By Alan Swahn
Contracts in general have many stakeholders across multiple departments. Getting upfront reviews and approvals isn’t trivial. Once a contract is executed and in the file cabinet or document management system, tracking time-sensitive terms and compliance to terms is even more challenging. Contract management products and standard processes can help resolve many of the problems associated with a contract lifecycle, if the flashpoints that cause delays within the system are designed out.

One to watch is the workflow management component that can be a go or no go, for efficient contract management. Workflow management is the process enforcer that facilitates transparency, making deadlines, and compliance (contract, regulatory, tax…). Workflow should be tightly coupled to the lifecycle of a contract for:

Request
Sourcing
Approvals
Fulfillment
Auditing
Renewals/Cancellations

A number of key workflows have an associated people matrix. For an approval workflow it may be the approvers and their roles associated with contract amount signoff, contract type, and originating location. If changes are performed manually to approvers’ roles or the approvers themselves, this may be a flashpoint waiting to happen. Updates become reactive to process delays or break down. An example would be a workflow process that is waiting on approvers that are never going to answer the bell. Perhaps because they are on vacation, traveling, on sabbatical, have left the company, or are just off the grid. It doesn’t mean the workflow process will fail. Workflow systems can handle aging, escalation, warnings, failover, cancellation, and updates for workflows in process. In this example the workflow should trigger an escalation phase and backup approver as required. But escalation delays make the process less efficient.

On the flip side, if the workflow system is connected to a dynamic source, a change in personnel could be accounted for and the workflow automatically corrected. The dynamic source doesn’t need to be complex, just accurate and kept up-to-date. In the foregoing example, a company directory that includes name, email address, title, department, and location is sufficient. Of course there should be an accompanying database source that associates a person’s title, department, and location to approval scope—department, business unit, subsidiary, company wide; type of contracts; and dollar amount. The approval scope database changes very infrequently, once setup. On the other hand, a source like the company directory can change almost every day in a large global organization with employees taking on new roles within a company, new hires, and people leaving. The workflow management system should “see” the changes in the company directory, and update its matrix of approver logic, based on their scope. It should then update any workflows in progress to account for the approver change. This potential flashpoint is then removed by a combination of robust workflow and a dynamic data source.

Another flashpoint is the inability to kickoff a workflow, or at least an alert, based on a contract term. Once a contract is signed off and in the firebox, the real work begins. With 1000s or 10000s of contracts, how do you know if the terms are being followed, tiered discounts are being taken, there is compliance to escrow deposits, time sensitive options are executed, or termination provisions proactively selected? An auditable closed loop process is really required. Key terms in a contract should be easily associated with a workflow, before the contract is put in the box. The associated workflow can then be the compliance watchdog to ensure the maximum benefit is achieved from each contract. This flashpoint is therefore addressed by picking a solution that doesn’t view contract management as document management alone, but rather understands the contact management lifecycle and supports the creation of closed loop auditable processes.

By: Vincent Brasseur

IBM announced on April 12, 2011, a change for selected products whereby they are moving from the Processor Value Unit (PVU) software license metric to the new Resource Value Unit (RVU) metric. This impacts several product families such as Tivoli Monitoring, Tivoli Provisioning and Service Delivery Manager. PVU and RVU metrics are radically different:

With the PVU metric, the capacity of the server where the application is installed is measured. If this application is moved to another server or the hardware properties (processors) of the server hosting it are changed, the license may be impacted. This can easily happen in virtual server environments. So, there is a risk of being out of license compliance.

With the RVU metric, the number of units of a specific resource used or managed by the application are counted. The application can be freely moved across servers and the hardware properties (processors) of the server hosting it can be modified with no impact on the license.

This makes perfect sense: the capacity of the server does not always correspond to the usage of the software installed on it. In the past, with the PVU metric, many IBM customers had to choose between price and performance when selecting hardware on which to install the software. With the RVU license metric, IBM customers will be able to configure and adjust the hardware capacity of the server hosting the application to meet their business performance requirements: there will be no impact on license compliance or license cost.

