Software License Optimization

‘What If’ analysis: how to avoid drifting out of software license compliance

By Vincent Brasseur

The approach to license compliance consists of understanding the number of licenses consumed, by counting the number of software installations or metering application usage, and comparing these numbers to the current license entitlements owned or subscribed by an organization. This calculation must consider a number of parameters:

• The various license types: device, user, processor, server + CAL, etc.
• The licensing terms and conditions, including software product use rights, associated with each purchase, and
• The IT environment context in which the application is used or installed:
  • Physical location,
  • Hardware properties of the virtual or physical host device,
  • Whether the application is locally installed or is accessed through an application virtualization technology,
  • Who owns the device accessing the application

This process can deliver amazing results enabling organizations to maintain license compliance, and in many instances optimize their licenses to realize substantial cost savings. One of the main limitations with this approach is that compliance issues will be only uncovered after the inventory or usage data is collected and reconciled with license entitlements. The risk is the chance that you may be audited before the issue is uncovered internally. Also, all organizations like to have visibility and understand the impact of changes before they are made, rather than being in a reactive mode. From this perspective, uncovering licensing issues before they occur by implementing a proactive license management process is one of the recommended software asset management best practices. (See also the other recent blog on this topic).

Changes impacting the license position, not only include installations of applications but also changes to the environment where applications are running. For instance, adding a processor to a server or moving a virtual machine across two physical hosts can significantly impact a license position. The example below shows the impact of moving an LPAR between two servers having different hardware characteristics:

Another basic example is found with Microsoft SQL Server Processor licenses where the software is running in virtual environments: the license position could be impacted if the hyper-threading of physical processors is turned on or off. Using workflow processes, organizations can limit the risk of drifting out of compliance. For instance, all new software installations or changes to an existing environment can be subjected to a workflow process that will include the license manager.

Measuring the impact of a change within the datacenter is not an easy task. Many licenses such as the IBM Processor Value Unit (PVU), the Oracle Processor license, or Microsoft SQL Server processor licenses have complex calculation rules that include terms and conditions specific to virtual environments. Multiple changes may happen at the same time: reorganization of servers within the datacenter, virtualization of these servers or M&A activities, for instance, may involve reshuffling a set of applications, virtual machines or hardware partitions across many servers. When performing the impact analysis of any change, all installations and entitlements must be considered, since a different (more optimized) allocation of licenses may lower the license consumption. Calculations, such as the Oracle processor license, always require considering all software installations rather than an individual change.

The solution that has been requested by many license managers for a very long time is a ‘what-if’ analysis tool. This sort of tool would enable them to simulate various changes to their IT environment, such as new software installations, modifications to the properties of physical or virtual machines and processor pools, additions of new servers or virtual machines….and measure the impact on their license position. With this what-if analysis capability, organizations can proactively manage software licenses in dynamic IT environments to reduce cost and risk.

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To learn more about what-if analysis, please visit our web site.

Reactive versus Proactive License Management

By Alan Swahn

Traditional software request portals, Software Asset Management (SAM), and license management tools are reactive by their nature. Many times proposed IT environment changes get implemented/deployed to meet the immediate business needs, without first determining the impact to the business. These changes can include:

• Software purchased
• Software installed
• Volume agreement changed
• Virtual machine spun up
• Virtual machine moved within cluster
• New server added in cluster
• Existing hardware modified
• Move from full capacity to subcapacity licensing
• New users added
• Employee moves or leaves
• Employee brings device to work
• Employee uses 3^rd party computer
• Contractors hired and need access
• Applications streamed to thin client
• Virtual desktop accessed
• Move to Cloud

It is only later through inventory, measuring, or monitoring that the true effects — such as the impact on your license position for key vendors, are known. Then the change must be accounted for in the best way to limit liability. This includes license compliance liabilities due to the need for additional licenses or licensing points as a result of the changes that have already been made — see Diagram 1.

 

Diagram 1-- Reactive

As an example, if software is purchased without first checking if a license is available or product use rights, such as upgrade rights, already cover the software, then the purchase may not have been necessary. Over time the company will be over licensed with a large unnecessary expenditure.

