Software License Optimization

Software Bill Back within the Enterprise – Are you paying for what you use?

By Donna Yobs

There are many approaches that companies can use for internal bill back (aka chargeback) of software licenses to optimize business results.  I like to think of this in terms of your application usage model. Typically, your goals are to track software usage, allocate costs appropriately, and promote the desired software user behavior.  I’m going to focus on the concurrent licensing model, as this is still one of the two most common licensing models software publishers are using today. (See the Key Software Trends report).

Bill back goals commonly expressed by enterprises:

• Spread software costs across the departments that are using the software
• Determine IT resources needed across the organization
• Effect user behavior (avoid peak hours usage, increase awareness of license denials)
• Enable compliance reporting for both internal and external audits
• Bill back clients appropriately by projects

Some Common Bill Back Approaches:

Approach	Metric	Justification	Behavior
None	Self Managed: Each group evaluates, acquires and uses software on their own.	Departments define their costs independently.	No consistency across enterprise departments. Lacks ability to realize savings from sharing of resources across the whole company.
Department Based	Split shared license pool costs between departments. Divide application cost by # departments using the application.	Each Department has equal access	Allows for shared licenses, does reflect disproportionate license use across departments.
User Based	Split shared license pool costs between each user. Divide application cost by # users of the application.	Department size reflects valid bill back charges	More representative of use but may result in limiting application use to subset of users on the team.
Total Time Based	Split shared license pool costs by total time used by each  user. Divide application cost by # hours used.	Usage hours reflect valid bill back charges	Users tend not to notice peak hours and may end up creating a false need for more licenses.
Total Peak  Hour Based	Split shared license pool costs by total time used during peak usage hours by each user. Divide application cost by # peak hours used.	Promotes spreading of workload outside of just  peak times. Captures cost  of adding licenses when heavy peak usage drives the need for new licenses.	Allows users to control cost by using applications during less busy times
Hybrid	One charge for basic usage + Higher cost per Peak hour usage.	This reflects the cost of on-going maintenance for the base and purchasing needs for new licenses.	Allows users to control costs by using applications during less busy times

The approach needs to take into account a balance between ‘fairness of accounting’, ease of accounting, and desired behavior.  If you use one metric to spread costs evenly but end up with employees who are afraid to use the software for fear of charges, this can lead to an undesirable outcome of slower time to market. 

Bill back can be an important component of your optimized license management strategy, helping you realize reduced costs and drive user behaviors that align with your corporate goals.  Key questions to ask when choosing a bill back model are:

• Will this provide predictability and control to each department?
• Will this help bring the product to market faster or hinder development?
• Will this reflect the cost of the project? 

Are you using bill back effectively in your organization? What models have you had success with?

 

Strategically managing application usage across your software estate

By: Randy Littleson

I had the opportunity recently to speak at two events on the topic of strategically managing application usage across your software estate.  The focus of the presentation was on the business challenges people face in managing software application usage and detailed best practice business process recommendations to get ahead of these issues.

What we’ve seen time and time again is that organizations have focused on and are good at the upfront portion of the software asset management process (e.g., securing the best quote when procuring software) but lack processes and tools to manage these increasingly strategic and high spend assets on a continual basis (e.g., establishing processes to consistently and reliably deploy applications and to ensure that you are using the software you purchased the way you intended to, without over-buying licenses).

The presentation starts with the holistic software asset management business process and then drills into the deploy, manage and upgrade steps to discuss the Application Readiness and Enterprise License Optimization challenges (including Windows 7 migrations, virtualization, software spend management, etc.) and best practice business processes to deal with them.  The presentation makes the case that with migrations and upwards of 30% of applications changing annually, Application Readiness needs to be a continuous process, and with software spend and license compliance risk on the rise, Enterprise License Optimization can deliver continuous license compliance, optimized usage, and cost reductions.

View the full presentation “Strategically Managing Application Usage Across Your Software Estate.”

 

WEBINAR: Optimized License Management for the Datacenter

By: John Emmitt

Join us for a Defense Systems sponsored webinar on May 17th, 2011 at 11am EST.

