Software License Optimization

More from Gartner on Sofware Vendor Audit Trends and How to Respond

By John Lipsey

Gartner’s new report, Software Vendor Auditing Trends: What to Watch for and How to Respond (May 23, 2012) contains  interesting food for thought for enterprises.  According to the report,  65% of the respondents in a recent Gartner survey said they had been audited by at least one software vendor during the past 12 months.  The vendors reported as auditing for software license compliance most frequently were (in alphabetical order) Adobe, Attachmate, Autodesk, IBM, Infor, Informatica, Microsoft, Oracle, SAP, Symantec and VMware. 

The report goes on to point out the myriad license compliance issues of each of the high-audit vendors, along with Gartner recommendations for how to best address these issues.  A close reading of the Gartner “primary area of risk” portion of the report highlights a common thread that enterprises must take into account in order to be “software audit ready”.  Here are a few short snippets:

• Adobe: “…Inventory discovery tools cannot ensure compliance with all license terms and conditions, such as the contractual restriction that Adobe Acrobat forms may save no more than 500 completed responses without a server product license, as these tools identify only the software installations and not the way in which the software is used...”
• Attachmate: “…In many cases, customers are confused about the difference between the mainframe and thick-client (standalone) versions of the products, and about the ways in which they can be used…”
• Autodesk: “…Autodesk's license models are complex and confusing, particularly the way in which subscription entitlements and prior version rights work… Autodesk products are notoriously difficult to audit and many clients find that their incumbent tools are unable provide the necessary information to demonstrate compliance with negotiated license terms and conditions…”
• IBM: “…IBM has announced and set forth a new International Passport Advantage Agreement (IPAA), effective 18 July 2011, with changes to terms and conditions… When reviewing [license]entitlements, ensure that these terms are updated in your contract and SAM databases and processes to track and manage compliance…”
• Infor: “…Risks include failure to comply with the usage rights for software licenses, source code and object code, for software licensed now or previously by Infor, Baan, SSA Global, Lawson Software and other licensors' products acquired by Infor… Infor customers are often not aware of these limitations or issues as IT asset management and IT procurement may not be actively reviewing these older license agreements…”
• Informatica: “…Customer [software] audits seem consistently to target several key areas of Informatica functionality. Because PowerCenter (and many Informatica products) are licensed on a per-CPU-core basis, customers need to ensure they are not deploying the software on more CPU cores than they are licensed for…”
• Microsoft: “…The most common compliance issues faced by Microsoft customers typically relate to a lack of understanding of the subtly nuanced licensing requirements…”
• Oracle: “…The primary areas of risk appear to be vague areas of license metrics and usage entitlements, including changes in license metric definitions that may show up in ordering documents that differ from those of some earlier deals…”
• SAP: “…SAP license bundles have shifted considerably over the years. The exact bundle was generally not well defined in contracts, which now makes it difficult for clients to know whether they are entitled to use specific software in their agreement…”
• Symantec: “…Both desktop and server virtualization require a detailed check of license terms…”
• VMWare: “…An ELA (Enterprise License Agreement) grants licenses for software to be deployed and used before the ELA expires. Customers who set aside licenses just in case they might be needed in future can find that these licenses are not covered under the terms of their current ELA, especially if it is uncapped…”

Even a quick reading of this Gartner report reveals that enterprises cannot hope to be compliant and software audit ready if they only concentrate on inventory and counting of licenses.  Indeed, the greater risk comes from not being aware of the complex licensing terms and product use rights contained in each software license agreement, and ensuring that users are at all times compliant with those terms.

Gartner provides excellent recommendations on the actions that enterprises should take to ensure compliance with those license terms.  The question remains whether those recommendations can be put into action without automation.  Given limited time, resources and the enormous complexity around software asset management and license optimization, I think not.  Having automated license management solutions in place capable of tracking license terms, applying software product use rights, and reconciling software installations and usage with license entitlements would seem to be the only practicable solution to assist the resource-challenged software asset manager implement Gartner’s recommended approach.