Moving down the list above to a less obvious example, if a new server with a higher  Processor Value Unit (PVU)¹ rating is added to an IBM cluster where virtual machines (VMs) and the associated applications move within the cluster and are licensed under subcapacity² rules, your company will be obligated to pay for that higher PVU rating across all the clustered applications, since any VM in the cluster can run on the new server. Let’s say that your current spend is $1M across the applications in the VMs for this cluster and the physical machines were rated at 50 PVUs per core. The new server added to the cluster is rated at 120 PVUs per core. Your spend just increased to 120/50*$1M or $2.4M !

The old reactive way doesn’t hold up to the dynamics of the current business domain. The impact of changes must be determined in advance to allow the business to make informed decisions. Enterprises need to take a proactive approach and build insight in by design—see Diagram 2. Move beyond traditional SAM tools to license optimization solutions that provide this sort of predictive analysis.

Diagram 2-- Proactive

References:

1. PVU: # of processor (core) value units are assigned to a core based on processor vendor, brand, type & model number.
   http://www-01.ibm.com/software/lotus/passportadvantage/ pvu_licensing_for_customers.html
   
   
2. Subcapacity (Virtualization Capacity): the core capacity available to the software product. Customers are licensed for the lower of subcapacity or full capacity of a server or group of servers.

FlexNet Manager Suite for Enterprises is Finalist in CODiE Awards- Best Asset Management Category

By John Lipsey

SIIA announced on Wednesday, the finalists for its 27th annual CODiE Awards in business software categories. For the second year in a row, Flexera Software’s FlexNet Manager Suite for Enterprises has been named a finalist in the “Best Asset Management” solution category. The judges consider the solution that best audits and manages software assets, and includes all solutions designed to audit software assets across a network environment.

Nominated products were extensively reviewed by executives with deep industry expertise who acted as judges to select the finalists. The judges evaluated the following attributes of FlexNet Manager Suite for Enterprises in their consideration process when naming it as a finalist:

• Ability to manage the lifecycle of strategic assets
• Adherence to standards
• Ease of Use
• Fulfillment of key attributes
• Functionality of key attributes
• Strength of Discovery Tools
• Strength of license management tools
• Strength of software metering tools

Our inclusion as a finalist in this competition is further validation of FlexNet Manager Suite for Enterprise’s market leading technology and leadership in the areas of software asset management and license optimization.

Between now and April 13, SIIA members will be casting their ballots for their preferred solution.  The winners will be announced on Thursday, May 10, at the CODiE Awards Presentations held in conjunction with the SIIA’s annual All About the Cloud conference.

The Cost of License Reassignment for Virtual Desktop Access

By Alan Swahn

 We live in a mobile world and are fast approaching the point of getting our desktop and applications served on demand to a variety of devices—laptops, tablets, and smart phones. Enabling technologies include Cloud-based desktop virtualization that serve clients running on endpoints, such as Citrix Receiver and VMware View Client.

Organizations are faced with the challenge of providing access to their applications and data for consultants, contractors, and employees working from home, while maintaining license compliance. Virtual desktops provide a managed environment on a standard image for 3^rd party devices. Besides being a convenient and scalable solution, it brings the user to the data with less possibility of data leaks. But, is software licensing going to get in the way of accessing virtual nirvana? 

For users in this category, a Microsoft Virtual Desktop Access (VDA) license is required to access a Microsoft-based virtual desktop, for devices that are not covered by Software Assurance.¹ The subscription period is one year and costs $100.² VDA licenses have a reassignment limitation, where once the license is assigned; it can’t be reassigned for 90 days.² Example: If a contractor needs access for a month, it’s locked up for an additional two months and can’t be used by another contractor. If a contractor needs access for two months, it’s locked up for an additional month. By comparison, if there was no minimum time period before reassignment, then you could reallocate licenses to achieve maximum utility.

What is the effective overcharge of this reassignment blocking rule? The answer depends on how frequently your company uses short-term contractors and how many devices they have that need VDA licenses. Considering the potential randomness of how long a contractor needs a VDA license, the number of contractors at any one time, and the number of licenses required per contractor, I took a simulation approach to the problem.

