- Apr 06, 2017
- Olaf Diehl
8 More Software License Management Best Practices | SAM Round Table, Part IV
Recently in Berlin, Aspera GmbH was the Platinum sponsor of we.CONECT, an international SAM conference that combines speaker sessions with attendee round tables. It’s a great place of knowledge for companies, service owners and practitioners with mature Software Asset Management practices, and the topics are all relevant for strategic day-to-day SAM.
The following is Part IV in a series of insights from a round-table discussion with SAM professionals and experts. Aspera hosted the topic “Cost Savings in the Data Center” and I was the group moderator. →Read Part III here.
Recently, I talked about 8 software license management best practices, following the advice and experience of 45 professionals. They talked about how to design Software Asset Management savings as part of the organization’s overall financial target, and how it is important to align the SAM team with other departments and internal people. In this article, we will explore 8 more software license management best practices.
#1 – Align SAM with software requests
Your success depends on aligning SAM service and optimization with all ITSM processes and their request tickets. The SAM team should know in detail — not just in theory — how the software request lifecycle works and what bypasses exist. This includes how software is requested, how these requests are processed, how the software is deployed, and how licenses are reharvested – if at all.
For example, the IT team has a reharvesting process that looks at metering data, detects software that hasn’t been used for 90 days, and then automatically uninstalls the application and makes the license available again. However, the process to reinstall that software is complicated, because the employee has to document her previous usage. If it takes 1-2 days, people will complain. But if you can reinstall the software in 30 minutes, people will be happy. That’s why you should align software license optimization with the ITSM request system. Together they can generate faster results and support a better customer experience.
#2 – Know a project’s business value
To get the best software license optimization, you must understand the business value of a SAM project. Otherwise, your optimization might be correct from a technical or theoretical perspective, but may not satisfy critical business points or customer expectations.
When you evaluate projects from a SAM perspective, it’s important to recommend a cheaper or more efficient alternative. At least, most of the time. You don’t want to reduce costs just because that can be done. Ask yourself, “Do I know the project’s intention and its value to our company?” If your answer is “no” or “not completely,” then take 15 minutes to talk with the project leader and get guidance to the right decision.
For example, if you know an SAP licensing structure is intended for everyone in the company, then you wouldn’t optimize the licenses by restricting the user base. Instead you would tell the purchasing department to negotiate with SAP for more robust usage rights.
#3 – Align SAM with other teams
To get high quality long-term results, you must motivate all involved parties to align with your optimization priorities. Don’t invent a lot of processes. Just establish robust checks and balances to keep software license optimization in mind by other teams like budget owners or the legal department. Remember to always be on the same side as the teams with money! Aim for a monthly status, shared with the stakeholders.
For example, organize a set of reports or KPIs that all parties agree to. The SAM service team provides data to the Purchasing department. Purchasing should have a reasonable deadline, perhaps two weeks, to come back with their list of changes initiated by that reporting. This might be simple completion of data. Then another two weeks later, the SAM team has to prepare a short review to show any related results. Eight weeks from the first report, the issued should be solved and the KPI is under control. Now there are self-controlling boundaries in place so if the results are not optimal, an automated alert is triggered and escalation may happen.
#4 – Know the needs of your users
It’s essential to communicate with the people who are most relevant to your tasks. Before you optimize your software estate, you should first go to the business units and find out what SAM and IT services they really need. You must invest the time to really understand the underlying business requirements.
Often in a SAM or IT department, your team is concentrating on KPIs, data quality and knowledge of technology tools. This high-level focus can remove you from the employees and end users who you are trying to help. Make sure you don’t forget them! Otherwise the direction of optimization is rubbish, and you may be at risk to lose both time and reputation.
#5 – Establish license transfer & pooling
Consolidate your company’s license usage with these two big operational steps and you will reduce your license spend immediately:
- Reorganize the structure of software requests
- Reorganize the pooling of licenses
Your goal is to eliminate licenses being owned by various business units and legal entities. This is especially a challenge in a large organization that doesn’t share assets across units and departments. You might hear some noise, such as negative comments or reactions, during the first part of implementation due to things changing, such as taking licenses away or putting hurdles into well-established structures. But that’s okay.
For example, let’s say your company does not have a model for chargebacks. It’s hard to motivate one department to give away an unused license, even if they haven’t touched it for two years. So there is a license on the shelf but the other department has to buy a new license anyway. Or maybe the department is willing to part with the unused license but there is no process in place to formally handle that change. Questions arise such as what is the “purchase” price, or how do I get the license back if the installation is “on loan” and temporary.
But with a plan in place, you can avoid spend on both ends. The SAM team can implement a small chargeback model that organizes a monetary transfer of value within the company, or take the approach of “transfer and give back.”
#6 – Link renewal dates to the vendor’s fiscal year
If you have to renegotiate a contract with a software vendor, align your calendar with the vendor’s fiscal year. Use time as your tool, making sure your contract renews when the vendor is motivated to hit their targets. Know the pain points around this. You should prepare a personally beneficial proposal to submit as an alternative to what the vendor wants you to do. The vendor is more likely to negotiate because they need to state the revenue by year end. This is basic knowledge and strategy in a purchasing department, but not always known by SAM or IT teams.
For example, in a contract with IBM, the renewal date usually comes six months into your current contract. Your yearly audit is technically limited by the upcoming renewal date, and if you don’t have a settlement by the contract end, then your maintenance will run out. IBM will pressure you in the negotiation by saying that if your contract runs out, you will have an expensive problem in getting your licenses reinstated under maintenance.
But you can turn that negotiation around using tactical pressure. Be prepared with exact data at the beginning of the audit, knowing your IT requirements in detail so you can push the vendor. Try to concentrate your budget — and don’t forget the power of the purchase order! You can entice the vendor with a sizable P.O. that you are ready to submit… just as soon as you get their signed letter with your target contract conditions met.
#7 – Evaluate the TCO of software
Often software is viewed as a purchase plus maintenance, and that’s it. But that’s not true in the calculation of total cost of ownership (TCO). You must look at indirect costs and related costs as well as the buy price and depreciation figures. Only then can you decide if what you paid for the software has generated value.
For example, Oracle automatically increases its maintenance fees by 3-4% per year. If you calculate that over five years, you end up paying far more after the purchase than for the purchase itself, as you pay 4% the first year, then 4.4% on that, and so on. So when you install an Oracle database, it’s not just $32,000 for the initial purchase. It’s also 19% of $32,000 for the first year and an increasing cost afterward. Learn to think in longer terms such as five years to recognize the real financial impact.
#8 – Automate everything!
The bottom line is that software license optimization is far too granular to successfully deal with manually. Tracking your software licenses in Excel files once a year has never been enough to maintain your compliance. And this is even more of a hard reality when it comes to periodic optimization.
To have time and resources for the relevant issues, you should try to get SAM done automatically and — at least — on a quarterly basis. At Aspera, we love to help with software license management best practices, especially if you are beginning your SAM journey. Our flagship SmartTrack platform is built to cover all license types and software vendors, and accurately calculates complex metrics for every device: servers, clients, mobile, and cloud.
We ensure that your company gets complete compliance while reducing your licensing costs to an absolute minimum. So get in touch and start your journey to software license optimization today.