What is Software License Optimization?
The short answer is: Software License Optimization is the ongoing process of proactively managing the software estate, throughout the software product lifecycle, to maximize utilization of assets, minimize costs and maintain license compliance. It requires reconciling software installations (inventory data) with what the organization has purchased—license entitlements, taking into account the vendor's product use rights that determine how the software can be installed and/or used. It's important to remember that software purchases don't provide 'ownership', but merely the right to use the software under the terms of the license agreement.
Software License Optimization extends beyond traditional software asset management (SAM) to incorporate strategies, and the tools to support them, to fully leverage these license entitlements—software product use rights. This allows the enterprise to minimize license consumption, calculate an optimized license position and reduce ongoing costs.
Software License Optimization also encompasses other strategies to optimize licensing, such as tracking and analyzing usage data to determine the optimal named user license type for each user and finding unused software for reallocation to other users. Different strategies are required depending on the vendor's license model and the use rights that go with it.
Going back to the original question—what does it take to achieve software license optimization? At a high level, it is a 3-step process:
- Collect inventory data for both hardware and software assets and perform an application recognition and normalization process to generate the list of installed software titles, versions and editions per machine (desktop, laptop, server, virtual machine). Normalization is simply the process of creating a list with consistent naming for all of the hardware and software assets—e.g. Adobe Acrobat Professional version 8, instead of Adobe Acrobat Pro version 8. For the software titles, we are only concerned with the ones that require licensing. This step tells you—'what do I have.' It provides enhanced visibility into the IT estate, but doesn't offer much in terms of real business value. Recognition and normalization don't even tell you whether you are in license compliance. For that, we need to go to the second step in the process.
- Collect purchase order (PO) data from the procurement system to understand basic license entitlements—'how many licenses did I buy,' and compare that to the output of step 1—'what do I have installed (or in use) in my environment.' This produces a baseline license position that tells you whether you are in compliance with your license agreement. The business value at this stage is reduced software audit cost and risk, which is significant, but more can be done to optimize the software estate— go to step 3.
- Apply the appropriate license optimization strategy, depending on the vendor's license model, terms and conditions. For some vendors, such as Microsoft, Adobe, and IBM, this involves applying vendor specific product use rights to reduce license consumption and ongoing software costs. For other vendors, such as SAP, this involves detailed usage tracking and analysis to determine the lowest cost Named User license classification that meets each user's needs. The output of this step is an optimized license position. The business value of this last step can be huge because optimization can dramatically reduce software costs for new software purchases, annual true-ups and maintenance renewals.
Now we will delve deeper to answer the question—what does it take to achieve Software License Optimization, in more detail.
It's all about People, Process and Technology
People, Process and Technology—as with traditional SAM, these are the cornerstones of a successful Software License Optimization program. Let's briefly consider each one:
- People—this encompasses defining the team and their roles and responsibilities for managing the software estate—from IT procurement to IT operations and compliance. Looked at more broadly, it also involves gaining executive sponsorship and key stakeholder buy-in to the program to enable both short and long term success. It requires the determination of the organizational structure for the Software License Optimization team and how that organization interfaces to the rest of the enterprise. Software License Optimization requires an investment in people to staff this critical function. However, this is often lacking and existing IT staff frequently doesn't have the bandwidth to tackle the job (see next page). Another issue is that in many organizations, there is a lack of licensing knowledge. This is an area where the right technology can add significant value due to built-in knowledge of license types, terms and conditions, and volume purchase agreements. Make the investment in people to ensure success.
The Importance of People to Software License Optimization Success
In June of 2012, a leading European banking and financial services organization, employing close to 200,000 people worldwide, decided to embark on a Software Asset Management (SAM) and License Optimization program. The customer was in the middle of a Windows 7 rollout, and had started to investigate what benefits could be achieved by implementing a SAM program. The initial plan entailed a pilot project covering the desktop environment of a single, selected country involving approximately 7000 users. During the first phase of the program, the company decided to focus on just 14 software products, although the total number jumps to 64 when you consider all of the versions and editions.
By September, because of staff constraints due to other IT projects, the customer had not been able to assign full time resources to the delivery of SAM and license optimization, and as such had seen little to no tangible benefits from the program. The company brought in a Flexera Software consultant to act as an interim Software Asset Manager within the organisation, with the following impact:
Week 1 – The consultant started off by looking at true license consumption as opposed to just matching licenses to the number of software installations. Utilizing the Product Use Rights Library built into the Software License Optimization tool, they applied the license entitlements afforded to the customer by their volume purchase agreements, to calculate an optimized license position. Use rights such as downgrade rights, upgrade rights, second-use rights, etc. were used to reduce license consumption and realize a £74,000 cost avoidance on several of the software products.
Weeks 2 to 3 – The focus was on the WinZip application during weeks 2 and 3 of the engagement. More than £200,000 worth of cost avoidance was achieved by identifying purchases that the customer was unaware had been made, uncovering additional purchases that were wrongly classified, and by taking advantage of the available upgrade rights to the current version.
Week 4 – During the fourth week of the engagement, the consultant identified a huge exposure on Adobe Acrobat Pro, and by using the Software License Optimization system, could see that there was very little usage of the application. Unused installations—those unused for at least a 90 day period, in this case, were immediately removed. This eliminated a license liability of about £206,000.
All together, the customer achieved cost avoidance in the region of £500,000 (about $800,000 USD) within a 4 week consulting engagement.
The goals of the SAM and Software License Optimization program have now significantly changed for the customer, with a fresh impetus by senior management to extend the scope to cover worldwide operations and also incorporating server environments. Their goal is to achieve the maximum possible cost savings and cost avoidance for software licenses and maintenance in the coming year. The investment has been made for additional resources within the company's software asset management team and processes are now documented and being managed.