Approach:

To get my head around the problem, I simulated 40,000,000 scenarios in Excel as follows.

Random Inputs:

• The “Term” (months) of the Contractor and associated licenses.
  • Randomly selected in these ranges: 1-3 months; 1-6 m; 1-9 m; 1-12 m.
• Number of new licenses required at the start of each month over a 1 year period
  • Randomly selected between 0 and 100.
  • Licenses are allocated at the start of each month.

Example- licenses not blocked due to reassignment rule:

Contractor A (50 devices) and Contractor B (25 devices) start January 1st with a 4 month contract. 75 licenses are required from January through April and 75 licenses are ready for reassignment on May 1^st.

Example- licenses blocked due to reassignment rule:

Contractor C (80 devices) and Contractor D (20 devices) start January 1st with a 2 month contract. 100 licenses are required from January through February. The licenses are can’t be reassigned or used by another contractor in March and won’t be ready for reassignment until April 1^st.

Output:

• Number of new licenses that would need to be purchased each month with no 3 month reassignment rule (NRR) imposed.
• Number of new licenses that would need to be purchased each month with the 3 month reassignment rule imposed (WRR).
• Total NRR licenses for the year (TNRR); Total WRR licenses for the year (TWRR)
• The amount overcharged over the course of a year (because of reassignment rule)  expressed as a percent: AO = 100 * (TWRR-TNRR) /TNRR
• How often the overcharge occurred in the range of amount overcharged (0%; 0⁺ to ^-10%; 10-^-20%; 20-^-30%; 30-^-40%; 40-^-50%; 50-^-60%....90-100⁺%)

Process:

• Set Term range 1-3 months
• Run simulation--number of new licenses and license Term are randomly selected at the beginning of each month over a 1 year period
• Calculate TNRR, TWRR, and AO (% extra licenses required--overcharge)
• Add 1 to How Often bucket in the range of amount overcharged
• Rerun simulation 10,000,000 times
• Plot How Often Overcharge occurred versus Amount Overcharged
• Reset Term range and repeat process (Term reset to 1-6 m; then 1-9 m; then 1-12 m)

Summary:

The reassignment rule comes into play, if the term of the licenses needed by contractors is less than 3 months. Table 1 shows that if the term randomly varies between 1-3 months, you could expect to over pay ~77% of the time and ~63% of the time (grayed) the overcharge would be 10% or more. For terms that randomly vary between 1-12 months, you could expect to overpay ~33% of the time and ~15% of the time (grayed) the overcharge would be 10% or more. Graph 1 illustrates how longer terms dampen the reassignment rule effect.

 

 

 

 

 

 

 

 

 

 

Graph 1

Notes: Graph 1, x-axis points are really ranges as per Table 1.
Example: For a Term of 1-3 months, the amount overcharged of 50 % to less than 60% is represented as a single point x=60% (how much) and y=5.965% (how often)

References:

1. Microsoft VDA Brochure:
   http://download.microsoft.com/download/7/8/4/78480C7D-DC7E-492E-8567-F5DD5644774D/VDA_Brochure.pdf
2. Licensing Windows for Virtual Desktops:
   https://partner.microsoft.com/us/40136222

Webinar: Software License Optimization

By John Emmitt

Webinar: Software License Optimization

Date: Friday, 30th March, 2012
Time: 10:00 am CT (Central Time U.S.)

Guest Speakers: Duncan Jones, Forrester Research, and Luis Peluffo Johansen, Maersk Line

Join Duncan Jones of Forrester Research and Luis Peluffo Johansen of A.P. Moller-Maersk for a Webinar on Software License Optimization. Duncan will discuss how traditional software asset management is failing to meet today’s business challenges related to virtualization, usage based models and complex license metrics. Then he will describe the Software License Optimization approach that allows organizations to meet these challenges by:

• Maintaining a central license management repository
• Establishing a contractual framework for compliance tracking and cost optimization
• Performing license reconciliation that leverages your entitlements
• Forecasting future needs through demand and trend analysis

Luis Peluffo Johansen, General Manager at Maersk Line IT, will then discuss how his team at A.P. Moller-Maersk has implemented an IT asset management program that embodies these license optimization principles. Learn how they have gained control and visibility of their hardware and software assets, and have been able to significantly reduce software costs for key vendors. Luis will describe their phased approach to implementation that has enabled them to meet all their quarterly deliverables and achieve quick wins.

