As discussed during the IAITAM convention in Houston this month, SAM professionals and procurement managers are looking for a higher degree of automation, mainly to facilitate data collection and the workflow-driven use of SAM tools. The former, snapshot-like approach of SAM programs is outdated and more realtime thinking has come to the audience.
One of the first tools manages the upstream of SAM: License12 provides the automated conversion of software procurement documents to capture all data with a one-day cycle and populate the customers’ exclusive ContractSafe, a repository for the associated license entitlements. It can now process all vendors of packaged software, compared to the earlier version that was focused only on the ‘Big Four’, IBM, Microsoft, Oracla and SAP. It also addresses the cloud and subscription model and is a viable foundation for all downstream SAM tools.
Another notion from the convention was the focus on high value items. In that respect, hardware assets are viewed as commodities that might not require the same effort and cost for management.
An effective SAM program should provide you with two essential deliverables:
- A reliable methodology of usage discovery for the relevant vendors
- An undisputable statement of compliance
When you need to cut cost, IT directors tend to first cut programs that are internal and do not directly effect the business. Like in a recession, or due to the current US sequester, SAM might get to the short list of cost cutting. The unfortunate thing is that during such times vendors also get hits to their revenue targets that will remind them of driving sales from audits.
So, what to do then?
Depending on the state of your SAM project, you need to look for options of automating or outsourcing the SAM job. If you do nothing, you might end up with a charge as described in the latest blog of The ITAM Review: IT Asset Manager Fired for License Shortfall
Here are the steps to automate your SAM deliverables:
- Digitalize your contracts to get a consolidation of all license entitlements
- Use existing field mapping to map your discovery tools’ software IDs with the license products names from the downloaded inventory
- Report the discrepancies and fix the causes where applicable
All that is supported by the cloud service License12. You can check out the workflows on their Youtube channel.
Dreams are coming true, according to the latest press coverage on License12, the new portal for licensing agreements optimization. The idea, called one-stop-SAM, brings process automation to the nasty areas that used to create headaches: Software-Compliance.
According to the note, the process of license administration is automated by capturing all relevant details by scanning the vendor’s original contract and converting the data to a full-fledge database shaped for advanced analytics. As part of the services, License12 claims to forward the contract data with the correct identifiers (SWIDs) needed by the discovery. If the subsequent SAM tool can process workflow triggers, it can invoke a compliance check and indicate to IT management that the latest negotiations are targeting the right licensing levels. As this integration comes ‘almost’ real-time, intermediate changes are easy to capture. SAM tools equipped with features of licensing optimizations (SLOs) might even propose contextual optimization which can further be used to refine the targeted bill-of-material.
Hard to awake from such nice dreams. Check out, if they are real!
Cloud solutions differ in some ITAM-relevant issues from on-premise software:
- By the nature of contracting cloud, you pay a regular fee for the accessibility of a solution
- The metrics are less complicated and can be verified without much ado
- Associated SLAs are often immature and need to be reviewed and managed carefully
- Hidden issues are interface efforts, data recovery and transfer format, as well as future cost
Because the solutions rarely have a footprint within your court of assets, you do not require local discovery. User access is granted by the service provider and controlled within their system management. Therefore, you don’t have audits to deal with, but you should be aware about automated fees increase in case users register unplanned, if the contract allows for the same. When systems are accessed using a unique log-on-URL, you may have to set up an administration to control the access authorization via the webmaster or firewall settings.
More general consideration that may help you discover realted issues are found in the following publication by Gartner:
Five Trends that will affect your Cloud Computing Strategy
You might be looking for a comprehensive collection of best practice related to licensing optimization. After searching the market myself, I have decided to add a Whitepaper called
What you should know about software licenses … but didn’t realize until today.
Yes, it is about discovering the bumps in the road to optimal licensing. And for the first time, we start right at the beginning, at the license procurement negotiation. Because it is the origin of all troubles later …
Available both in German and English:
The ongoing debate with respect to used software disposal has received some more clarifications at court shortly before the 2012 Christmas break.
To make it clear, the whole issue only concerns licenses bought within the European Union legality, and if the license comprise perpetual rights!
Here are the Dos and Don’ts:
- If the use of single licenses can be removed from your system/device/frontend so that you cannot use it any longer under the same licensed access, you are free to resell the license regardless of prior restriction imposed on you by the license contract. This right is irrespective of the delivery, if boxed or downloaded.
- Licenses bought at a metric of multipacks, like in 3-user pack, package of 10 CALs or similar, you may only resell such packs in the same metric and cannot split into smaller units.
- After buying multiple licenses under a volume license agreement, these can also be resold as single licenses even if operated under one authorization number, once you de-install the same and want to dispose off. However, you may not act as a regular reseller and exploit the volume license agreement under false intentions.
