Software License Optimization

License Reharvesting – The Silver Bullet?

By: Cyndi Tackett

Most companies consider license reharvesting—the process of removing installed but un-used software and deploying it to another user—at one point or another.  After all, why should someone have Visio installed if they haven’t used it in six months?  It just makes sense.  There are even usage tracking tools on the market that provide agents which monitor usage of specific features within products.  But, many organizations make the mistake of believing that license reharvesting is the silver bullet – the foundation of their software asset management (SAM) practice. 

The truth is that license reharvesting is an invaluable tool if the software portfolio is already optimized. But getting to an optimized software estate involves much more than usage tracking and license reharvesting. 

To illustrate, consider the following scenarios.   Assume that the company owns 1000 licenses for Software Product X bought for $100 each.

Scenario1:  Installation counts for Software Product X reveal 500 licenses installed, giving the company a 500 unit surplus.  Tracking usage finds that 50 of the 500 installations are not using the product.  Removal of the unused licenses now yields the organization a 550 unit surplus.  The net cost savings is $0.  License reharvesting is simply not an effective tactic if the organization is already over-buying because the savings cannot be realized until the original surplus is gone.  Unfortunately, most companies are over-buying the "usual suspects" for reharvesting.

Scenario 2: Installation counts for Software Product X reveal there are 2000 licenses installed, giving the organization a 1000 unit deficit.  Tracking usage finds 50 of those licenses are not used; reharvesting results in a 950 unit deficit.  In this case, reharvesting does reduce the liability by $5000, but still leaves the organization with a $95,000 liability.  Reharvesting cannot eliminate the liability of a significant under-buy so it is only part of the solution.

Scenario 3: Installation counts for Software Product X reveal there are 1010 licenses installed.  Tracking usage finds 15 licenses that are not used.  Reharvesting eliminates the need to purchase an additional 10 licenses, so it is extraordinarily effective when the license is almost optimized.  In fact, the most effective usage tracking technique is to start tracking usage when the license is within a 5% threshold of the number of entitlements.  This is the scenario where reharvesting really pays off.  But, to get to this optimized level takes more than just tracking usage of applications.  If the organization does not know their actual license position, this situation is unlikely to happen at the beginning of a software asset management project.

The other problem with depending on reharvesting as the Holy Grail to software asset management is its slow time to value.  Usage tracking is only reliable after 3-6 months of monitoring.  If the organization has to deploy another agent to track usage, then factor in more time for a more complex tool implementation.  Adding to this, many software product use rights require that applications be "shelf-ware" for 30-90 days before they can be re-deployed, adding even more time to the realization of value.  Most importantly, reharvesting doesn't really work in the data center so it is not a strategy for many high value licenses in the organization.

I am in no way suggesting that license reharvesting is not a valuable tool in the software asset management toolkit - it is just not the silver bullet that companies hope for when implementing a software asset management program.  Once the organization knows their actual license position and applies product use rights to minimize license consumption, license reharvesting is one of many best practice processes that can help keep the software estate optimized.  License reharvesting is extraordinarily effective in the right circumstance, but make sure your organization doesn’t fall for the false promise of reharvesting and usage tracking as an overall software asset management strategy.

Flexera Software ranked as Leader in ITAM Review Enterprise Software Asset Management Analysis

By: John Emmitt

The ITAM Review has posted their Enterprise Software Asset Management Tool review summary and Flexera Software has been ranked as the sole Leader in this market, based on their analysis to date. The ITAM Review assessed Flexera Software's FlexNet Manager Suite for Enterprises products, a proven set of software asset management, license compliance, and license optimization solutions for corporate, educational, and government organizations worldwide. The ITAM Review's Tools Intelligence service provides an independent analysis of enterprise software asset management tools using their standard set of evaluation criteria.

Please visit our website to learn more about our market-leading software asset management and license optimization products.

Product use rights are the key to license optimization

By: Matt Marnell

In order to minimize IT risk and reduce cost to the enterprise, procurement personnel must be well informed to make software purchasing decisions. This means that existing inventory and deployment data must be accurate, usage data and enterprise needs must be analyzed, and the pros and cons of the various purchasing options must be weighed. The many different software purchase programs offer widely varying license entitlements—product use rights. The term ‘product use rights’ is used broadly here to mean, the sum total of all licensed benefits that deliver value to the enterprise. Essentially, what can be done with a piece of software and at what levels or numbers? The optimized application of product use rights can significantly reduce an organization’s license consumption—i.e. fewer licenses can cover a higher number of installations or usage of the software. And reduced consumption means you can realize lower on-going license and maintenance costs.