Space is limited. Reserve your Webinar Seat Now at:
http://defensesystems.com/webcasts/2011/04/optimized-license-management-for-the-datacenter.aspx?tc=page0

Please join Flexera Software and Defense Systems for this webinar to learn how your organization can achieve significant IT cost reductions in your datacenter.

Software represents one third of the typical IT budget and datacenter applications are usually the most expensive component of software spend. That’s why datacenter license and maintenance fees offer the greatest potential for cost-savings in the software portfolio. Decreasing ongoing costs of multi-million dollar applications in the datacenter is a fundamental component of overall IT spend reduction.

In this webcast, you will learn how to meet these datacenter license management challenges:

• Heterogeneous / Multi-platform environments (Windows Server, UNIX, Linux)
• Complex License Models
• Virtualization
• Complex License Entitlements

And how to reduce datacenter software costs by:

• Applying product use rights to minimize license consumption
• Reducing ongoing maintenance costs
• Reducing the cost and risk of software audits by maintaining license compliance

Speaker:              Cyndi Tackett,  Sr. Manager of Sales Engineering, Flexera Software 

Register Now!

Don’t overlook the importance of Microsoft downgrade rights

By Vincent Brasseur

Large organizations are slow to adopt new software releases. It comes down to the cost of moving from platforms that have been tested and proven in their environment, to a new one that will require months of planning and effort before being internally approved. For instance, many companies skipped Windows Vista and waited for Windows 7, avoiding unnecessary cost in migration, support and maintenance.

More and more organizations are moving to Windows 7, as Windows XP is already 9 years old and the end of mainstream support occurred in April 2009 (extended support will end in April 2014). However, Windows 8 is just around the corner and will probably be available by early 2012. Microsoft will probably stop selling Windows 7 in the year following the release of Windows 8. Organizations will then need to rely on downgrade rights obtained from their Microsoft volume purchase agreement to keep installing and using Windows 7, while purchasing the newer Windows 8. Downgrade rights are part of the license entitlements provided by Microsoft for many products, but rules can be complex and must be applied correctly to maintain license compliance.

The primary parameter to consider for downgrade rights is the type of purchase agreement: OEM, Retail or Volume Agreement. Downgrade rights vary according to the agreement or purchase type. Another important consideration is whether or not the products qualify for and are covered by Software Assurance. As a rule of thumb, the vast majority software products purchased through retail (Full Packaged Product) are not entitled to downgrade rights, except for a handful of server products. Few Windows operating systems, including Windows 7 and Windows Server, offer downgrade rights through OEM purchases. Volume agreement and Software Assurance deliver the most generous downgrade rights across all products and few restrictions apply.

Microsoft makes a clear distinction between product version and edition. Versions are defined as different generations of the same product; editions are usually released at the same time and refer to different functional offerings within the same product family. Downgrade rights apply to the versions of a product, not to editions, unless explicitly stated in their product use rights document or product list. For instance:

• With Windows Server 2008 R2, downgrade to versions 2003 or 2000 and downgrade to lesser editions of 2008 and 2003 is authorized. For instance, a Windows 2008 R2 Standard license can be installed as Windows Server 2003 Standard edition or Windows 2000 Standard. A Windows Server 2008 R2 Enterprise edition can be installed as a Windows 2008 or 2003 Standard edition. The only restriction is for OEM licenses: the installer may provide an earlier version but is not obligated to do so. After March 31^st 2011, OEMs are no longer entitled to distribute recovery or downgrade media for Windows Server 2003. Microsoft customers will need to use the Microsoft Windows Server Fulfillment website.
• An Office Professional Plus 2010 license purchased through a volume agreement or covered by Software Assurance does not provide any right to install Office Standard 2007 or even Office Standard 2010. It does, however, provide the right to install and use Office Professional Plus 2007 as a lesser version. But, OneNote 2007 and Groove 2007 cannot be used as they were not part of that release, even though they are part of the 2010 release. (Groove has since been renamed SharePoint WorkSpace).
• A purchase of Microsoft Visio Premium 2010 through a volume agreement does not provide downgrade rights to Visio Professional 2007. The versions of the two products are not the same and Microsoft Visio Premium 2010 has no equivalent in the 2007 release. Only customers that were previously licensed for Visio Professional 2007 and acquired the Microsoft Visio Premium 2010 license through Software Assurance may continue to use that product.

