense. The skeptical nature of corporate leaders will demand evidence.

Dollars and cents are at the heart of any strategy to secure budget for SAM and license optimization. Within the scope of that objective, a number of steps can be taken to establish credibility and gain executive support.

• Establish credibility-Gather and provide data points even prior to purchasing and implementing a SAM and license optimization solution. In some cases, this will mean manually taking an inventory and comparing results to purchase orders and contracts. Convincing the management team that IT understands the volume of software licenses and the mechanics behind managing them will help to build the case that IT will also be able to take advantage of a tool that provides automation and analytics.
• Educate executives about market norms and trends– Locate and share typical statistics on software investments such as how much overspending is typically done to avoid license compliance issues, which software suppliers typically pursue compliance audits (see this blog post), return on investment (ROI) for successful Software License Optimization programs (see this blog post on Building the Business Case for Software License Optimization), etc. This information can be mapped to your own software investments to show the risk and return in relationship to your organization.
• Provide case studies to demonstrate potential savings-Ask solution providers for case studies, published or not, and then talk to users to gain additional insight into which products and priorities delivered the quickest results. Use this information in pitching your request for budget dollars. In some cases, you will need only charts and/or spreadsheets that show savings achieved in similar vertical markets.
• Show examples of analytics-This information can be provided by your short-list of SAM and Software License Optimization vendors in support of your business case. Detailed examples provided by these vendors can show how analytical information will fuel contract negotiations and also reduce expenses for some specific categories of software applications used by your organization. Advanced license optimization tools have built-in Business Intelligence (BI) engines, such as Cognos, to deliver complex analysis and reporting capabilities that can now be applied to software asset management. Another category of “advanced analytics” is What If analysis that is used to see the impact of hardware and software changes on your license position, before the changes are actually made.

Software License Optimization plays directly into the requirement for IT Financial Management (ITFM) by adding business discipline to the function of technology management. Through license compliance measures that ensure contract requirements are being met and which mitigate unbudgeted audit true-up expenses, IT leaders are demonstrating a perspective that moves beyond technology for the sake of itself. Similarly, cost savings and due diligence are shown when IT professionals scrutinize software investments with the aid of sophisticated tools. The business case for purchase of Software License Optimization tools will become self-evident as IT Directors and CIOs communicate the business value.

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Learn more by reading our white paper: Moving Up the Software License Optimization Maturity Curve to Drive Business Value.

App Store Essentials: Using Your App Store to Aid the Software License Optimization Process

By Laura Noonan

In many companies, more than one third of total IT spend goes toward software licenses. Software is a huge investment, so it’s no wonder that IT executives are looking for effective ways to optimize software license usage and minimize software spend. Consequently, an important goal within IT is to establish a comprehensive Software License Optimization process that aggregates, normalizes and reconciles software inventory, purchase order, usage data, license entitlement, product use rights and other information from enterprise business systems and determines an accurate license position. This enables the staff to maintain continuous license compliance and a state of software audit readiness in addition to reducing ongoing costs for software.

Your enterprise app store can be an integral part of your overall Software License Optimization program by helping you eliminate the waste that occurs when software that is installed on user machines sits idle. The software may be unused because the user has changed jobs. Or, it may be that the user needed the application for a particular project and, once the project was done, never used it again. 

The good news is that an enterprise app store with the right feature set can help you track down unused software and then reclaim the associated licenses. The benefit: you spend less on software because you don’t buy additional licenses unless all the software you own is actually being used. Two features in particular are instrumental in helping you do this: License reharvesting and software leasing.