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Readers may also be interested in this recent blog post on the same topic. To learn more about Managing IBM License Complexity, please download our white paper.

Bridging the DevOps Divide by Automating the Handshake between Dev and Ops

By Jeanne Morain

As the cloud becomes the more prevalent and preferred architecture – having a succinct, automated process between Development (Dev) and Operations (Ops)— DevOps—will be a critical success factor for IT shops.  During my research for Visible Ops Private Cloud and Client4Cloud – it became clear that IT shops that automated bad processes or did not have processes in place – only got into trouble faster.  The less process and more rigid controls IT put in place for the business the more the business would work around IT to circumvent policies that inhibited productivity.

The agility, flexibility, and dynamic nature of cloud computing provides significant ROI to the business but only if IT can create and automate processes that provide compelling value to overall productivity of the company.  As IT Ops becomes the "Cloud Broker" and is able to create virtual environments within minutes – Dev will need to automate the packaging, handoff and analysis to keep up.  One individual interviewed for Visible Ops Private Cloud indicated that although it was great that IT could  provide the virtual environment within 15 minutes it still took them over 9 days to have critical applications installed and running due to poor processes for software licensing, procurement, analytics, and change management.  (2011, ITPI)

Many senior development and operations executives I have spoken to are focused on – how to create a cloud environment that provides Infrastructure as a Service (IaaS) for the business. It became apparent during many discussions that DevOps is the next logical step.  Meaning, once the infrastructure is in place and automated – business will require IT to automate the rest of the process to reduce the overall time to value for the organization.  Successfully automating the handshake between Dev and Ops will be a critical success factor in companies realizing the true value of cloud computing.

Key elements to consider on your DevOps journey:

• Development workflow that enables collaboration across multiple geographies, groups, and departments.
• Secure source code repository with branching that also have a sound disaster recovery and security controls to reduce mistakes and malicious activities.
• Automated packaging and provisioning of applications across physical and virtual paradigms leveraging current backend systems for Asset Management, Configuration Management, Change Management, and Service Desk.
• Automated test and dev that are cloud enabled to provide both depth of scale but also ability to burst across various cloud environments.
• In depth analytics on application and feature level usage along with software license entitlements to ensure that not only technically can you deploy in the cloud but legally can you.
• Automated software licensing handshake across hybrid clouds – also known as licensing as a service to enable lifting and shifting of workloads without the drag of manual approvals for bring your own software licensing policies of 3^rd party cloud providers and ISVs.

DevOps is coming of age and will be more critical for both development and packaging moving forward.  The key is automating the handshake and processes now as part of the overall cloud implementation.

Want to learn more about DevOps…check out these upcoming events where Paul Peissner from CollabNet will share DevOps insights and how Flexera Software solutions fit within the process.

Building the Business Case for Software Asset Management and License Optimization

Or, Why SAM and License Optimization should be on the CIO Top 10 List

By John Emmitt

Everyone who is deeply involved in software asset management (SAM) will tell you that (a) its not a quick fix type of thing—its got to be an ongoing program, (b) its mostly about having good, indeed best practice, processes and skilled people (but having robust, proven technology can make a huge difference in terms of successfully implementing those processes—more on this later), and (c) it can be hard to build a business case for implementing a SAM program and get the support of senior management. Why is that?

The Gartner list of top 10 CIO tech priorities for 2012 shows that SAM and License Optimization are not (specifically) on the list:

1. Analytics and business intelligence. (Last year's rank: 5)
2. Mobile technologies. (Last year: 3)
3. Cloud computing, including SaaS. (Last year: 1)
4. Collaboration/workflow technologies. (Last year: 8)
5. Legacy modernization.
6. IT management. (Last year: 4)
7. CRM
8. ERP applications
9. Security
10. Virtualization. (Last year: 2)

If you look back at previous years, I’m quite certain that software asset management and license optimization weren’t on the list then either. We do see “IT management” on the list, and maybe this is where we need to assume that SAM and license optimization are really “showing up”—SAM programs help organizations manage IT assets— to gain control and improve visibility of those assets and have better financial management of the assets.

