Reigning in the Cost and Complexity of Managing Software Licenses

- Vincent Smyth, General Manager, Flexera Software, responsible for EMEA and the Indian Subcontinent

Compared to other objectives, 82% of enterprise respondents to the survey (up from 72% a year ago) indicated that managing software licenses and usage is either important or very important.

Moreover, 33% of enterprises indicated they are either dissatisfied or very dissatisfied with their current method for managing software licenses and usage.

Ensuring continual application readiness

One element of managing the complexity of the software license estate revolves around Application Readiness — the processes by which enterprises package and deploy new software, and migrate existing software to new operating systems like Windows 7 &8, or to new environments, the cloud, virtualized and mobile environments.

Migration planning requires extensive planning, taking into account hardware and software considerations, application compatibility and potential conflicts between new operating systems and, and much more. Accordingly, organizations must implement best practice processes to ensure they are continually ready to deploy new applications when and where needed.

Application Readiness is the new standard for migration best practice. It includes the following six measures:

- Identify — Obtaining an accurate view of the applications that are deployed across the organisation and take stock of what is actually being used, as opposed to what is deployed. When organisations undertake a major migration, like to Windows 7, every application they port to the new environment will require time and effort, which can be costly. Reducing the number of applications that must be migrated, and the cost per migrated application must be an important goal.

- Rationalise — Verifying the need to continue to support the applications or to consolidate applications to a reduced number of products and versions, excluding from the migration process those that are not used, is important. This will enable organisations to reduce wasted IT spend on application licences that are not being used.

- Assess compatibility — This is an essential step as not all applications owned will work in the new environment. Without automation, it's difficult to quickly know which applications will have compatibility issues, and thus which will require additional time to migrate.

- Plan — The information gathered in the Rationalise and Assess Compatibility phases, gives a clear view of the magnitude of the project enabling IT to accurately calculate costs and duration timeframes. The software migration process itself represents only a small portion of the overall effort. Departments must also consider hardware requirements, software requirements, potential conflicts between the operating system and software, as referenced above. Often, insufficient hardware can cause major problems in migrations, so departments must ensure that they have enough horsepower to run the new operating system and applications.

- Fix and package — Converting applications to the required format. Application fixing and format conversion can be a time-consuming, manual process, so utilising technology to automate this and leverage investment in packaged applications can yield considerable savings, and ensure a consistent approach to Application Readiness.

- Deploy — The new application must then be handed off for deployment. Increasingly, as a result of the consumerization of IT trend, enterprises are using enterprise app stores, or app portals, as the delivery mechanism to enable employees to self-serve and access the applications they need. In order to ensure that IT retains accountability and control, the app portal should be tied on the back end to the enterprise's Application Readiness and software license optimisation systems.

Migrations don't happen in a vacuum — they occur at the same time IT must manage deployment of new applications, software updates, bug fixes and patches. To ensure continual readiness to deploy in the face of constant change, organisations must consider implementing Application Readiness best practice processes, supported by solutions and tools that can streamline and automate those best practices. Such an approach will deliver savings immediately and for future migrations and projects such as application virtualisation and Virtual Desktop Infrastructure.

Software License Audits & Shelfware Underscore Software License Optimization Need

According to the survey, 82% of enterprise respondents (up from 72% a year ago) indicated that managing software licenses and usage is either important or very important. However, 33% of enterprises indicated they are either dissatisfied or very dissatisfied with their current method for managing software licenses and usage. Because of the difficulties enterprises face managing their software licenses, increasingly they are over-using software they have (non-compliant use) as well as purchasing software they don't need (shelfware). 38% of enterprises indicated that 11% or more of their application spend is associated with applications that are overused, and therefore out of compliance, up from 26% one year ago. Likewise, this year 56% of enterprises say that 11% or more of their application spend is associated with applications that are under-used (shelfware), up from 49% last year.

And because software vendors are auditing customers more than ever, enterprises are often writing six- and seven-figure checks annually for software audit true up penalties. According to the survey, 64% of enterprises reported that they have been audited (or had a license review) over the last 18-24 months. 24% said their total true-up paid over the past year was $1 million or more. 5% said theirs was between $5-10 million. And $4% said their total true up costs were more than $10 million.

The best way to eliminate the unnecessary cost and risk associated with software license management is through software license optimization. Indeed, 78% of enterprises said they're using some sort of automation to manage their software licensing and usage today.

Why is it so easy for corporations to end up with shelfware and simultaneously be out of compliance with the software they are using? Because IT faces myriad challenges. Failure to strictly comply with software contract terms can result in the organization falling out of license compliance and being subject to software audits and unbudgeted true-up costs — that can and frequently do run into the millions of dollars per audit. To further complicate matters, employees have been known to download and run software on their own. Finally, organizations must be able to track whether employees actually are using the software — in order to understand whether they are overbuying applications — and wasting resources on “shelfware.”

Given the complexity of vendor-specific software license agreements and their product use rights, the moving targets that are users who must be assigned those licenses (software licenses must be assigned to new hires and re-absorbed when employees leave), the accountability required for software downloaded by employees — most enterprises have little visibility into their software estates, and even less control.

CIOs are faced with the following software license optimization challenges:

- Capturing accurate application usage data for key vendors such as SAP, Microsoft, Oracle, Adobe, Symantec, to name a few, and selecting the most appropriate user license types

- Optimizing software spend due to an incomplete picture of what is being used compared to what is owned

- Exposure to over/under spending on software due to the complex license models and purchase agreements created by vendors

- Reconciling contracts and license entitlements with software installations

- Managing licenses in an on-going, consistent and effective way across vendors

- Software audits and unbudgeted true-up expenses due to non-compliance

Given the size and complexity of the problem, it is impossible for IT organizations to manage this problem manually. That's why software license optimization has emerged to help the CIO and IT management, manage their IT assets to ensure continual license compliance and cost control.

These tools capture hardware and software inventory and usage data across the IT estate, and reconcile this with purchase order data and the product use rights found in the software license agreements — to determine an accurate license position for each vendor. This provides organizations with a picture of not only the software that it has and is using — but also a report on how software licensing could be optimized so that the company is only buying what it needs and using what it has.