Let’s start with license reharvesting. Here’s how this feature helps you achieve substantial savings with respect to licensing costs:

• License reharvesting leverages installation and usage data to automatically identify software that is deployed but unused. Usually the organization will specify a period of time, such as 90 days, whereby, if the software is unused during that period, it is a candidate for reharvesting.
• You want to ensure your app store includes the ability to conduct automated email campaigns, so you can engage users in the reclamation process by sending them an email message that offers the option of keeping an application or surrendering it.
• If the users opt to surrender the application, the app store then triggers a de-install of the application through your software deployment tool. The software license management tool will detect the removal of the software at the next inventory collection and should be able to automatically add the license back to the available pool.
• Effective license reharvesting campaigns track user responses for you and provide full visibility into results, including how many users did and did not respond, the percentage of users who opted to keep or surrender the software and the users' justification for keeping software.

Now let’s look at software leasing. Leasing is particularly useful in project-based environments where application needs change as employees move from one project to another as well as in environments in which contractors are brought in to perform specific functions for a period of time. Here are some of the ways leasing helps you keep license costs in check:

• Leasing gives users access to an app for a limited period of time, after which the license is reclaimed automatically unless the user extends the lease.
• An effective leasing capability gives you the flexibility to set a maximum lease time and a default lease time based on the needs of your business.
• When a lease is about to expire, it’s important to have an automatic notification capability so users aren’t caught off guard and they can extend the lease if necessary.

As you can see, license reharvesting and software leasing options give you a real edge in optimizing usage and spend by reclaiming unused licenses so you can assign them to users who need them. Some companies report that they were able to recoup the acquisition cost of their app store solution within six months simply by using the license reclamation capability.

Read the next blog in the App Store Essentials series, “Connecting Your App Store to IT Service Management Systems,” to find out how integrating your app store with IT service management systems such as BMC Remedy, ServiceNow and Microsoft Service Manager brings the app store into your service management processes to ensure that software delivery complies with corporate policies and external regulations.

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To learn more about software license optimization, please view our on-demand webinar:  Go Beyond
Traditional Software Asset Management with Software License Optimization 

 

Managing Software Assets as Enterprise Software Evolves

By Randy Littleson

An interesting article over at ZDNet entitled “The Evolution of Enterprise Software: An Overview” provides some interesting insights on how enterprise software has been evolving and some of the challenges it introduces to the typical company.  The one section that particularly caught my eye was the author’s comments on software licensing.  He stated:

The licensing terms for enterprise software can be convoluted, particularly where large vendors have incorporated multiple acquisitions, each with their own licensing schemes, into their suites. This can lead to significant non-compliance charges for clients with less-than-perfect software asset management tools.

The reality is that most large vendors have grown through acquisition and even when they don’t, they have multiple products with varying licensing models and even multiple models per product in an attempt to cover all the use cases as demanded by their customers.

Managing this manually is close to impossible.  Being able to proactively manage your software estate to ensure continuous compliance with software license agreements and optimizing your software spend requires a program that:

• Combines clear organizational ownership with
• Best practice software asset management (SAM) processes
• Supported by the right technology

The software asset management and Software License Optimization technology can be a huge benefit by incorporating high value libraries that contain software product-specific and vendor-specific licensing "knowledge". The tools can do this in a way that “productizes” essential information that would be virtually impossible to manage and leverage manually.  The software license management (license reconciliation) process entails collecting, normalizing and then comparing both inventory data and license entitlement data (purchase orders and contracts) to understand your license postion. The value to an enterprise comes in the form of software licensing analysis and insights drawn from the automated application of the built-in knowledge in the libraries during the license reconciliation process.

Software license management across a typical software estate is becoming more complex due the use of new technologies, such as virtualization, that create highly dynamic IT environments, constantly changing license rules and the growing complexity of software license models and agreements as vendors seek to address all possible scenarios.  The key to coping with this from an enterprise perspective is to have a global software asset management program that incorporates best practice processes, appropriate oversight and ownership by people in the organization, and automated by underlying Software License Optimization technologies that bring together the required information to facilitate decision making. 

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To learn more, please read our white paper: Moving Up the Software License Optimization Maturity Curve to Drive Business Value.

 

App Store Essentials: Leveraging Software Asset Data to Achieve Continuous License Compliance

By Laura Noonan

What comes to the business user’s mind when asked about the enterprise app store concept? An easy-to-browse online catalog. A shopping experience similar to Apple’s App Store or Google Play. Hassle-free and near-immediate delivery of apps.

