By Toby Ivens
A strong working relationship between the Software Asset Management (SAM) team and IT Procurement is vital to ensure effective and optimised software license management and procurement.
At a very high level, Procurement’s function is to help an organisation meet its strategic objectives through the identification and sourcing of external resources. In relation to enterprise software, this often entails identifying the business requirements, the software that is proposed and under what terms and type of license agreement the licences will be procured.
An effective SAM team should know –
- The software license entitlements that have been procured and under what metric(s), contractual terms and reporting requirements
- What the company’s optimised license position is for key vendors
- And where possible, the company’s future software requirements based on usage trends and feedback from the business
If the Procurement and SAM teams do not have a good working relationship and are not aligned, this can cause numerous issues and risks for both groups, such as the following.
Unnecessary or Non-optimised Software Purchases
Software license entitlements may be:
- Procured when they are not required—
For example, per user subscription requirements within the business may have declined or the company may already own similar software that meets the business requirements. Also, terms may exist that allow the software use required from within an existing license entitlement.
- Procured when an enterprise-wide initiative, such as changing software editions or licensing metrics, may provide additional savings over the specific proposal raised to procurement.
For example, rather than continuing to purchase a ‘Standard’ license on a case-by-case basis, an ‘Enterprise’ license may cover all of the business requirements at a lower cost.
In addition, maintenance and support contracts may be renewed even though some portion of the maintenance is no longer required.
Undesirable Contract Terms and/or Reporting Requirements
Contractual requirements and stipulations, such as license consumption reports, may seem reasonable to Procurement when negotiating a new purchase agreement or renewal. However, as the SAM team will be expected to maintain software license compliance, they need to be aware of what is being agreed to in the contract and can say whether they will be able to adhere to the contract terms and conditions.
This is especially important in the case of contractual reports. If the Procurement and SAM teams do not have a close working relationship, license entitlements may be procured under contractual terms that:
- The business may not currently have the tools and/or technical ability to support.
For example, the license terms require a tool be deployed to measure license consumption for virtualised or ‘sub-capacity’ licensing (e.g. IBM PVU sub-capacity licenses).
- The SAM team or wider business may not be able to collect the required information to report license consumption.
For example, the license metric may be ‘Peak processor cores monitored in a 12 month period’ but the product itself does not report/track this.
The best time for the SAM team to ensure they understand how to adhere to contract terms and have the ability to reconcile the software license entitlements with installations and usage is during the procurement process (i.e. prior to purchase). The software vendor will usually be much more forthcoming with contract clarifications to ensure the sale is finalized.
Note: Asking the software vendor how to reconcile their software post purchase could increase the chances of a software audit. This may flag to the vendor that your business may be non-compliant as it is not currently managing / reconciling its license consumption or may be incorrectly calculating its license position.
- The SAM team (and likely the wider business for the collation of non-automated inventory) may not have the resources or time available to meet the contractual requirements.
For example, a regular report may have to be generated to meet a vendor’s contractual requirements. The SAM team may determine that it’s too time consuming for the business to collect the data and generate the report within the stipulated time frames.
Contractual terms, reporting requirements and software audit stipulations may be able to be amended during software contract negotiations.
To learn more, please read our whitepaper: Maximizing Value in Software and Cloud Services Procurement