By Donna Yobs

In a previous blog we discussed the ‘5 Key Operational Reporting Requirements for Concurrent License Management’. Another key to continuous license compliance is understanding the historical application usage trends and needs across the enterprise. Concurrent license usage reporting is about understanding how applications are used— be it underutilized, over-subscribed (denials and engineers waiting to use the software) or business reporting (by geography, business unit or project planning). These reports have many audiences:

• Engineering Teams
• Procurement & Finance Teams
• CIO / CTO
• License Managers
• Project teams

5 Key Attributes of Optimized Usage Reporting

• Accurate data source
• Continuous flow of data coming in
• Strong database system to handle volume of data
• Strong business intelligence reporting system
• Flexible reporting options
• Reporting Views
• Feature
• Product
• Business Units
• Geography
• Project
• Reporting outputs
• XML
• Graphics
• PDF
• HTML

Reporting outcomes

• Compliance
  Internal Governance
  Audits
• Business Planning
  Procurement Negotiations
  Vendor Relations
• License Optimization
  Optimum License Sharing across groups
  What if analysis on potential license changes
•  Business operations
  Internal Chargeback
  Project Billback
  Procurement Spend Planning

Being able to take advantage of reporting at the right level for the right audience and feeding into the right process will aid your organization in gaining optimum control and ROI on your most valuable software assets.

By Steve Schmidt

At the Gartner IT Financial, Procurement & Asset Management Summit last month in Orlando, FL, Bill Snyder (the conference chair) shared interesting data from a recent survey of IT Asset Management (ITAM) projects. This has been followed up with the publication of a more complete research study report. It appears to be the largest study of its kind to date. Key findings included that ITAM programs were successful, but not always measured first in financial terms, and that they were becoming increasingly important. While many in the industry may have sensed this pattern, it’s great to see supporting data across so many companies.

First, a definition: Gartner defines IT Asset Management as “a framework and set of processes for strategically tracking and managing the financial, physical, licensing and contractual aspects of IT assets through their life cycle.” This definition includes the field of software asset management (SAM).

ITAM Success – ITAM programs have delivered against expectations. According to the Gartner study, the vast majority of organizations that establish ITAM programs are “satisfied or extremely satisfied with the results”. This is good news, both for those organizations reporting on their results and other organizations that are just starting out. It justifies the high percentage of companies that are expanding or beginning their ITAM programs. It begs the question, though, what were those companies expecting—what were their ITAM program objectives, and how might those expectations/objectives evolve in going to the next stage of value and maturity?

Measures of Success – The measures of success are not always cost reduction. In fact many companies just starting out do not measure on this dimension at all, but are instead seeking control over their IT assets. On an industry-wide basis, this risk avoidance and management function is just as a compelling a rationale to get started with an ITAM project. Those who did measure cost savings reported benefits of more than 5% in the first year, with 42% of respondents saving 10% or more. For those who did not measure cost savings initially, as their ITAM program matures, financial components increasingly come into play. This is consistent with the evolution we have seen in the form of a focus on software identification first, then on reclaimed, redirected, or deferred software license spend, and then on the ability to optimize license spend on an ongoing basis. See the software license optimization maturity model for more details on this progression.

Increased Importance – One indication of the importance of the ITAM programs is that ITAM information is increasingly being used to make more strategic decisions. The report states that 28% of organizations are using ITAM data to support financial management and IT strategies. Another indication of the importance of ITAM programs is that IT asset managers predominantly report to CIOs. This is a shift from the past, and highlights both the level of risk that can be mitigated through ITAM programs and the financial implications of these programs. These indicate that ITAM programs require and warrant executive-level attention.

The costs associated with IT assets and their strategic value to the enterprise, especially for software assets, is high and increasing. With the success reported to date, it’s not surprising that the focus on IT asset management and then financial optimization is also increasing.

How do these sorts of reports impact IT Asset management programs in your organization?

By Donna Yobs

Understanding daily operational needs across the enterprise is one key to achieving and maintaining continuous software license compliance. This is especially true for concurrent licensing, commonly used in technical and engineering applications. The following requirements relate to operational reporting and allow enterprises to understand and quickly react to business needs based on the current state of license servers, license usage and license availability. These types of reports have the following audiences:

Engineering teams
License managers
Project teams
IT department

The 5 Key Requirements of Concurrent Licensing Operational Reporting are:

1. Timely updates
- Doesn’t need to be real-time but should reflect a reasonable update pattern based on load.
- Typically 5 minute updates from dozens of License Servers

2. Show current state of the data and environment in one view
- Can be approximation of data
- Usage logs are the ‘true’ source of compliance and procurement planning
- But for operational reporting you are concerned with operational health

3.  Provide specific views, such as:
- Different dashboard views for different end user roles
- License managers by department or geographies
- Department views
- Application views