But as an IT professional, what comes to your mind? Making sure every app is licensed properly and used in compliance with contract license terms. Using the enterprise investment in software wisely. Optimizing software spend while minimizing costs. These objectives aren’t always easy to achieve depending on the size and complexity of the IT environment and considering the variety and intricacies of software license models.

Fortunately, you can build an enterprise app store that meets user expectations and needs while also controlling costs and minimizing license compliance risks. Data is the key. A truly successful app store has access to comprehensive, detailed and up-to-date data on all software assets. Data makes it possible to handle software request, approval and fulfillment processes appropriately and automatically.

But where does the data come from? Gartner, Inc., recommends getting it by integrating the enterprise app store with internal software asset management and IT procurement systems. (Source: “Enterprise App Stores Reduce Risk and Improve Business Results,” Ian Finley, Gartner, 1 February 2012). With this kind of integration, your app store can ensure license compliance while keeping software costs under control.

So, what kind of data should your app store obtain from your software asset management and other enterprise IT systems? Here are some examples:

• Software asset data, including what and how many assets of each version and edition you own, how many are installed, where and on what devices, and the number of available licenses
• Metering data to identify which software installations are being used and which are not
• User data, such as user roles and access privileges as defined in Active Directory

When you make this kind of data available to your enterprise app store, you can accomplish much more than merely giving people convenient access to applications. This data powers your app store with the ability to address a variety of key IT needs such as:

• Populating the app store catalog automatically with accurate information on which applications are installed on each device.
• Checking license availability in real time and reserving a license at the time of the user request, if a license is available;  kicking off the procurement process to purchase additional licenses when they are needed. This ensures that software is only installed when there is a license entitlement to go with it.
• Routing requests automatically for approval based on asset and user data, leveraging best-practice processes to minimize the risk of noncompliance with license contract terms
• Identifying applications that are installed but not being used and reclaiming them to optimize usage and avoid costly overbuying.

Asset data makes all of this and much more possible. In the next blog in our App Store Essentials series, “Using Your App Store to Aid the Software License Optimization Process,” we’ll offer guidance on how you can use features such as license reharvesting and software leasing to optimize software usage and software spend.

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To learn more about software asset management and license optimization, please view our on-demand Software License Optimization 4-Part Webinar Series.

 

You have optimized your SAP landscape...but now you have to account for a new module or system!

By Matt Schaefer

It's a very common scenario where it is necessary to bring a new SAP system into your SAP software license optimization efforts. This can happen for a variety of reasons-- the scope has broadened to include organizational entities that your SAP scope didn’t previously include; acquisitions, where one company strategically leveraging SAP's technology stack buys/merges with another company using SAP as well; your organization is expanding your SAP footprint and bringing more functionality on line.  When addressing these scenarios, it is critical to understand how your SAP licenses and related contractual obligations will be impacted.
 
Regardless of the reason, it’s important to make sure that you are maximizing your value from the new system. Before bringing this system online or in-house, there are a few things to consider:

• What are the licensing metrics of the new system? Do you pay for the user (license level type) or is it an add-on package based on business metrics like revenue or PO line items? Understanding this metric is key to knowing how this system fits into your SAP license framework.
• How does this 'new' system fit in terms of functionality and usage? If this system is redundant, which mainly occurs in acquisition scenarios, it’s critical to understand existing contract terms and conditions. For example, if you are now considered 'over licensed', does either company have parking language that could be exercised to reduce the cost of ongoing maintenance? Would the SAP license entitlements from one entity transfer to be able to cover the 'under-licensed' entity if that situation occurs? Can you leverage currently owned SAP license entitlements for your new system?
• Will the system be considered Production, QA or a Test environment?
• What is the expected lifecycle of this new system? Is it one that will be rolled into the buying entities’ system or will the two systems operate side by side? Depending on your next SAP audit or true-up, timing could influence what entitlement purchases will or will not be required.
• Can you apply already established business rules for determining what 'usage' is? For instance, will the same types of people / roles access this system, requiring a certain license level, as previously defined?  If not,  what level of CPU time, executed transactions, logon rate will be considered for establishing the policy for this system based on the named user license levels?
• If users already have logins for another SAP system, will the license entitlement they already have cover usage in this system as well?
• During the discovery/disclosure period of acquisitions, consider performing an SAP software license optimization exercise to be certain the assets and liabilities associated with the system landscape are truly understood. 

