By John Lipsey

Gartner recently published a new report on government IT — Predicts 2012: Government CIOs on a Tightrope.  The report’s authors came to some interesting, if not unsurprising findings:

Cost optimization remains top of mind for most government agencies, but there is a growing realization that what is at stake is their ability to continue operating and delivering services at the same or better levels while being asked to deliver unprecedented levels of efficiency.
The key challenge for governments will no longer be to transform to improve their services, but to be able to fulfill their statutory obligations. While technology investments could favorably impact productivity and help with sustainability, cost containment remains a top concern, forcing IT executives and their organizations to embrace more agile and evolutionary development approaches, as well as more radical sourcing options.
Government organizations will continue to adopt technology innovation, but mostly in areas where technology is inexpensive or can contribute to sustainable transformation of services and operations, supporting more radical approaches to cost containment.

The message is clear that cost containment will be a continuing dominant theme in government IT – but even more important will be cost containment strategies that deliver more capability and productivity to end users.  That is, delivering more value for less spend.

This is actually one of the primary themes around software asset management and license optimization.  How can you give more productivity to users through software, while spending less money by optimizing software procurement, reducing software audit cost and risk, and improving IT operational efficiency? The government seems to be getting the message, as reported on in an earlier blog post, when it was announced that Congressman Joe Walsh introduced an amendment to eliminate wasteful software license spend in the house version of the Department of Homeland Security authorization bill.

The bottom line that Gartner understands, and that government agencies are beginning to realize, is that there is a tremendous amount of waste currently institutionalized in the federal government’s current system (or lack thereof) in procuring and using software.  Adopting best practices from the private sector around software asset management and license optimization is a painless and efficient way to eliminate this wasteful spend – while increasing the value being delivered to government employees.

By Natalie Overstreet Lias

One of the largest barriers to successful software asset management is a lack of software governance. Lack of clear policies and enforcement measures can result in unwanted applications being deployed in the environment, inappropriate decisions about versions or editions leading to inefficient use of funds, and worst of all, large unknown software license compliance risks.

For example, consider an organization that allows users to purchase software independently of any formal procurement process. Typically this would be done through a company credit card. The software is then installed on the user’s machine.

There are several issues with this scenario:

Users do not have a clear view of organizational software strategy and policies. This means they often purchase products that contradict the organization’s software goals. For example, they may purchase a stand-alone version of an application when the organization is attempting to standardize on a centrally served version. This represents a dual waste of funds: the organization incurs an unnecessary cost for an undesirable software license, and the organization must furthermore fund the user’s migration to the standard environment.

The organization has no view of the original software license entitlement. Typically, the undocumented purchase first comes to light during a software inventory scan. If the organization’s software asset management team has no knowledge of the purchase, they must either work with the user to obtain the original entitlement documentation or repurchase the license. In practice, it is often impossible, on an organizational scale, to contact all users in a timely fashion and gather entitlements, so a common outcome is that the organization purchases the exact same license a second time.

Even worse than repurchasing a license for one user is purchasing a license for many users because of software proliferation. Users are oftentimes unconcerned with license compliance considerations (another area where software asset management policies, procedures and internal communication can help). Regardless of what may be contained in a EULA, users may erroneously believe that the software they purchased individually on behalf of the company is covered under some sort of site license. Of course, very little software today can be purchased under a true site license arrangement, but many users are not aware of this. In addition, there are certainly users who engage in true software piracy – not an innocent ignorance of software licensing, but rather a conscious decision to flout license terms and conditions. Regardless whether the user intends to engage in unauthorized software distribution, a single license of software purchased outside normal channels can result in the organization purchasing the software not only for the original user but also for anyone else who may have received it. One software copy can quickly become ten, or a hundred. If the vendor audits the organization, they will not be forgiving of these kinds of mistakes – they will treat the distribution as piracy, with unpleasant consequences.

So what can be done? Some organizations deny administrative privileges to users to prevent them from installing software. Unfortunately, this practice results in its own administrative headache – IT staff must be involved with every change made on a desktop, and users lose flexibility to administer properly purchased and authorized software.