What is a Resource Value Unit? The purpose of the RVU license metric is to tie the number of licenses required, measured in RVUs, to the utilization of the software or the resources the software manages. RVUs may use– the number of Gigabytes, premium income, pages per month, number of messages, etc., as units of measure. The price of the license is based on the number of RVUs required. The RVU calculation is quite complex and usually uses a factor that is applied per quantity tier. In the case related to this IBM announcement, the number of activated processor cores for physical or virtual servers managed must be counted for RVU licensing. The factor table is as follow:

For Servers (active cores):

Quantity Factor
0 to 2,500 1.00
2,501 to 10,000 0.80
10,001 to 50,000 0.60
50,001 to 150,000 0.50
Over 150,001 0.20

Example: if a customer has 45,000 Activated Processor Cores across its managed servers, it will need 29,500 RVUs.

(2,500*1.00 + 7,500*0.80 + 35,000*0.60) = 29,500 RVUs

If the resource considered is a client device, the metric is just the number of client devices but a different factor table is applied. For managed servers, it is not that simple to get the right number of license entitlements needed, as it relies on a number of cores. It gets even more complex if the servers considered are deployed in virtual environments: the RVU license metric in this case supports sub-capacity licensing. In these environments, the measurement of Activated Processor Cores is based on the number of processor cores available for use. Rules and definitions are clearly defined by IBM but are specific to each virtual environment (virtual machines or hardware partitions).

Overall, customers will benefit from the IBM announcement and the use of the RVU software license metric: they will purchase a license from IBM that will be calculated based on what they use. However, moving managed servers across hosts in virtual environments or modifying their hardware characteristics can impact the license position in cases where the RVU is based on active cores available in those managed servers. Staying in license compliance is not going to be easier.

By: John Emmitt

A recent Gartner Research report—Contain Virtualization Licensing Costs With Software Asset Management Best Practices—identifies a number of license management challenges when dealing with both server and desktop virtualization. It also provides several software asset management best practices that organizations should adopt to help meet these challenges. But, organizations can and should do more with the help of next generation software asset management technologies that understand and apply license entitlements, including virtual use rights. Its ‘virtually’ impossible to maintain license compliance and control software costs in these complex environments without the aid of technologies that can automate significant parts of the process. Best practice software asset management processes and procedures are always important, but especially in virtual environments, license management technology is also an imperative.

In virtual server environments, the challenges include the ability to move virtual machines from one physical host to another, using technologies such as VMware’s vMotion. The software license may or may not allow such a move (e.g. Microsoft imposes 90 day move restrictions in some cases), but even if it does, there are additional complexities to consider. For instance, the new machine may have a different processor-core capacity and therefore, the license requirements could change. More cores could mean you need additional core-based licenses.

IBM provides what is called subcapacity licensing for virtual environments that allows customers to license less than the full processing capacity of the server, based on the availability of multiple processors or cores in the machine. The virtual machines running the application can be allocated a subset of the total number of processors in the physical host—say 2 out of 16, for example. This can save you money on the licenses required for your application. Other vendors may require you to license all of the processors on the server, regardless of how many processors are allocated to the virtual machine for the application in question. Oracle typically does this, unless you are using Oracle’s own virtualization technology with hard partitioning.

Symantec also defines virtual environment use rights for their datacenter server products. For example, the operating system edition determines the number of virtual machines allowed per license for Symantec Storage Foundation. The Symantec license tiers correspond to the Windows Server virtualization rights granted by Microsoft. On Windows Server Enterprise edition, the Symantec software may be installed and run on up to 4 virtual machines, whereas for Datacenter edition, the number of virtual machines is unlimited.

On the desktop, the challenges stem from the fact that the application can be streamed from a central server, rather than being installed on the client device. So, install counts don’t help with understanding license compliance in these environments. And now, users can access software running on their virtual desktop, from their mobile device, home computer, or airport kiosk, in some cases. Microsoft allows these Roaming Use Rights for certain products, such as Office, Project and Visio, under Software Assurance. Software licenses are required for all devices that are used to access virtual images of these applications.

These examples illustrate the complexity of the license management problem in both virtualized server and desktop environments. The software asset management tools must understand not only the license models in use—e.g. IBM Processor Value Unit (PVU), but also the license entitlements related to virtualization for that software title, that vendor and the type of license purchase agreement in effect. Customers are ultimately responsible for maintaining license compliance, and need to leverage best practices and technology to meet the challenges of virtualization.