Many organizations focus on Portfolio Management and Application Lifecycle Management when making the decision to bring in a new system such as SAP, focusing on the features and value that are gained from the system. However, without understanding the overall picture of your SAP landscape, including license and contractual considerations, bringing a new module or system on-line or an acquisition’s system in-house could introduce risk to your overall business case.

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Learn more about SAP license optimization by viewing our on-demand webinar:  SAP Software Licenses Could be Costing You.

 

What does optimization of your SAP landscape actually mean?

By Matt Schaefer

We often discuss the concept of optimization of our SAP assets as if it is well understood, but what are we really talking about?  There are essentially three aspects of SAP optimization that need consideration:

• License
• Process
• Vendor Relationship

The License aspect considers the license position based on what was purchased versus what is consumed. There is some complexity that exists when taking into account the mix of SAP licenses that the organization is consuming (e.g. Developer, Professional, Limited Professional, Employee, etc.).  Investigating what this license type 'mix' should be requires that your organization understand how users are utilizing the SAP landscape. At a minimum, what transactions are users executing, how long are they in the environment, and how often between sessions do users log-in are questions that must be answered if you are to pick the most effective license type for each user based on their actual business use of SAP. This is important because customers tend to allocate the Professional level license to be sure their users are 'covered' no matter what they do in the system or systems. This can become a costly insurance policy that can be easily avoided with an appropriate software license optimization solution that can automate this calculation across the multi-system SAP environment.
 
The Process aspect considers the ability to replicate the set of the tasks necessary to repeatedly calculate your SAP license position. All too often SAP owners/users/practitioners do not consider the value of the amount of time and resources that go into the above. They believe that some version of custom reports and spreadsheets is enough (or if they realize it’s not enough, they believe it’s all they can do).  The problem that occurs is that manually creating this license view is not only operationally expensive but it keeps organizations from accurately understanding their usage and truly making the leap to license optimization. The sheer effort required from the manual approach forces them to 'get by' and 'survive' audits rather than maximize return on investment from their systems landscape. Software license optimization tools that bring automation to bear on SAP license management can streamline the process and dramatically improve results.

The Process perspective should also look outside of just SAP and holistically consider optimization of the entire software estate, of which SAP is just a part. Standardization of software asset management processes across the enterprise enables the centralization of reporting as well as streamlining vendor management communication internally between executives, IT, Procurement, and Legal. (And this allows a more strategic and “in the driver’s seat” positioning with suppliers!) For instance, the procurement group may want to focus their negotiation efforts on ‘parking’ language or remixing of licenses rather than drive for discounts for licenses they don’t even realize they don’t need. (Another way of saying that, is if you get a 50% discount but only use half the licenses you purchased….then you paid full price.) The key is organizations have to know how to get the most value from their systems, contracts and vendors. This process view focuses on getting the right information to the right people at the right time in an efficient and repeatable way to make more informed business decisions. 
 
The Vendor Relationship is the culmination of the execution of the two previous optimization areas.  This aspect considers what the relationship should be with a vendor— in this case SAP. It is being able to categorize them (e.g. are they a strategic partner?) and come to the appropriate value terms in an unequivocal and precise way. When it comes to vendor relationships, hostility is bred from ambiguity. It’s only when both parties can consistently understand and agree to the terms of value that the relationship's focus changes its posture from defensive to collaborative with a focus on strategic growth (for example, a shift from— I want x (feature) to— how can you help me achieve y (outcome)).

