Software license optimization is now on the agenda of many organizations, although how it has got there varies. During the depression of 2008, the major software manufacturers realized that their halcyon days of big growth were over and they needed to find new ways of keeping their revenues up and shareholders happy.
Rather than being innovative and coming up with new and better products, they quickly focused on getting more out of their captive audience – existing customers. The tool they used to do this was the audit. Thanks to their own complex and byzantine licensing agreements, they presumed that many of their customers would be non-compliant, and much to their delight they were presumed right!
Now, Gartner reckon that you have a 65% chance of receiving one or more audits a year and with not just the big boys focused on this (Microsoft, Oracle, IBM & SAP), the chances of being hit with an audit are increasing. The impact of these is costly, both from the actual license true-up costs as well as the disruption that you will be hit with during the audit period.
Effective license position to defend an audit
As a result organizations began looking at ways of mitigating the impact of the audit by taking steps to ensure they were compliant and in particular knowing their Effective License Position (ELP). Whilst this would give them the information to defend against an audit, it is a static, point-in-time position that is out of date the moment it is produced.
As, in many cases it was a painful and drawn out process to produce the ELP, many organizations only bothered about it when an audit was imminent, meaning their licensing got a bit messy in-between. Which brings us to the present. Fortunately, organizations are waking up to the risk that their software investment opens them up to. Also, like any investment, software needs to be managed and maintained to ensure that you get the best ROI.
The way to do this is to go beyond focusing solely on compliance and optimize your software. After all, if all you wanted to do was ensure compliance, the easiest (and in some cases possibly the most cost-effective way) would be to buy too many licenses! Although this would you make very popular with your software supplier, it is not the best way to get the most from your software.
Software license optimization is much harder to do
Software license optimization takes your static ELP and coupled with your actual software usage and product use rights allows you to work out what your optimized license position should be. This obviously is much harder to calculate and requires both a tool (to automate discovery, inventory and usage monitoring) as well as the knowledge and experience to understand and interpret the complex product use rights.
The work is worth it though as according to Gartner 30% can be saved on licensing spend in the first year with a good SAM optimization program. This is supplemented by 5% savings in subsequent years, so well worth the effort.
If you are considering optimizing your software licenses and are not sure how to go about it, why not give us a call, our consultants will be happy to help.