Exceptions and special case scenarios are legion. Microsoft publishes new sets of rules (Product Use Rights) on an irregular basis (twice in 2009, 5 times in 2010, once in 2011 so far). Software asset management best practice is to monitor new releases and to check for any major differences, as this may impact the license position of the organization. FlexNet Manager for Microsoft customers on maintenance will remain up to date, since Flexera Software updates its Product Use Rights Library every month and it is automatically downloaded to the FlexNet Manager Platform repository.

FlexNet Manager Suite is CODiE Award Finalist

By John Emmitt

Flexera Software's FlexNet Manager Suite for Enterprises product has been named a SIIA CODiE Award Finalist in the category of Best Asset Management Solution. The CODiE Award judges for this category have in-depth software asset management and software licensing knowledge and expertise. The judges probed deeply into the intricacies of software license management with questions such as:

• How does FlexNet Manager Suite manage license entitlements, such as upgrade rights, for different versions of the software? Answer: We keep track of which versions can be upgraded, which ones have been upgraded, etc. FlexNet Manager Suite products provide a Product Use Rights Library that contains software license entitlement information for high value vendors such as Microsoft, Adobe and Symantec. Suite products automatically apply license entitlements such as upgrade, downgrade, and right of second use as appropriate, depending on the type of license agreement (Enterprise Agreement, Select agreement, Adobe CLP, etc.). This is the key to optimized license management.
• How does FlexNet Manager Suite manage software license recycling in the case of OEM licenses? Answer: OEM licenses, such as for Windows operating systems that come bundled with the hardware, typically cannot be recycled when the hardware is retired. The Suite products can determine that the license type is OEM from the license key and/or the shipping information from the hardware device manufacturer. Other non-OEM software licenses usually can be recycled when the hardware is retired, deferring new license purchases in those cases.
• How does FlexNet Manager Suite handle Oracle processor/core software license rules? Answer: The Suite products have built-in knowledge of all the common license models, including Oracle processor-core and Named User Plus licenses. In the case of the Oracle processor-core model, FlexNet Manager Suite contains the Oracle core factor table information that determines how many processor licenses are required for a given hardware device, depending on the type and number of cores.

The CODiE Award winners will be announced at a SIIA luncheon on May 25, 2011, at their All About the Cloud conference in San Francisco. Stay tuned for more information!

Software Licensing in the Cloud-- Now you have more flexibility

By Vincent Brasseur

Driven by vendors such as Amazon, software license models in the cloud are often pay-as-you-go and/or subscription based licenses. The best known example is Salesforce.com—licensed according to the number of users on a subscription basis. This model works well for a full integrated service, or when replacing an existing (on-premise) software solution. It does not really work when you move an existing system to the cloud, if the organization would not be able to use their existing licenses anymore. As the number of cloud service providers has expanded, major ISVs have created new licensing models or adjusted existing ones to provide additional licensing flexibility.

Microsoft has created dedicated software license models for cloud service providers based on processor license (PL) or Subscriber Access License (SAL) based on the number of end users connected. Both of these are licensed on a monthly basis to service providers. Microsoft is also a cloud service provider, with payment for online services (Exchange OnLine, SharePoint OnLine, Office Live Meeting…) based on the number of users per month. IBM offers a long term billing plan or an hourly pay-as-you-go billing plan. Developers can use all its products in the cloud for a small monthly fee. Red Hat’s license fee for Rackspace cloud servers starts at $20 a month. The major benefit for enterprises is flexibility: you pay according to what you use.

One of the issues for organizations willing to move their core applications to the cloud is the existing investment in software licensing. Oracle and IBM allow organizations to move their existing licenses to the cloud with the Bring Your Own Software and License (BYOSL) program offered through the Amazon Elastic Compute Cloud (Amazon EC2). On March 30^th 2011, Microsoft made the “license mobility” announcement extending product use rights for applications purchased under Volume License agreements with Software Assurance. This offer is limited to the following products: SQL Server, SharePoint Server, Exchange Server, Dynamic CRM, Lync Server (previously known as Office Communications Server) and Systems Center Servers. Starting July 1^st 2011, organizations will be able to deploy applications hosted by cloud service providers using their own Microsoft licenses.