The same Gartner survey that produced the above list also looked at top business priorities, and in third place they have “reducing costs”. So, we see that cost reduction is still a high priority. And guess what? Software asset management and license optimization programs can help organizations reduce costs for software, not to mention helping to avoid unbudgeted software audit true-up expenses. Furthermore, software typically represents 20 to 35% of the IT budget—it’s a big chunk of the CIO’s budget. So, again, why isn’t it on the list?

I have a couple of possible explanations for this. First, traditionally, software asset management technologies and projects focused on counting assets—hardware and software inventory and maybe doing some reconciliation against purchases. But the process was not very automated and was far from easy—it was a lot of work to bring in the license entitlement (purchase order) data, figure out what was actually purchased and match that up with the inventory data. You may have purchased Adobe Creative Suite 5 (CS5) Design Premium, but your inventory data showed that you had Acrobat and Dreamweaver on some machines and Photoshop and Illustrator on some others, for instance. It took some real digging to figure out that the Creative Suite purchase covered some or all of those installations. At the end of the day, maybe all this hard work got you through an audit or annual true-up event, but it didn’t help you dramatically reduce software costs or avoid the audit in the first place.

Second, customers who have been successful with SAM programs are almost always reluctant to tell their stories. So there is not a lot of verifiable data out there that says, if I invest X in SAM and license optimization, I’m going to have an ROI of Y. The reasons for this include the fact that these organizations have to continue to do business with the software vendors, even after they have achieved significant cost savings with that vendor, and they don’t want to rankle the vendor by publicizing the savings. That’s understandable, but also unfortunate from the standpoint of advancing the cause of SAM in the marketplace. Its also ironic, because the enterprises have been over-spending on software with these vendors for many years in some cases.

To address the first issue, I can say that SAM and license optimization technology has come a long way over the past few years. Tools now have built-in Stock keeping Unit (SKU) libraries, for example, that allow purchase order data to be automatically matched up with inventory data to help streamline the reconciliation process. Now you can see your license position at “the push of a button” and maintain continuous license compliance—avoiding those license audits. License optimization tools provide product use rights libraries that capture vendor license entitlements, which, when properly applied can reduce your license consumption considerably—right of second use, multiple (versions) installation rights, virtual use rights, cold backup/failover rights, etc. all entitle you to have multiple installations covered under a single license. This type of optimization was hard to do before, and as a result, companies over bought software licenses.

With regard to the second issue, we have many major enterprise customers that have successfully implemented SAM and license optimization programs and have reaped the rewards in terms of—increased control and visibility of their assets, reduced license liability risk, and significant cost savings. The actual savings is typically between 10% and 30% of their software spend in the first year of implementation. One Global 500 customer with more than 100,000 employees, for example, has realized a savings of more than $35 million on just two major vendors. That equates to about 17.5% of their total annual software spend of $200 million. In several cases customers have achieved reductions of 50% to 60% of their ongoing software maintenance costs for major vendors such as Adobe and Oracle.