4. Provide alert mechanisms for key thresholds, such as:
- License denial rates
- Down license servers

5. Time Frames: What makes sense for my time horizon?
- This may vary from location to location
- Typically viewed in terms of a few: hours, days or weeks

In addition to providing these reporting capabilities, the license management system should also enable organizations to:

Check availability of:

- License Servers
- Vendor Daemons
- Licenses

And perform the following actions:

- Restart Systems, Services
- Request license release, if applicable. (Ensure validity of excess licenses before taking action).
- Discuss software planning with individual departments based on high usage patterns
- Educate users on license usage expectations based on current trends

Being able to take advantage of reporting at the right level for the right audience and feeding into the right process will aid your organization in gaining optimum control and ROI for your most valuable software assets. Data beyond a few weeks of age is best treated as Usage Data (reporting for: compliance, business planning and internal chargeback) and is handled with different reporting metrics.

These will be covered in the next blog— 5 key Usage Reporting Metrics for Concurrent License Management

By Alan Swahn

Subcapacity licensing is just what it sounds like, software applications can be licensed for a portion of a server or group of servers and goes hand-in-hand with a variety of virtualization technologies and multi-core chips on the market. On the one hand, there is a lot of flexibility to fully utilize the underlying hardware and quickly provision or move partitions that contain the accompanying software applications between several networked servers. On the other hand, understanding the impact (software license liability) of virtual machine or hardware partition movement within the environment is somewhere between challenging and daunting. Challenging costs more than it should; daunting costs way too much.

As a simple example, let’s suppose you have a group of virtual servers that consists of:

and a partition that is allocated 2 cores and contains 3 applications with an aggregate price of x dollars per Processor Value Unit (PVU). Since they are in the same partition on the same server, the application cost is:

2 cores * # PVUs per core * x

If the workload is moved from the POWER5 QCM to the POWER6 570 the cost jumps 240%.

Let’s put in some real applications and associated costs:

Therefore, the price swing for running these applications is from $51,010 to $122,424. It’s easy to move workloads between virtual servers using technologies such as IBM’s Live Partition Mobility, just make sure the financial liability is understood or you could get an unbudgeted surprise! What’s really needed is a software license management solution that provides “what-if” analysis to tell you the financial impact of moving or provisioning workloads before changes are made. Unfortunately, IBM’s ILMT³ tool only reports on PVU based inventory, after the fact.

References:

1. http://www-01.ibm.com/software/lotus/passportadvantage/pvu_licensing_for_customers.html
2. http://estore.gemini-systems.com ; Applications bought in lots of 10 PVUs.
3. http://www-01.ibm.com/software/tivoli/products/license-metric-tool/

By Darren Balakrishnan

Are you considering outsourcing the management of your software and hardware assets? Here are a few things to consider before you make your decision to outsource.

Why Outsource?

Cost savings:  You can achieve significant cost savings by outsourcing business functions to a service provider. This is especially true for functions that are not part of your core competencies. In the case of Software Asset Management, for example, the outsource provider may be able to achieve higher cost savings through greater economies of scale, in addition to savings from more optimized license management processes.

Expertise: The service provider should have more people with a high level of expertise in the outsourced function than you may have available with in-house staff. They have access to a pool of resources which would be expensive to replicate in-house. Software asset management requires in-depth knowledge of vendor volume purchase agreements, software product use rights, license metrics, and more.

Contractual advantages: You have the ability to enforce deliverables in the contracts, if structured with penalties. It would be in the best interests of the vendor to ensure that they meet the contractual obligations to avoid the penalties. It’s more difficult to achieve this in-house.

On-demand staffing: If you have business need to have additional resources for a temporary situation to deal with deadlines etc., it is much faster and simpler to request these from the vendor, rather than hiring and training a new employee for the task. What with the big up-tick in software vendor audits over the past couple of years, it’s more and more common for organizations to be facing an audit. These can consume a lot of IT staff time, especially if the there is a lack of best practice software asset management processes and automation.

The Downsides of Outsourcing

Expectations versus reality: If appropriate expectations are not set early in the process, the outcomes of the service provider deliverables might not be to your liking. To avoid this situation, mutually accepted expectations clearly set out in writing must exist prior to signing the outsourcing agreement.

Quality of work: The work delivered by the service provider might not be up to your standards. It could be for a multitude of reasons, including high staff turnover, inexperience of staff, partner providing service to multiple clients etc. A strong contract with specified service levels and penalties for non-performance will help mitigate delivery of shoddy work.

Lost knowledge: A potential downside to outsourcing is the potential for lost knowledge within your own organization. When the contract ends, your organization may be vulnerable, unless you take steps to retain expertise in areas that you deem critical to ongoing management of your hardware and software assets. This would allow your organization to have more flexibility in negotiating with the same or different vendors for the new contract term.

What about technology?