By John Emmitt

A recent article published by industry analyst R “Ray” Wang of Software Insider and Constellation Research Group shows that software audits have risen dramatically over the past 3 years. But you probably already knew that if you are responsible for license compliance in your organization. In the Q1 2011 Software Licensing and Pricing Trends Survey, 58.9% of respondents had been audited in the past year. This was up from 26.6% in the 2008 survey. The primary reasons that major software vendors gave for audits were- to keep customers in compliance and to drive incremental license sales as well as find opportunities for new deals. So, as might be expected, audits are mostly about generating revenue for ISVs.

The article also alludes to the “pain and agony” of a vendor audit and then provides some sound advice for enterprises to help them be better prepared for a software audit or license review. Software audits are costly not only in terms of potential unbudgeted license true-up fees, but also from the standpoint of the time spent collecting the data for the auditors. One customer of ours, a large financial institution, was able to respond to a Microsoft license review in less than 2 weeks time. Another bank of similar size was audited by the same third party audit firm, and required a full year for a similar exercise. There are a lot of dollars attached to an audit process that takes your IT staff a year to complete. You need better software asset management processes and tools in place to minimize this time and expense.

In fact, deploying software license management tools is one of the recommendations in the Ray Wang article. Having the proper processes and tools in place can help you avoid software audits altogether, since vendors generally go after only those companies that they believe to be out of license compliance. That’s why audit ROI is typically very high—the software vendor is fairly certain that there is a compliance problem before they knock on your door. And by high ROI, I mean in the 1000’s of percent in some cases! They do database analysis to check for licensing anomalies that are indicators of non-compliance. For example, if a company has 5000 employees but only 3500 Office CALs, that might trigger a review. Merger and acquisition activity is another common audit event trigger.

Of course, an optimized license management program pays many more dividends than just those discussed here in relation to software audits. Software spend management and ongoing cost reduction are key benefits of optimized license management. So, even if your organization is in the 41.1% minority, and you’re not facing any software audits, there are still planty of reasons why you should implement a software asset and license management program.

By: John Emmitt

Join us for a Defense Systems sponsored webinar on May 17th, 2011 at 11am EST.

Space is limited. Reserve your Webinar Seat Now at:
http://defensesystems.com/webcasts/2011/04/optimized-license-management-for-the-datacenter.aspx?tc=page0

Please join Flexera Software and Defense Systems for this webinar to learn how your organization can achieve significant IT cost reductions in your datacenter.

Software represents one third of the typical IT budget and datacenter applications are usually the most expensive component of software spend. That’s why datacenter license and maintenance fees offer the greatest potential for cost-savings in the software portfolio. Decreasing ongoing costs of multi-million dollar applications in the datacenter is a fundamental component of overall IT spend reduction.

In this webcast, you will learn how to meet these datacenter license management challenges:

Heterogeneous / Multi-platform environments (Windows Server, UNIX, Linux)
Complex License Models
Virtualization
Complex License Entitlements
And how to reduce datacenter software costs by:
Applying product use rights to minimize license consumption
Reducing ongoing maintenance costs
Reducing the cost and risk of software audits by maintaining license compliance

Speaker: Cyndi Tackett, Sr. Manager of Sales Engineering, Flexera Software

Register Now!

By Vincent Brasseur

Large organizations are slow to adopt new software releases. It comes down to the cost of moving from platforms that have been tested and proven in their environment, to a new one that will require months of planning and effort before being internally approved. For instance, many companies skipped Windows Vista and waited for Windows 7, avoiding unnecessary cost in migration, support and maintenance.

More and more organizations are moving to Windows 7, as Windows XP is already 9 years old and the end of mainstream support occurred in April 2009 (extended support will end in April 2014). However, Windows 8 is just around the corner and will probably be available by early 2012. Microsoft will probably stop selling Windows 7 in the year following the release of Windows 8. Organizations will then need to rely on downgrade rights obtained from their Microsoft volume purchase agreement to keep installing and using Windows 7, while purchasing the newer Windows 8. Downgrade rights are part of the license entitlements provided by Microsoft for many products, but rules can be complex and must be applied correctly to maintain license compliance.
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By John Emmitt

Flexera Software’s FlexNet Manager Suite for Enterprises  product has been named a SIIA CODiE Award Finalist in the category of Best Asset Management Solution.  The CODiE Award judges for this category have in-depth software asset management and software licensing knowledge and expertise. The judges probed deeply into the intricacies of software license management with questions such as:
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