Building the Business Case

Let’s build a rudimentary business case for a software asset management and license optimization program for a hypothetical financial services company that has $5 billion in revenue. The typical IT budget as a percentage of revenue varies by industry, with financial services coming in at about 4% of revenue:

Pharmaceuticals - 5.8%

High Tech - 4.6%

Consumer Products - 2.6%

Automotive - 2.1%

Aerospace & Defense - 4.3%

Retail - 2.6%

Chemicals - 2.2%

Oil & Gas - 1.8%

Financial Services - 4%

For our hypothetical Financial Services company

Total IT budget:  $5B * 4% = $200 million

If their software budget is say, 25% of their IT budget, then:

Total Software budget:  $200M * 25% = $50 million

If the company can realize just a 10% savings on its software spend by implementing a SAM and license optimization program, the savings is:

@10%: Savings from SAM and License Optimization: $50M * 10% = $5 million

Let’s estimate that the first year cost of their SAM program, including IT staffing, consulting services and tools is about $850,000. Then the return on investment in the first year of implementation is:

ROI @10% savings rate: $5,000,000 - $850,000 / $850,000 = 488%

We see that the return on investment is substantial, even at the 10% savings rate. And we have empirical evidence from existing customers that this savings rate is very realistic and in fact is at the low end of the range. Now what CIO doesn’t want to invest in a program that returns more than 400% in cost savings and reduces license liability risk at the same time?

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To learn more about getting started on a Software Asset Management program, view our on-demand Webinar. You may also be interested in reading our newletter on Demonstrating the Business Value of Software Asset Management and Software License Optimization that contains a full Gartner research report on "How to Demonstrate the Business Value of SAM by Choosing the Right Metrics."

Flexera Software Wins CODiE Award for Best Asset Management Solution

By John Lipsey

 

 

 

 

 

Flexera Software, the leading provider of Application Usage Management solutions for application producers and enterprises, announced today that its market-leading software license optimization solution, FlexNet Manager Suite for Enterprises, won the Software & Information Industry Association (SIIA) CODiE Award for best asset management solution.  This is the third CODiE award win for Flexera Software.

SIIA, the principal trade association for the software and digital content industries, announced 28 CODiE Award winners in different categories on May 10 at a ceremony in San Francisco.  A CODiE Award win is an especially prestigious honor, as each award winner was first reviewed by a field of software industry executives, whose evaluations determined 119 finalists. SIIA members then reviewed these finalists and voted to select 28 CODiE Award winners in different categories, including FlexNet Manager Suite for Enterprise’s win as the best asset management solution.

FlexNet Manager Suite for Enterprises has emerged as the leading solution allowing large, global enterprises as well as midsize organizations to move up the maturity model, going beyond software asset management (SAM) to achieve continual software license optimization. The solution automates entitlement based license management and reconciles software purchase order and contract information with actual application installation and usage data, to reduce license, maintenance and audit costs while maintaining license compliance.  As a result, enterprises gain unprecedented control of their software estate, driving as much as 5-30% savings in annual software spend.

Read the full press release here.

Software Asset Management: Transitioning from Project to Program

By Natalie Overstreet Lias

When an enterprise decides to take on in earnest the challenge of software asset management (SAM), it usually begins with a project.  The enterprise usually has some pre-existing rudimentary tracking in place, even if only entry of service requests for software installation into a spreadsheet.  The SAM project team will examine the requirements and capabilities for software inventory and entitlement tracking in the organization, select a product and/or service to meet its objectives, and implement the new solution in the enterprise environment.  However, one critical element is often overlooked:  conversion of the SAM project, after completion, to a sustained SAM and license optimization program. 

It’s understandable that enterprises are often focused on the SAM project.  The project is what should drive process implementation and improvement in the enterprise.  The SAM project is aligned with the enterprise’s business goals; as part of the project, an enterprise must understand and design the right business processes to achieve these goals.  The project phase is also when infrastructure to support SAM is deployed, when software inventory collection systems are integrated, and often when initial software reconciliation results are delivered.  In some cases, the project might also entail some level of license optimization in which the organization’s license entitlements, including product use rights, are applied to minimize license consumption. This could be done for certain key vendors in the initial project phase, for example. This optimization process goes beyond traditional SAM and is a key requirement for maximizing the ROI of the project and/or the ongoing program. A SAM project is full of activity, usually has high visibility, and because it represents change, is closely monitored. 