A more straightforward approach is to prohibit the purchase of software outside the organization’s procurement process. A centralized process is ideal, but a process that involves a proper software asset management and procurement team will do. Purchases of software on credit cards should generally be denied.

Appropriate software purchase governance will limit the exposure of the organization to compliance risk, ensure uniform software architecture, and save the organization money!

By Donna Yobs

A recent IT Business Edge blog was lamenting that the trouble with software license management is the lack of a continuous process in most organizations. Both the process and access to robust data tend to be lacking.

With concurrent licensing models, much of this robustness is built-in, and thus highly valued by enterprises. Concurrent license management tools continuously monitor and capture license usage data for the applications licensed in this manner. Enterprises need to leverage that license server and application usage data. This involves two license management views: Operational and Usage reporting. Both provide a wealth of data and each has a unique value to the enterprise. Let’s examine these further:

Operational reporting is about knowing the state of the enterprise now and over the recent history so you can answer these types of operational questions:

Check the health of the systems:
Is a license server down?
Are there denials of service (licenses are unavailable when needed by end users)?

Recent history gives you context:
Is this a consistent problem; has this been going on for a while?
Is this ‘a blip’ that happens and resolves itself quickly?

Key metrics for Operational Reporting:
Licenses in Use
License Server Loads
Excessive Use Summaries
Basic Server Health Statistics

License usage reporting is about understanding how applications are being used: are they underutilized (shelfware) or oversubscribed (denials and engineers waiting to use)? It also involves business reporting (by geography, business unit or project, for example) so you can answer procurement and license optimization questions:

Do I have the right number of licenses and the right mix of applications?
How can I plan for a better application mix and future needs?
Can I leverage usage reporting for (internal) customer chargeback?
Can I use department chargeback reports to
Improve application usage behaviors
Promote greater sharing across teams

Key metrics for Usage Reporting:

Peak usage and denials
Usage over Time
Report by Project
Product Reporting

In subsequent blogs we will cover:

How to use 5 key Operational Reporting Metrics with Concurrent License Management

How to use 5 key Usage Reporting Metrics with Concurrent License Management

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 John Emmitt

The Business Software Alliance (BSA) recently reached a settlement with a Belfast based architecture firm in which the firm paid £15,000 (about $24,000 USD) in damages and another £18,000 (~$28,700 USD) in true-up fees to purchase the necessary software licenses for Microsoft, Adobe and Autodesk products. The BSA represents independent software vendors such those mentioned above, as well as others including Progress Software, Symantec and The Mathworks.

In the article posted on the BSA website, Julian Swan, Director, Compliance Marketing EMEA, BSA, commented, “Unlicensed software often occurs when a company’s management regards software licensing as only an IT problem, rather than treating their software as a business asset. It is important for companies to implement software asset management (SAM) to ensure that not only are they legally compliant, but are deploying their software in the most cost efficient and productive way.”

Mr. Swan has hit the nail dead center in this statement. Maintaining software license compliance (reduced license liability risk) is only half of the equation when it comes to effective license management. The other half is cost reduction related to licenses, maintenance and improved operational efficiency. In another recent blog we discussed the Gartner survey results that showed that IT Asset Management (ITAM) programs lead to significant cost savings. In fact, the report says—

“Gartner research indicates that organizations that have effective ITAM disciplines will reap the benefit of cost savings, even in the current economic climate. More than 25% of the 66 respondents that measure ITAM savings indicate that their ITAM programs saved 10% to 20% of their IT spending in both the first year and over years two to five of their programs.”

10% to 20% savings on IT spending (not just on software spending) every year for five years sounds pretty darn good. But, in many cases, organizations can do even better, and more organizations can achieve at least this level of savings. The reason is that many organizations are not yet at the level of optimized license management maturity where maximum cost savings can be achieved. One third of the organizations in the Gartner survey rated themselves as Level 3 in Gartner’s 5-level maturity model, which they define as— ITAM roles are defined and processes are applied consistently across the organization. ITAM data is reliable and is starting to be used to guide tactical IT decisions. This means that there are more savings to be had through optimizations such as automatically applying software product use rights (license entitlements) to reduce license consumption, and reharvesting existing licences. (Download this whitepaper to learn more).

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/