Register Here for the webinar.

You can also read Duncan's research report: Introduction to Software License Optimization.

Software asset management is a growing business need

By Randy Littleson

I read an interesting article over at ZDNet Asia entitled “Software Asset Management a Growing Business Need.”  The article states that “new deployment options and licensing models have complicated how companies manage software and stressed that extra investments and effort put into software asset management will be worth it in the long run.” The article makes a good case for the importance of a software asset management program. 

I commented on the article which you can read on the site or below.

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Great article. Agree on all points. We see this all the time with the global clients that we work with. Managing software assets is tricky enough, but the growing complexity of new licensing models and deployment options is making matters that much worse.

As the article points out, companies should designate an owner and establish a formal software asset management program on a global basis (this is important, don't just solve the problem locally). People (ownership and clearly defined roles), processes (established to provide regular and proactive actions to manage software assets and to optimize license spend) and technology (to help manage and automate the business processes) all play a role.

Best in class companies are also moving beyond traditional software asset management to the next generation called Enterprise License Optimization. Whereas software asset management focused on counting what you have purchased and deployed, Enterprise License Optimization moves beyond that to actually optimize the software estate on a global basis. Such tools reconcile what you have with what you are actually using and what you're entitled to use per your license agreements to provide unique insights into situations where you may be over-spending or out of compliance (over-using).

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To learn more about getting started on or enhancing a software asset management and license optimization program, please view our webinar series, starting with How to get started on a SAM program.

4 Key Concurrent License Management Concepts You Should Know

By Donna Yobs

Gaining Insight from License Denials

 A key to building your concurrent license optimization strategy is understanding how your organization uses these licenses. Today, I’ll focus on how to analyze license denials, as this is an important metric that will affect planning for new licenses and end user productivity.

1. When it comes to license denials, counting is not enough.  If you simply rely on denial count alone you can be lulled into false complacency or into overspending on licenses. You need to dive into what those numbers mean.  High denial counts are a good example and could be caused by:

• Batch grid jobs that re-request a license 1000s of times per second. This can result in a high denial count, when the late night batch job simply had to wait 3 seconds for a license.
• An application user who mistakenly requests a feature from the wrong license server
• An application setup that reserves more features than needed.
• Requests that are subsequently satisfied by a second license server in a clustered environment.

2. There are different types of denials that should be well understood. The list below shows the most common types of denials and the associated root causes. You should understand the impact of each type.

Never having a denial can simply mean you have too many licenses—a clear sign of overspending. Getting constant denials can result in a lack of productivity for your core R&D team and may unintentionally train your engineering team to horde licenses.  Note, having a small (e.g. 3%) denial rate with a small average wait time can reflect optimal settings.  To get to this desired served/denied balance, the 3 following variables need to be considered:

• Types of denials: 
  • Capacity reached:  No licenses available (True Denial)
  • Rules violation:  User is not allowed a license on a particular license server
  • Spurious Requests: Request for a feature or a license that doesn’t exist
• Frequency of denials:  What does the frequency mean to your organization?
  • Too Frequent
  • Never occurs
  • Acceptable denial rate
• Wait time of denials:  Is the recovery time acceptable?
  • Seconds
  • Minutes
  • hours

Each licensing system has its own specific set of denial types; usually there are 10-30 different types.  In general, there are more reasons to be denied due to policy and rule settings, or improper calls for licenses, than due to a shortage of licenses.  Below is a table of some typical denial types.