All good things must come to an end, and SAM projects are no different.  By their nature, SAM projects are short-lived.  This means that for the enterprise to achieve lasting benefit and a mature SAM environment going forward, the foremost goal of the SAM project must be the establishment of a SAM and license optimization program.  Such a program delivers ongoing value to an enterprise simply by continuing and improving on the processes and technologies established during the SAM project.  It sounds straightforward, but often this step is overlooked by enterprises.  Of course, in many cases, some or all members of the SAM project team will be members of the SAM and license optimization program team.  However, in some enterprises, particularly enterprises with significant IT outsourcing, at the end of a project, many resources will be redeployed onto other projects.  Without a transition plan, the newly minted SAM environment will be neglected and will grow stale over time.  Up to date reports will not be available, and ultimately the enterprise may need to create another SAM project to refresh the environment. 

Therefore, in order to create sustainable SAM gains for the enterprise, a SAM project must consider how the ongoing program will operate.  In particular, the project must forecast staffing requirements for ongoing license management activities, including maintenance of SAM infrastructure, software upgrades and issue resolution, and especially ongoing license reconciliation, compliance reporting and license optimization.  Do not assume that the time required for these activities will not change from current processes.  If an individual is currently tracking license allocations by manual spreadsheet input, it should take less time for the same person to do that using a more automated system, but they may have other more advanced reports to generate and analyze going forward. This could include license compliance reports, trend analysis reports and predictive analysis simulations to measure the impact of IT environment changes on their license position, to name only a few.  The value of this more-mature SAM and license optimization analysis is certainly worth it to the enterprise, but it does not come for free and must be staffed to be realized. 

In order for any enterprise to realize long-term benefits from a software asset management project, that project must be established as an ongoing program with appropriate staffing and support.  An established SAM and license optimization program will allow the enterprise to realize a higher return on investment on SAM processes and technology, not just for three months after the project conclusion, but year after year. 

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To learn more about best practice processes for establishing a SAM and license optimization program, please download our whitepaper: NCC Guideline for IT Management: Software Asset and License Management Best Practices.

A blog not (really) about software license management

By Alan Swahn

Are Random Processes Really Random?

Today’s blog is really a thought exercise on random processes. Do random selections always yield random results? Let’s run a test.

Let’s say that we have a Cloud compute grid where the servers are mapped to a 0-1000 by 0-1000 grid. Furthermore, we are using XWare virtualization technology and  xMotion to move workloads around the compute grid randomly. Each time a workload moves, the direction is randomly selected from (N, S, E, W, NW, NE, SW, or SE) and the color assigned to each. When the workload lands on the next server, the server is color coded. The distance traveled is always 2/3 from where it is to the edge of the grid, where the edge of the grid is determined by the random direction.

In the example below, the workload starts at randomly selected X and moves South (direction selected at random), lands on a server, which is colored purple. The next direction selected at random is Northeast and the server where the workload lands is colored blue. The next random move is Southeast and the server is colored green.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This compute grid is really big—1001 by 1001 computers or 1,002,001 computers. To see if the resulting workload moves result in a random pattern or not, this process was repeated 1 billion times, with the picture (a fractal) below being generated. We see that a seemly random process can lead to a very deterministic result. Interestingly, only 62% of the servers were touched by this workload.

 

 

In an IBM audit situation, if you could convince IBM that you should only pay for 62% of the servers in the cluster, because you can prove that xMotion will only move the workload to this percentage of servers, you would still lose the argument, since XWare isn’t an IBM Eligible Virtualization Technology!

Even if it were an approved virtualization technology, you’re probably still on the hook to license for all the servers in the cluster if you have “full capacity” licenses (depending on the license model in use). If you have “sub-capacity” licenses then you’d have to license for the Virtualization Capacity of the group of servers. Virtualization capacity is “the sum of the virtual core capacity available to a product.”

OK, so I managed to get a little bit in there on license management.

