By Dan Anderson
The Internet of Things (IoT) and Connected Devices
By now, we’ve all heard the hype about how everything from vending machines to thermostats to garage door openers will be able to communicate directly across the Internet to transform our lives. The decreasing cost of connectivity is providing companies the ability to bring new products to market and transform the way they provide services. Cisco is estimating that by 2020, the IoT will drive $500 Billion in spending globally. Just as importantly, they and other analysts are estimating that there will be 50 Billion connected devices by 2020.
Software License Optimization is the ability to automate software asset management (SAM) processes and leverage software license entitlements to maintain license compliance and eliminate unnecessary software spend. It is a critical enabler that will allow organizations to adapt to this new IoT reality.
Figure 1: Source - Cisco Internet of Things Infographic
While much of the press coverage has focused on consumer devices like Nest, the vast majority of connected devices will be used in business applications. A recent Accenture study on Industrial Internet of Things applications reviewed the applications and services that organizations like Michelin and GE are already creating. The study projects IoT as one of the primary drivers of new revenue growth while delivering operational efficiency gains of up to 30%.
Industry analysts like Gartner are starting to review the implications of all of these devices on the Data Center and IT Operations. IoT will drive much of the growth in data centers and transform the demand for IT services. We already see awareness of this from an IT security standpoint as organizations work to identify and control potential threats from connected devices with embedded OSs.
What does all this mean for Software License Managers? How can you help enable your organizations to adopt new models while at the same time maintain license compliance?
New Markets, New Devices, New Demands
The growth of IoT is occurring because leading businesses are learning to capture and leverage data from new sources to create business opportunities. While IoT has generated more hype than change to date, almost every organization will see real impact in the not too distant future. At manufacturing companies, supply chains will change. Your organization may want to move into new markets. IT and business units will adopt new types of devices.
Changes will hit your organization, and software on new devices will be critical to enabling those changes. Your software license management team will need to adapt to the requirements to manage those devices or you’ll lose visibility and control. IT organizations are always expected to meet the demands of the business, and IoT is no different. As you look at your current license management capabilities, you’ll need to figure out how you can adapt to rapidly evolving information requirements about traditionally “dumb” devices as well as how to manage and optimize utilization of the software powering those devices. The attributes and data models you use today, the methods you use to track inventory, and the scope of what you’ll need to manage will all need to evolve in response.
Evolution of License Models
The line between hardware and software is blurring as new types of devices come into the environment. Connecting “things” has no value on its own; the value comes from the information and services enabled by connecting those devices. Of course, access to that information probably won’t be free. Device manufacturers are becoming software vendors as they create new information services with hybrid hardware/software business models. (All companies are essentially evolving into software companies). These changes will require multiple new license models, which in turn create challenges for software license managers.
The scope of software license management will need to evolve to meet these new governance and technology challenges. The scope of the software and hardware you manage, which stakeholders are involved, and even how you define your asset lifecycle will all change as hardware and software become more entwined. Do you need tires for your corporate fleet? Or do you need a Tire-as-a-Service? How do you calculate the costs? How will you respond when device manufacturers audit how you use their hardware; or when your software vendors decide to license access to data differently based on which embedded devices use that data?
Organizations with mature governance structures will be best positioned to evaluate different types of hybrid models to make strategic lifecycle decisions in an “Apples to Oranges to Oranges as a Service” environment. Today’s software environment already creates differing priorities and turf wars in many organizations around objectives and decision making authority. Building governance capabilities and embedding them in day-to-day activities is a critical part of being ready for the IoT.
Firefighting isn’t Scalable
The number of IoT devices is expected to grow by 26 billion devices in the next five years. I frequently find when I talk to companies that they barely manage to control their current amount of software and devices, and that it takes heroic efforts and countless hours to gather information manually. They don’t focus attention or resources on managing their software portfolio until some critical event forces them to add resources and address the issue. IoT may not be a single event, but rather, is a critical evolutionary change. Companies that want to fully leverage the benefits of machine-to-machine (M2M) connectivity and generate the corresponding operational benefits will need to invest in managing the data required to comply with new software license models and make strategic decisions.
Organizations that adopt Software License Optimization and invest in automating lower-value tasks position themselves to better invest their software budgets. They enable software asset managers to provide significantly greater value by eliminating software spend that doesn’t add value and driving out unplanned software non-compliance spend. Just as importantly, they provide the organization with scalable processes to support the explosion of new devices and new license models which are coming.
The predictable outcome for those companies that continue to depend on spreadsheets, manual processes, and large teams of people to gather and analyze IT asset data will be ongoing audits, true-ups, unplanned expenses and over spending, as they fall farther and farther behind in their ability to track and optimize new types of software spend.
Software license management professionals can play a critical role in helping to evaluate the costs of different types of solutions to ensure that organizations actually achieve the planned benefits and can manage new devices and new services coming with IoT. Software License Optimization capabilities provide license management professionals with the license compliance information needed to get out of “firefighting” mode and the information that business leaders need to actually deliver on the promise of the Internet of Things.
To learn more about Software License Optimization, please read our whitepaper: Moving Up the Software License Optimization Maturity Curve to Drive Business Value.