A common example of this is getting SAP to define the 'Limited' in the Limited Professional license type so it is relevant and valuable to your organization. Once this is established, the conversation can shift from defining features to how they can be leveraged. This is beneficial for SAP as well, as it gives their customers the ability to know and appreciate the value based business they have historically done with the vendor. It allows customers to have the confidence to re-invest their savings with SAP, broadening the SAP technology footprint in their landscapes.
 
So optimization means being able to accurately know how you are consuming and leveraging SAP assets, applying a strategic direction to that information and putting it in the hands of the people to nurture the relationship with specific value based goals as the framework for your collaboration with SAP.

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To learn more about optimizing SAP licenses, please view our on-demand webinar: SAP Software Licenses Could be Costing You

Duplicate Users, Misclassified Users, Unused
Licenses—all of these could mean that you are spending too much on SAP named
user licenses. Watch this Webinar to learn how to optimize your SAP software
licensing to reduce costs and be audit ready. less

 

Whose job is it to manage software licensing?

By John Emmitt

Whose job is it to manage software licensing? This was the title of a blog posted by Brian Von Hatten of Scott & Scott LLP. Brian goes on to say that there has been a large increase in the number of software license audits over the past few years. We have blogged about this topic as well-- see this blog post from last year: New Gartner Report Shows Software Audits Up Again in 2011. But the main thrust of the article is about whose responsibility it is to manage software licenses and maintain license compliance.

Brian reports that it seems to vary quite a lot from organization to organization, based on responses to this question on a professional networking site. Then Brian suggests that it is really everyone's responsibility. While that may be true overall, it is usually a good idea to assign specific individuals or teams to have this type of responsibility, to ensure that someone can be held accountable. The c-suite is going to want someone to be accountable, especially if there is a large unbudgeted audit true-up expense. In some companies, this type of expense must go to the board for review and approval.

It's true that the people responsible for software asset management and license compliance do vary-- from software asset managers to IT procurement personnel. Sometimes it falls under the CIO's organization and other times the CFO. Sometimes there is a Chief Compliance Officer in larger enterprises who would ultimately be responsible for license compliance, in addition to regulatory and other compliance issues. At Flexera Software, we have seen a wide variety of job titles and organizational reporting structures for software asset management and license compliance in the companies that we work with.

But beyond assigning this area of responsibility, it's incumbent on organizations to also invest in software asset management (SAM) processes and tools to better manage software licenses and proactively maintain license compliance-- as discussed in the above Software License Optimization blog. Organizations cannot simply throw people at this problem, due to the complexity involved. There are at least three areas of complexity that make license management a difficult problem:

• License complexity-- including complicated volume purchase agreements that vary from vendor to vendor, myriad license models and metrics, and complex software product use rights that must be understood and fully leveraged to minimize license consumption.
• IT environment complexity-- including many flavors of virtualization technology (server, desktop (VDI), application, hard partitioning, ...), public and private clouds, SaaS, BYOD, roaming use, etc.
• Organizational complexity-- including globally distributed organizations, mergers, acquisitions and divestitures, decentralized procurement, etc.

Furthermore, organizations must go beyond merely maintaining software license compliance and optimize their licensing to reduce ongoing costs. While maintaining license compliance helps ensure that your company won't have any unbudgeted audit true-up expenses, it does nothing to ensure that you aren't over spending on licenses and maintenance. This is the added advantage of Software License Optimization-- enabling organizations to maintain license compliance and reduce software spend by 5 to 25% per year.

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To learn more about software license optimization, please read our whitepaper: Moving Up the Software License Optimization Maturity Curve to Drive Business Value.

 

When Performing a Microsoft License Reconciliation – Start with MSDN

By Mandi Sue Bleau

When working with a new customer on a Microsoft software license reconciliation, the question that I start with is – how are your Microsoft Developer Network (MSDN) licenses being handled?  Why, you
ask?  They are becoming the quickest way for a customer to save the largest amount of money.  These licenses are very expensive and most companies treat them like tissues to be thrown away after one use. 