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To learn more about how to simulate changes to your IT environment to understand the impact on your license position, please visit our website to read about ‘What If’ analysis.

License Management and Optimization in Citrix XenApp Environments

By Greg Holmes

One problematic area for Citrix XenApp (and other application virtualization technology) customers is how to ensure they buy the correct numbers of software licenses for products they deploy and use from their Citrix servers.  While the licenses they buy from Citrix are quite straightforward, the licenses for virtualized applications that they use in this environment can be troublesome to count, particularly if some users are also using the apps locally on their desktops as well.  Since every third party vendor would look on this kind of deployment differently, enterprises need accurate methods to count each type of license. License optimization tools that help count the usage and license consumption can be very beneficial and help avoid over-counting.

There is often an overlap between licenses used in a Citrix environment and those used in other end user environments, such as the traditional desktop. For instance while a Citrix farm might make MS Office available for all users, some users may already have a local install and consume a license for that device, which also covers them for the Citrix virtualized application delivered to the same device (desktop, laptop, etc.).  The examples below illustrate that depending on the license model and usage scenario, different numbers of licenses are consumed. In the first case, a User based license will consume only 1 license for 2 devices, whereas a Device based license requires 2—one for each device. In the second scenario, only one license is required to access both the local installation and the virtual application, regardless of whether the license is User based or Device based.

Figure 1 - Examples of Licensing Scenarios in a Citrix XenApp Environment

Why is this important?

A customer with just under 5,000 employees, including about 1,000 users who also access their software via Citrix, was recently trying to calculate their license consumption under all of the above scenarios. For some titles they were getting numbers greater than 5,000, even though users were meant to be able to leverage their license for a locally installed copy.  The numbers were obviously wrong, but how could they work out an appropriate license level? In addition, some of these titles weren’t used by all users, so just buying one copy for each employee would have been expensive and also the wrong approach.

They needed to come up with a better way of calculating the consumption of licenses for a combination of locally installed software and virtualized applications, without wasting money on unnecessary additional licenses.

How is it different from a traditional software environment?

In a traditional software environment, companies are used to the problem of just counting the number of software installs on the physical hardware. In a Citrix XenApp virtualized application environment, the application software isn’t installed on the end-point device, so it doesn’t show up in inventory. To solve this problem, some organizations are using next generation software asset management and license optimization products to collect application virtualization data from the Citrix server—for example, information on users with access rights to the virtualized applications and possibly, the actual usage data, if the Citrix Edgesight tool is also in use. This information can be combined with regular inventory from the end users’ machines to find out:

• Who has a local copy of the application on their desktop or laptop
• Who uses the software via Citrix XenApp
• Who could use the software via Citrix XenApp (i.e. has access rights)

This information gets reconciled against the entitlement data from purchase orders and software agreements.  Organizations can determine whether an additional license is needed for each Citrix user or whether the license allocated to the device for the local copy is going to cover the virtual usage. The application usage data can also tell them which users have access to the software in Citrix but don’t ever use it.  That way, administrators can tighten up access through ACL permissions on the Citrix servers.

With the Citrix XenApp, Edgesight and end-point inventory data, the license optimization tool can be used to accurately manage virtualized application licenses.  These tools also apply license entitlements—product use rights, including virtual use, to ensure that license consumption is minimized and no unnecessary licenses are purchased. 

What is the result for customers?

The customer mentioned above was able to uncover license entitlements that had previously not been utilized—meaning they had bought more than enough licenses for their current needs. They also discovered other situations where the additional licenses required were much fewer than they expected.  For some titles, they needed 1000 less licenses than they had thought.

They were also able to tighten up access to applications and are using automation to only grant access to users in Citrix XenApp where they require it.  This has resulted in significant cost avoidance and cost savings on licenses for virtualized applications.

How are you managing licenses for your virtualized applications?

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To learn more about optimized license management for complex datacenter environments, please download our whitepaper.