I was recently onsite at a 65,000 seat, global customer whose business structure and operations were completely decentralized. They are, essentially, a large holding company of many smaller companies. As a result, their software asset management (SAM) program was completely decentralized as well. They had been relying on their Large Account Reseller (LAR) and Microsoft to help them manage all their software licensing because of the large number of independently operating subsidiary companies. They had both a Microsoft Enterprise Agreement (EA) and a Select Agreement in place. However, the LAR was allowing subsidiaries to purchase licenses under the Select Agreement, when the specific product was actually already covered under the Enterprise Agreement. The result was that they were over-purchasing and over-paying for their software licenses.
When the annual Enterprise Agreement true-up came up, headquarters would ask the subsidiaries what they had installed—not everyone had Microsoft’s System Center Configuration Manager (SCCM— a configuration management and inventory tool) , so some of this was done manually. As an example of some of the challenges that they would encounter, let’s take a look at Windows Server Standard. The subsidiary would say that they had 20 Windows Server Standard licenses in use. Their original count was 12 on the Enterprise Agreement, so headquarters would true-up the difference on the EA— 8 Windows Server Standard licenses. However, the LAR had actually allowed that subsidiary to purchase 8 licenses under the Select Agreement, resulting in the company purchasing twice the number of licenses needed.
The LAR was also allowing the customer to purchase software products for which they already had licenses. For example, Office Pro contains Excel & PowerPoint, yet there were about $30,000 in separate purchases for those products. Mismanaged purchases by the LAR led to about $850,000 of over spend in one year! When we went back to the original purchase agreement signing date about 18 months prior, it was closer to $1,200,000 in software licensing over spend.
We were ultimately able to help them put in place SAM processes and software license optimization tools to proactively manage their software estate, preventing these unnecessary purchases and ensuring that they are purchasing the right products under the right agreements. The result—they have saved a lot of money and have been able to leverage the full value of their already negotiated Enterprise Agreement.
The lessons here? Don’t assume that because you have the right software license agreements in place that everything is all set. As the example here illustrates, software assets need to be proactively managed on an ongoing basis. There are ways to automate much of this to ensure that you are leveraging the agreements that you have in place to avoid unnecessary purchases. You can also ensure that any future purchases are done under the right agreement to guarantee the best price possible.