Another key consideration should be the technology underpinnings of the outsourcer’s services—what tools are they using to help automate the process so that it’s not only easier to achieve optimized performance, but also allows the services to scale to many clients. With the proper preparation, negotiation of service delivery terms, and next generation software asset management tools as the basis for these services, many organizations can benefit from outsourcing of IT asset management functions.

Look for a future post where we will cover some other items to consider when picking an outsourcing partner.

By Vincent Brasseur

Microsoft offers two possibilities to license Windows in a Virtual Desktop Infrastructure (VDI) environment. The first option is Software Assurance (SA) which provides product use rights that allow virtual desktop access. If a device is covered by Software Assurance, no additional licenses are required to access a Windows VDI desktop. If devices are not covered by Software Assurance, as in the case where the organization has decided not to purchase it, or for thin clients that are not covered by SA, a Virtual Desktop Access (VDA) license can be purchased. Both software licensing models provide the same benefits, which include:

- Install Windows 7/Windows Vista/Windows XP virtual machines on any combination of hardware and storage
- Unlimited movement between servers and storage
- Access corporate desktop images from non-corporate owned Windows-based PCs
- The primary user of a Windows device has extended roaming rights, which means that he/she can access their VDI desktop from
any device outside of the corporate environment, such as a home PC or an internet kiosk
- A single Windows license, under SA or VDA, allows concurrent access for up to 4 virtual machines (VMs)

Companies cannot acquire perpetual licenses for VDI environments: the VDA license model is a subscription that can be purchased for about $100 per year per device. Software Assurance must be renewed over time to keep the product use rights tied to it. SA and VDA licenses are both attached to devices, not users. Each corporate device accessing the VDI environment needs to be licensed; however with the roaming rights a user can use any devices external to the organization to access their VDI Desktops.

The rules are almost the same for Microsoft desktop applications. Again, most Microsoft desktop licenses, such as Microsoft Office, are attached to specific devices, not users. With Software Assurance, Office, Project and Visio (2010 versions) have roaming use rights allowing users to remotely access their software on their virtual desktop from third party devices (not owned by the company) outside the organization such as home PCs and internet kiosks. Within the organization, every device using the software must be licensed. For all other products, the right of second use, provided with a volume agreement, applies only to the primary user of the application for a single portable device within the organization. It does not include home computers. For applications not supporting roaming use rights or not covered by SA, Microsoft provides the following solutions: organizations can purchase Microsoft Work at Home (WAH) licenses or as part of the SA coverage get the Home Use Program (HUP). In both cases, licenses need to be purchased per product per device.

Microsoft licensing for VDI is not easy and may come at a hefty price. Microsoft is still considering VDI as an emerging technology that does not reduce desktop Total Cost of Ownership (TCO). Its licensing strategy may have slowed the adoption of this technology somewhat, as licensing costs add up for the required infrastructure needed to deploy such a solution. Microsoft has invested a lot in this area and is developing its own solution known as Microsoft Desktop Virtualization. They also have a strong partnership with Citrix Systems. It is anticipated that Microsoft’s licensing strategy will be reviewed when this technology is mature and able to compete with existing solutions on the market.

By John Smith

Many software contract negotiators focus mainly on software cost, but other factors that allow more flexibility of software deployment and portfolio composition will yield far greater benefits in this business climate of frequent reorganization, mergers and acquisitions.

An extreme example that shows where cost and not terms became the priority was highlighted at a recent Users Group meeting of a well-known ERP vendor; the CIO of a large DIY chain proudly announced that he had negotiated a 95% discount with that vendor. Subsequent details emerged that licenses had been bought for every employee when only about 15% of that number would have sufficed, thus bringing the effective discount down to around 67%. Considering that annual maintenance fees (which are usually not discounted and are payable every year) would be due on an inflated number of licenses, my guess is that the vendor was not dissatisfied with the outcome.

The license terms listed below are not necessarily offered by the vendor but we’ve found they can often be accommodated within the negotiation process.

These valuable terms could include, but are not limited to the following:

Removal of limitations on geographic and organizational scope.
Ability to change the portfolio of software licensed by allowing access to new functionality / feature sets. This is particularly useful when negotiating contracts for concurrent licenses, commonly used for engineering applications.
Allowing exchange of software as processes or organizational profiles evolve. For technology companies, a change in the design process may require a shift in the engineering application mix, for example.
Ability to increase quantities licensed at the access rate negotiated for the initial contract. (Again, this may be most suitable for concurrent licensed applications. In other cases, there are volume discount tiers that come into play).
Stipulation of behavior of the software under given circumstances (license time-out, abnormal end).
Ability to “park” unused software for a period of time and remove licenses from maintenance.
Definition of maintenance rates applying for the contract duration.
Ability to absorb mergers and acquisitions into existing contractual terms.
Definition of vendor interfaces to maximize efficiency and limit access by the vendor to specified individuals and functions.

By defining terms that allow an organization to change, yet still be effectively serviced by software contracts, large payments / adjustments / penalties may be avoided.