Three factors should be considered when multiple licensing models are available in the cloud:

-          The number of users accessing the software.

-          The number of the processors on the device hosting the application.

-          Product use rights tied to virtualization or specific vendor rules for cloud computing environments. Oracle, for instance, has its own set of rules (http://www.oracle.com/us/corporate/pricing/cloud-licensing-070579.pdf )

As for Client Access Licenses, Named User Plus and processor licenses, the user based licenses are more effective for a few users and the processor based model is better for many users. Optimized management of both on-premise and in-the-cloud software licenses requires software asset management (SAM) processes and tools that track and apply license entitlements automatically.

With these different licensing offerings, the major ISVs will help drive more and more organizations to the cloud. Gartner projects that the percentage of organizations with the majority of their IT infrastructure in the cloud, or via SaaS will rise from 3% today to 43% in four years. Traditional license models are now available in the cloud through licenses already owned by enterprises—it enables them to leverage their software investment. The pay-as-you-go and subscription models are attractive for new services, infrastructure-as-a-service (IaaS), and other public cloud based offerings. It offers the flexibility needed by both service providers and end customers, minimizing risks and providing excellent benefits such as access to the latest versions of software products.  

Has your organization moved to the cloud? What applications and license models are you using in the cloud computing environment?

Software License Reharvesting – The Nuts and Bolts of this Technique

By Alan Swahn

There is a lot of discussion on the merits of software licenses being reclaimed from users that never use or rarely use a particular software title, aka shelfware. It could be applications that require a license once they are installed on a computer, or cloud based applications like Salesforce.com, where their customers purchase user-based subscriptions. It either case, shelfware can be costly and pervasive. The problem and costs associated with shelfware isn’t new, but now the universe of shelfware is expanding with new delivery models like software-as-a-service (SaaS).  Gartner estimates that 90% of SaaS deployments are not pay-per-use¹, which opens the door for shelfware. How can you tap into this hidden equity?  What’s necessary to reclaim unused or underutilized licenses?

First the shelfware needs to be exposed. On the desktop, this typically means having a usage agent gathering information from targeted applications from each computer in a network and sending it back to a central location. Rules can then be applied, such as the level of usage, before it’s officially deemed shelfware—opened once in 6 months, used less than 10 minutes per month etc. Once you know what latent dollars embodied in idle software are waiting to be reclaimed, the affected users need to be notified, usually through email to allow them to either justify their use of the software or confirm they don’t need it. Next a request must be made to a configuration management tool, like Microsoft SCCM, to remove the software. Once the software is removed, the license management repository must be credited with the associated license; the licenses are returned to the bank, which will offset future purchases. It all sounds straight forward, but the missing link is tying these business processes together. For the desktop, the glue required could be through a new generation of workflow products that are tightly coupled to IT Asset Management (ITAM) and ITIL processes, easy to configure, and reasonably priced.

Cloud applications licensed on a user basis, have their challenges as well. It may be very hard to find usage gathering tools to find out what personnel are actually using the applications. It may be a manual task of an admin logging in and periodically running a report. The report may just indicate when the user logged in, not for how long, which makes the license reharvesting decision—giving the license to another user—‘cloudy’. This manual process also doesn’t scale too well. There is URL tracking technology, as an option to find out who is accessing a cloud application, but you have to be a bit careful in the setup. As an example, tracking http://www.salesforce.com or https://login.salesforce.com doesn’t prove that users were actually logged in, just that the URL was hit. On the other hand, if you track https://na7.salesforce.com/home/home.jsp, you can be assured each user had to first login to get to the page. The hole in this method is if the user uses a non-company computer without a tracking agent to access salesforce.com, then all bets are off. If this is a small percentage, then you still may get the results you need to make license allocation decisions.

What’s your experience with software license reharvesting? Do you have your processes glued together? What would make license reharvesting better or easier in your environment?

¹ Gartner: 90% of SaaS deployments are not pay-per-use