Moving Up the Software License Optimization Maturity Curve to Drive Business Value

Software Asset Management and License Optimization

Software Asset Management (SAM) and license optimization are critical IT initiatives for two simple reasons: the ability to substantially lower IT expenses over a relatively short period of time and the reduction of risk related to non-compliance with software license contracts. Corporations benefit with an improved bottom line and IT gains budgetary flexibility as it contributes to financial results.

SAM, as defined by the ISO 19770-1 standard, is the “processes and resources to help firms oversee and control their various assets and inventory throughout their lifecycle.” From another perspective, the Information Technology Infrastructure Library (ITIL) describes SAM as “all of the infrastructure and processes necessary for the effective management, control and protection of the software assets within an organization, throughout all stages of their lifecycle.” Software License Optimization (SLO) extends traditional SAM through automation (tools), policies and procedures such that an enterprise can make the most effective use of its software investments, optimally purchasing and allocating licenses across the organization. Software license optimization increases value to the organization while driving down costs for software and reducing license liability risk.

For enterprise IT, managing software assets is a challenging task due to the complexity of licensing models, terms and conditions offered by software vendors, the IT environment (e.g. virtualization technologies), as well as the relative ease of proliferation of software throughout the organization. Acquisition of software has often been decentralized—with very few checks and balances. For example, the engineering team may have a strong need for computer-aided design (CAD) software and is in the best position to address requirements for that purchase. Similarly, the manufacturing floor holds the expertise to understand its needs for “just-in-time” inventory management. It is easy to see how control over contracts, renewals and allocation of valid software licenses can quickly get out of control. While procurement of software assets can be decentralized, formalized asset management control measures and procedures require at least some level of centralization.

The volume of software applications deployed in an enterprise is astonishing. Organizations have a tendency to over-provision software licenses as a means of “selfprotection” against license compliance audits. Overprovisioning software is an unaffordable luxury and yet most companies have not found a way to avoid the wellentrenched habit. Other aspects of the software asset lifecycle are also remaining unaddressed. Reallocation of unused or under-used software licenses and recycling of licenses allocated to retired hardware tend to fall through the cracks. Software license optimization is impossible to accomplish without a tool that can automate processes, keep up with software license entitlements (e.g. product use rights) and license model changes, and provide alerts due the quantity and complexity of software applications in a corporate environment.

Key requirements for a robust software license optimization solution include discovery and inventory management, automated purchase order processing, financial analysis of software licensing, contract management, the ability to understand and apply license entitlements, the ability to aid selection of optimal license types, and support for software audits. Solutions that incorporate these requirements go well beyond traditional software asset management tools. Many SAM offerings in the market are mere inventory tools and/ or geared towards one category of software assets such as desktop products. Organizations need a software license optimization solution that offers a range of business-focused functionality across technology silos and also addresses cloud and virtual computing environments.

Tackling Software License Management

Defining and implementing a strategic software license optimization program can be an overwhelming and daunting task. SAM and license optimization involve moving into a position of managing software assets proactively, automatically and for the majority of software titles. Yet, it is not necessary, nor practical to tackle everything all at once. In fact, a large enterprise may decide to focus on only a handful of critical software vendors in the early phases of the project. And, most enterprises can move towards software license optimization and feel satisfied once they are managing 90% of their software titles. It is an evolutionary process and more importantly, one that shows substantive financial results at the completion of every phase of the project.

Each company has unique priorities that will help delineate a phased approach for SAM and license optimization. For some organizations, staffing up the asset management team in order to drive data collection for software inventory and purchase orders, along with defining and implementing best practice processes will be the right approach. Yet others will choose to more effectively manage five or six key vendors’ software products for which expenses are high and distribution is wide. High on the list of usual suspects are: Microsoft, IBM, Oracle, SAP, Symantec and Adobe.

ISV Market Share
Microsoft 24.37%
IBM 10.89%
Oracle 8.65%
SAP 5.72%
Symantec 2.81%
Adobe 1.66%

A silo-oriented plan can also drive priorities where datacenter server licenses may be more important than desktop software titles. Common objectives include asset visibility/control, license liability risk reduction and cost reduction. There may also be unique business unit requirements, and considerations related to applications that are deemed mission-critical to the business. Priorities for defining and implementing a SAM and license optimization program are clearly in the eyes of the beholder.

One of the first steps to be taken is to perform a gap analysis to assess the current standing of the organization in relation to accepted best practice methodologies. A gap analysis involves taking stock of what strengths and limitations exist within current corporate policies and processes, and then using that analysis to build upon processes that are in place, improving them to achieve best practice. Multiple and independent perspectives on some of the following questions can be helpful in planning a strategy for managing assets and developing processes.