Here is a good example.  I was just working with a customer who had their developers managing their MSDN licenses.  While this would seem to make perfect sense, there are a lot of details that the
person in charge needs to understand and take into account to manage these licenses effectively. They need to understand what product version is best suited for each developer, know how and where it should be purchased, ensure registration on the Volume Licensing Service Center (VLSC), manage transfers and renewals, and much more.  As you can imagine, your typical developer is not trained on nor focused on these license management issues. And who can blame them, they just want to get their job done.

This customer had a significant overage of MSDN licenses for which Software Assurance was not renewed because most of them were never registered and they were not being tracked or managed.  If a developer left the company the software licenses weren’t being reassigned on the VLSC so the new developer would purchase a new license for themselves.  Without the Software Assurance (SA) being renewed, if the developer needed the new edition, a new license (and SA) would have to be purchased which would drive up the cost.  Purchases were rarely, if ever, being done on the right program – some were done on the Select Program, some on Open and some on the Enterprise Agreement.  Lastly, they didn’t take into consideration the actual usage of the MSDN software licenses.  More than half the licenses that were purchased weren’t even being used. 

All of this resulted in an overspend of about $1.9million over a 2 year period for about 278 MSDN licenses.

The lesson here?  Be sure to have a software license optimization program in place to proactively and centrally manage and optimize MSDN licenses.  Failing to do so can create a management nightmare and result in significant software overspend.

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To learn more about the benefits of a mature software asset management and license optimization program, please read our white paper: Moving Up the Software License Optimization Maturity Curve to Drive Business Value.

 

Webinar: Meet the BYOD, Computing Anywhere Challenge

By John Emmitt

As today's workforce becomes ever more mobile and flexible, organizations are adopting virtualization technologies that deliver desktops and applications anytime and anywhere. Users want access not only from their corporate laptops, but also their mobile phones and tablets. Attend this webinar to learn how you can deliver an on-demand, bring your own device (BYOD), 'computing anywhere' experience, while addressing such challenges as multiple devices, diverse platforms and software license management.

Enterprises making the transition to this new computing paradigm must consider the software license management implications.

Register Today to hear Barb Goldworm, President and Chief Analyst at Focus, LLC, discuss the adoption, challenges and benefits of well-managed desktop virtualization. Vincent Brasseur, from Flexera Software, will discuss how organizations can ensure license compliance and control software costs when implementing virtual desktops.

Attend this webinar to learn about:

• The adoption, challenges and business value of desktop virtualization
• The Citrix XenDesktop solution
• How to effectively manage software licensing in virtual desktop environments with Flexera Software's FlexNet Manager Suite solution.

When:

North America: Tuesday, April 9, 2013 at 10:00am CT

EMEA: Tuesday, April 16, 2013 at 11:00am (UK)

APAC: Thursday, April 18, 2013 at 9:00am (Sydney)

About the speakers:

 

Barb Goldworm 
Founder, President and Chief Analyst at Focus, LLC

www.focusonsystems.com a research, analyst and consulting firm focused on transformational technologies in virtualization, cloud computing, systems and storage. Barb is a well-known industry expert, frequent keynote speaker, author, and columnist on virtualization, systems management,
and storage, with over 30 years’ experience in various senior management, technical, marketing, sales and industry analyst positions with IBM, StorageTek, Novell, Enterprise Management Associates and other successful startup ventures.

 

Vincent Brasseur 
Director of Product Management at Flexera Software

Vincent has over 15 years of experience in software asset management and license optimization. He has held various positions from software development, and professional services to product management. At Flexera Software he is responsible for defining product enhancements and setting strategic direction for FlexNet Manager Suite for Enterprises products based on customer requirements and business goals.

REGISTER TODAY and learn how organizations can ensure license compliance and control software costs when implementing virtual desktops.