By Kirk Clausen
In an earlier post, I had stated that the end goal should be a combination of Software License Optimization tools and processes that enable the organization to proactively optimize their software spend on a continuing basis. This is a fundamental change from the traditional software asset management (SAM) approach, which is to provide a reactive, point-in-time snapshot of their software compliance position. By focusing only on license compliance, opportunities to cut back on software expenditures are often overlooked. True savings on software happens when you know exactly what you have (inventory, license entitlements and in certain cases, usage data) and only purchase what you need. The key is to determine what an organization really needs. For example, why pay annual maintenance for software that is not being used? Why buy licenses for software that is installed but does not need an additional license because of product use rights such as ‘right of second use’?
To emphasize this focus on software license optimization, here are some scenarios that I frequently see where organizations are spending more on software than is needed.
Examples of Software Overspend
Product Use Rights and License Consumption
One of the most common shortcuts taken during a typical license compliance snapshot is looking at the inventory results and matching a license to each installation of an application. In reality, this 1-for-1 methodology generally results in license overspend. An optimized approach to license management of commercial software must consider whether that installation is actually consuming a license based on product use rights that are provided by the software license agreement.
Here are a few examples:
- Multiple Installations Right– In this scenario, a computer can have multiple versions of the same software product installed and only consume a single license.
- Right of Second Use– In this scenario, an employee can have a software product installed on a desktop computer and a notebook computer and only consume one license.
- Virtual Use Rights– Many expensive software products that are installed in the datacenter have different license consumption rules when the software is installed on a virtual server. For example, Microsoft Windows Server 2008 Enterprise allows up to 4 virtual servers on a physical host and only consumes a single license – rather than consuming one license for each virtual machine.
While many organizations are aware of these and other product use rights when they begin their software asset management initiative, they often do not have the time or the tools to accurately apply these rights. With the focus being on software license compliance rather than license optimization, the end result is that license entitlements are not fully leveraged and too many licenses are purchased.
Microsoft MSDN Licenses
Most organizations take advantage of the Microsoft Developer Network (MSDN) subscription model for their internal IT Engineering/Development teams, but do not have these subscriptions in sync with their overall SAM initiative. The end result is overspending on software licensing through the following scenario:
- Software is procured through a Microsoft Volume Purchase Agreement, but independently the IT group is installing the same software under an existing MSDN subscription or buying an additional subscription for that same software. (See another recent blog on Microsoft product use rights and MSDN licensing). Similar to product use rights, many enterprises simply do not have the time or tools to accurately inventory and measure their MSDN usage and end up doing a true-up of existing software installs using their Enterprise Agreement (EA) or Select volume agreement.
Concurrent Licensing for Engineering Applications
Concurrent licenses for engineering applications can be extremely expensive (both the perpetual license and the annual maintenance). Yet most enterprises only look at the current license position as a reaction to denials of service, instead of proactively looking at how many licenses they really need. Most organizations can realize a significant savings on their software spend by ensuring that they are effectively using the concurrent licenses that they already have. The following chart is an example of this scenario. The horizontal line at the top shows that over 120 concurrent licenses are available, but the usage bar chart below this shows that for the given time period, the peak number of licenses that were checked out was less than 45. This is a large overage of licenses and significant savings could be achieved during the next maintenance renewal, or by remixing the unused licenses to other products from the same publisher.
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Organizations that invest in a software asset management and license optimization program typically see cost savings that pay for that investment many times over. Best practice SAM processes and the right software license optimization tools are critical to success.
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