Denial Type	Explanation	True Denial?
Licensed number of users already reached.	All available licenses have been checked out.	YES
All licenses are reserved for others	The available licenses are being withheld because some of the licenses are reserved for other users in the options file.	NO
Checkout request rejected by vendor defined checkout filter.	The application has a built-in test for the license that failed and rejected the license checkout.	NO
Feature has expired.	The license for this feature has expired; a new license is required	NO
License xx support not enabled.	A user requested license function, but the license or the application does not support license function (i.e. Borrow).	NO
License file does not support this version.	The version of the application is not supported by the license. You need to obtain a new license from the software vendor.	NO
No such feature exists.	The feature could not be found in the license file.	NO
User/host on EXCLUDE list for feature.	The user is restricted from accessing a license because it is listed in the EXCLUDE list in the options file	NO
User/host not on INCLUDE list for feature	The user is restricted from accessing a license because it is not listed in the INCLUDE list in the options file.	NO

3. License management and reporting systems provide filters to eliminate denials that were quickly resolved. This allows license managers to focus on unmet needs rather than denials that were resolved without impacting users.  Reporting filters include:

• Multiple requests that get resolved by a secondary license server or request fulfilled within an acceptable threshold. 
• Filtered denials: Using a filter set, denials for the same feature, user, host, process id, and/or report log file that occur in clusters within the specified time interval are considered qualified for elimination or folded together.
•  False denials: checkouts attempted from multiple license servers, yet resolved quickly.

4. You should take specific actions based on the denial data.

• If denial rate is very low – the goal should be to increase value from existing licenses:
  •  Review usage of the application
  • Allow more groups to use these licenses
  • Advertise capacity availability to existing users
• If denial rate is high – determine how to balance the load or purchase more licenses:
  • Determine if they are true denials
    • Investigate new ways for sharing license pools between teams
    • Advertise hours when the licenses are most available, letting teams shift access hours
    • Budget for more licenses to meet business needs and goals
    • Negotiate an application or feature remix with the software vendor
  • Determine if non-capacity denials are effecting performance
    • Train users on license features, license servers and other policies
    • Determine if users are making spurious requests and potentially keeping the license server too busy to serve valid requests
• If denial rate is high for an application from a certain publisher, while other software titles from the same vendor have low utilization – negotiate a remix:
  •  Do usage analysis to determine the right remix balance per your contract timeframes.

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To learn more about tracking software usage to reduce licensing costs and improve end-user productivity for concurrently licensed applications, view our on-demand webinar: Pure Gold--Leverage Usage Data to Reduce License Costs and Risk.

 

Take Back Control of Those Concurrent Licenses!

By John Smith

In several of my recent engagements with customers in the Oil and Gas Industry, I have found that alongside a scarcity of concurrent licenses for some critical applications, there has also been a widespread practice among geologists and seismic engineers to hold onto these precious licenses for days or even weeks at a time. 

Now, considering that these enterprises are global and that the applications are licensed concurrently, these users, with colleagues in other time zones, are consuming the equivalent of at least 3 licenses on a daily basis and maybe even 5 or 6, depending on their usage pattern for each application.  With an average annual seat price of, say, $10,000 for these costly applications, this poor working practice is causing the enterprise to incur a hefty premium.

So what to do?  Snatch the license back?  Clearly, NO, since this could result in a loss of work of even greater value.  No, this is a matter of education and proper incentives.  The managers of the offending license users could receive a "License Hogging Report" showing average checkout time per employee, per day, ranked highest to lowest, along with a proposal to implement a charge back algorithm based on a sliding scale (for example: 30% of the daily rate for licenses checked out for up to 5 hours per day, 100% of the daily rate for up to 10 hours per day and 300% of the daily rate for checkouts longer than 10 hours).

Armed with that ammunition, managers would be in a position to regain control over the licenses for these critical applications.

Then if the reason for "camping" on these software licenses was laziness, there would be ample incentive to do the right thing and release the license when the work session is complete.  If, however, the reason is fear of not getting the license back, then the Hogging Report data could clearly show that if all users played fairly there would be ample software licenses for all.

The net result would be an easier environment to support and manage, and probably an extended period during which no more licenses would need to be purchased.

The technology to achieve this result is readily available, all that is required is a very few hours of report generation and management determination to make it happen.