Surely there are many important factors to consider when optimizing licenses, but focusing on product use rights uncovers an impressive array of factors that all need to be understood and applied as necessary: license types, upgrades, downgrades, secondary usage, multiple usage, virtualization, mobility, clustering, backup and recovery. The list goes on and on. Some rights are tied to maintenance or specific purchasing programs; others are tied to certain products or even specific versions and/or editions of certain products. Having so many variables at play sometimes makes optimizing license management across a single product daunting, let alone across the entire software estate.

Making matters worse, there are major differences between software vendors when it comes to how they define license metrics. Anyone who has tried to manage processor-based licenses will have encountered a prime example: processor sockets versus cores. For another example, consider Symantec’s common user-based licenses. Enterprise Vault and Endpoint Protection, both Symantec products, are licensed ‘per user’ according to their respective EULAs. And, both EULAs define a user as ‘an individual person and/or device’. But the one for Endpoint goes on to specify that each running instance must be licensed. This metric makes sense considering the purpose and function of Endpoint, but this hardly sounds like a per-user license. In fact, it sounds like a device-based license. Enterprise Vault’s EULA does not contain any further guidance beyond the boilerplate definition of user. Although there are subsets of users that do not require a license, Enterprise Vault employs what I consider a more standard user metric.

Beyond license types, many differences are found between and within vendors’ definitions of product use rights as well. Some allow active/active clustering under a single license, some require active/passive, and many don’t provide clustering rights at all. Some licenses allow additional virtualized instances, some don’t, and others do only for specific hardware or software configurations. Going back to Endpoint, a thorough analysis of the EULA also shows that running one extra instance in Windows XP Mode on a Windows 7 machine is allowed. Running two extra instances, on the other hand, requires another license. Similarly, a NetBackup Client license currently covers all guest virtual machines hosted on licensed servers – but not on IBM zSeries machines.

It’s clear that product use rights, while providing significant benefits to an organization, are also a major source of confusion and pain when undertaking the challenge of software license optimization. So, with all the complexity concerning license entitlements, what can be done to make well informed purchasing decisions? An automated software asset management system that incorporates a ‘library’ of expert-built intelligence is necessary to convert raw licensing data into a set of actionable reports that enable meaningful value comparison. Then, not only can informed software purchasing decisions be made to reduce costs and maximize software value, but ongoing license compliance can also be maintained.

(What to do when) There’s No Funding in the Budget for Software Asset Management and License Optimization

By: John Emmitt

Here’s an actual email exchange with one of our prospects on the issue of funding for a Software Asset Management program. Of course, the names have been changed to protect the innocent.

Harry, Vice President, Fortune 500 Company:

“I thank you for checking in again. I did ask the team where we stood on potential implementation of a [software asset management and license optimization] solution, (yours and any other vendor’s for that matter). I was told that at present, with all the focus on other more urgent areas of operations coupled with the lack of any funding for any unbudgeted solution in 2010, there is no room to add this to the list. So basically the holding pattern I advised you of a few months ago remains.”

Bob, Major Account Manager, Flexera Software:

“Thank you for the email, I really appreciate you keeping me abreast of what is going on.  If you would like, I would be happy to offer a day or two on my dime to help you or the team responsible for Software Management review your current software position and even put together a business case that will allow you to find some budget for such a project. 

When I look at your annual report, here is what I see:

I estimated IT spend across XYZ Company Inc., based on total revenue of ~ $6 Billion, I was conservative with my 3.5% (Avg. IT spend as a percent of revenue).  I came up with total IT spend of $208 Million per year; of that, it is estimated 30% is used for software.  In your case that would be $62M.  Historically, customers we have worked with have seen savings anywhere from 8% to as high as 28%.  Just doing some quick calculations of a low - 2%, middle - 3% and high- 5% savings percentage based on license optimization, it was pretty interesting to see what the potential value to you could be.

• Low (2%) estimated savings - $1.2 Million
• Middle (3%)  estimated saving – $1.8 Million
• High (5%) estimated savings  – $3.1 Million

Harry, I have been very conservative in my estimates. Even if you believe my numbers are incorrect, I am happy to review this with you in more detail. A 1% savings would be $624,000 which would more than fund such a project and provide XYZ Company a platform for future savings.”

Harry:

“As always, you present a compelling argument. And your synopsis of spend, percentages, etc. is admittedly quite accurate.   Therefore, while my colleagues have advised they are simply just too busy at the moment to pursue this, I’m obliged to do so nevertheless. Let’s set up a meeting.”

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I have a couple of observations—first, like Harry’s company, many organizations have other higher priority projects on their agenda. So, this leads to the second issue which is lack of funding for software asset and license management projects. As with the early days of server virtualization, its taking a little while for organizations to become convinced that there is a real return on investment here. It’s the classic 'hockey stick' situation—a few early adopters take the lead and show significant cost savings and ROI. Then everyone else starts to jump on the bandwagon and pretty soon, it’s the hottest trend—like virtualization is today.

Let us know how we can help your organization build a business case for Software License Optimization. There’s real ROI here!