- Licenses hosted via a client/server installation but not used in full license level, are currently not sanctioned for resale by the current court rulings. If you try to resell such license to remove shelf ware, you might have to go to court if the vendor induces an injunction. As an alternative, it is recommended to reach a compensation agreement with the vendor for such shelf ware.
If you need to know more about the details and sentences, do not hesitate to contact us! We can review your individual set-up and provide you with guidance, including the legal services by experienced lawyers.
The question makes sense for the mega-vendors that you cannot bypass.And it’s about what works and what does not. The least what you should be asking for is a certain governance that establishes a framework that you can publish in your organization. To define the content, you need to check the following aspects:
- Try to assess your leverage by determining your options to either postpone closing the deal now, to reducingthe scope or to procure the project requirement via competition. Communication leaks can reduce theleverage.
- Make a self-assured impression with respect to your knowledge of the marketplace, but do not provide informationabout details. When you establish uncertainty about your course of decision, you increase your leverage.
- If the net contract value is the baseline for support fees, point to the long-term effect of insufficient discounts.At the same time, protect important terms that allow for a flexible use or re-configuration of yourlicense estate.
- Always remain credible and do not get lost in details. It is easier to call for the right principles (e.g. payingthe region- and industry-wise net price or avoiding unreasonable true-ups for support services) which allowyou to justify a strategic relationship with the vendor.
- Demonstrate that you are under no time pressure. Make it clear that your company can reach targets withoutmaking the software investment at this point in time. Use a potential delay to the next quarter as a threat toshift the pressure to your negotiation partner.
- Unexpectedly, start questioning a clause in the framework agreement, such as the rights to transfer softwareto other entities. Show that you are following and understanding other vendors’ legal battles andcreate a philosophical debate about the legality of some of the restrictions. Ask for the complete documentationof your license entitlements and how you can get such information seamlessly.
- Check out the marketing interest of your vendor and how he views your organization in terms of a lighthouseor thought leadership. Drop names of other thought leaders to create the notion that satisfying yourneeds will have a positive impact and vice versa.
- Talk about TCO (total cost of ownership) and ask for a flexible operational model. Many young and ambitiouscompetitors offer easier implementations such as cloud-based, are being considered.
- Bring downgrades of support fees into play. Consider discussions on third party or industry collectives if youhave proper contacts. Or, simply postpone the negotiations for that reason.
- If appropriate start talking about re-organizations affecting the project that owns the requirements. Thatway, you increase the time pressure for closing on your partner’s end.
- Review the underlying root agreement for your orders. This allows you to identify areas of risk, like countryapplicabilityor audit terms, that you can address and fix when signing a new order. A discussion about suchprincipal terms and how to change them increase the time pressure on your counterpart.
- Consider this list of issues as not complete and map individual company issues to the above, to give themauthenticity. Also, include internal stake holders in the framework of your negotiation tactics and get theirendorsement prior to approaching the vendor.
Further references are given by these definitions in SearchCIO: vendor management office .
For the first time, a web-based service allows procurement professionals to rate the competitiveness of a proposal. After providing a few parameters, License12 builds a benchmark study within seconds and provides it online or as a PDF download. The service is called QuickBenchmark™ and a nominal flat fee is charged in a typical e-transaction via credit card. No other registration or software installation is needed.
What does it mean for closing a software transaction?
Buyers of software are no longer exposed to the lack of transparency that complicated models of the big vendors have caused over years. By region and industry, user organizations can make sure they are getting a competitive offer. Even amidst of negotiation, in a break, the buyer can use his internet connectivity to see where he stands and what additional effort might maximize his benefit.
Currently, QuickBenchmark supports Oracle and SAP, further vendors will be added shortly according to the provider.
Most procurement professionals are aware of their vendor’s reporting cycles which regularly provides new opportunities for negotiating good software license agreements. But end of a calendar year is always an interesting situation as everyone has particular targets for this period, even if it is not the fiscal year end of the own company.
Oracle has its half-year end in end November, Microsoft in end December. Both IBM and SAP have their fiscal year end on Dec 31st. And user organizations often close their year end of the calendar year. Calls will increase and that’s what you should be prepared for:
- Collect all points of complaints, even if you do not intend to buy new. It’s a good time to resonate performance or service issues
- If you have budget left, ask your most promising vendor what special deal they can offer for forward buying
- Review critical contract clauses that have given you trouble during the year, to change them as a pre-conditio for additional procurement
- Get a fresh compliancy statement internally and check when you have been audited last. Year end is a favorite period where dissatisfied vendors might start such discussion
- Review the recurring cost because the next maitnenance bills will hit you in the early days of January. If you need to fix that, do it now.
By irregular pattern, Oracle tends to make price adjustments that you cannot easily disguise. We recommend to our clients to subscribe to the Oracle pricing website to keep track and get early warnings when a new version of a price list is released.
If you have particular questions, donot hesitate to contact us, as we are seeing similar issues across several customers. In case you like to validate your contracts, do as we do and check with License12 for current benchmark results.