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To learn more about how concurrent license usage tracking and analysis can help your organization reduce software costs, please view our on-demand Webinar: Pure Gold-- Leveraging Software Usage Data to Reduce License Costs and Risk

Software License Management Checklist—Keeping Score

By Alan Swahn

It’s no surprise that you need to understand your license position to avoid overbuying software and be in compliance with your software vendor contracts. A common question I get is whether configuration management and inventory tools like SCCM 2012 are good enough for software asset management and license optimization. The short answer is no. But to understand why, I made a good housekeeping checklist. It may not be exhaustive, but it should provide a starting point for an IT asset management (ITAM)/software asset management (SAM)/license management (LM) request for information (RFI), to cut to the chase and quickly determine suitability of tools for this purpose.

The list implies that multiple knowledge reservoirs must work together to provide an accurate picture of an IT estate, provide actionable information, and hold up to the scrutiny of an independent software vendor (ISV) license review or audit. These requirements go far beyond standard discovery and inventory of software for physical devices.

Discovery, Inventory, Application Recognition, Metering Support

Aggregation of multiple inventory sources

Wintel-based desktops, notebooks, laptops…

Unix and Linux machine coverage

Agentless Inventory for production servers (agents not allowed)

Active Sync mobile devices (iPads, iPhones, Android…)

Network-based: Oracle, SAP, Microsoft SQL Server, IBM ILMT…

Virtual Machines: VMware, Hyper-V…

Hardware Partitions: LPARS, WPARS, nPars, vPARS, Solaris Zones…

Streamed or locally cached applications: Citrix XenApp, Microsoft APP-V…

Virtual desktops: Citrix, VMware VDI…

Hardware inventory details: processors/cores (type & count), memory, server model…

Concurrent license usage: Cadence, Mentor, Synopsys…

ISO 19770-2 Application Tagging support

Repackaged Application Recognition

Recognition of applications from all major vendors

Recognition of application suites and bundles

Recognition of internal/custom applications—per user supplied rules

Non-Inventory Data Sources

Organization: LDAP

HR: role, authorization level

Software Request Portal; Helpdesk

Purchase Order System, ERP system

CMDB

Libraries

Application Entitlements (Product Use Rights): Upgrade, downgrade, roaming, multiple installations, second use, virtual server, virtual desktop, DR/Failover…

Product ID / SKUs: Indentify how purchased, full packaged product, OEM, volume, maintenance…

Application Recognition: Transform Inventory to application titles, editions and suites

Automated Processing: SKU library linked to application recognition library

Licenses

Models supported: Device, processor/core, resource, authorized user, concurrent use, full capacity, Subcapacity…

Vendor Specific Models: Oracle NUP, Oracle Processor, IBM PVU / RVU / UVU, SAP User…

Allocation:  Subsidiaries, business units, cost centers, regions, departments, users, devices…

Association: Licenses to contract terms

Contract Management

Volume Agreements: Microsoft EA, Select, Select Plus, Adobe CLP…

Alerts: Time sensitive terms, renewals, review periods, annual true-ups…

Licenses covered per contract

Document storage: copy of a contract, proof of license, and compliance record.

Optimizing Algorithms

Order of license allocation considering versions and editions of applications

Smart allocation of licenses to application Suites

Maximum utilization of License Entitlements (Product Use Rights)

Optimized consumption: Microsoft server models, built-in PVU tables…

Optimize User Type allocation based on application usage (e.g. SAP User licenses)

Remix of application licenses based on application usage (concurrent licenses)

Predictive compliance/financial What-If analysis before hardware or software changes

Compliance, Reports, Alerts

Optimized license position

Purchased versus installed license position

Applications and suites Installed; software asset reports

License position per business unit or cost center

Rolled-up Company position (liability to vendor)

Pending maintenance renewals with financial impact; areas for maintenance cost savings

Alerts on breaches, unauthorized applications, financial liability of change

Chargeback to business units, cost centers, regions…

Application purchases not under volume agreement

Trend analysis and reports to forecast future licensing needs

Software asset management and license optimization solutions that can meet this set of requirements can help your organization maintain continuous license compliance, manage hardware and software assets from a financial perspective, and reduce ongoing costs for software licenses and maintenance.

Is there anything else that should be added to the checklist? Please send me your comments.

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To learn more about how to get started on a software asset management program, please view our Webinar.