Good procurement templates, a moving target?

Peter February 7, 2014

Every once in a while I hear the question regarding the ‘most proven’ or ‘best practice’ for writing procurement RFPs or agreements. Unfortunately, there is no one-size-fits-all, and it can really get to you when trying to research what’s useful and what’s not.

The most effective way for improving your practice is to set the priorities first:

  • What’s your biggest process risk (or least control) when using software?
  • Who are your vendors with highest financial impact?

At the crossroad of these two aspects, you should evolve your effort for improvement: Search the web and respected blogs. On this one, you find my research papers in my archive on the right panel of this blog. One of my favorites is the paper on metrics: Eight Criteria for Evaluating Software License Metrics 2011

Once you have made some improvements, do not forget: As licensing is a moving target, you need to re-calibrate your templates regularly, review them at least once a year. Otherwise, the vendors will surprise you with new gotchas that you don’t want to pay for! If you like to be in a comfort zone, you may use License12 services for contract repository. It includes QA processes that can protect you from unexpected risk.

What to wish for Christmas?

Peter December 23, 2013

In software licensing you rarely think of a free wish or what would make you feel like Christmas. The environment of IT and, in particular, of license models and rules is far from wonders, for the most part.

But think of a few drastic changes that are no wonders in other subject areas, like the car business:

  • Only pay maintenance for the software you use
  • Only start paying maintenance when you use the software productively
  • Let the vendor send a fresh vendor price list when a new license product is launched
  • Get advance notice from the vendor about policy/model changes, including hints what that means for you
  • Sell off unused licenses in a second-hand market
  • Shift the burden of proof for software compliance to the vendor
  • Let the vendor execute your product update to remove faults and return a tested live system as part of maintenance

It might take years to get there, but Christmas is a time when such wishes can be pronounced, for the least! Until this becomes factual, some of you might drop by License12 to get a first sight of what transparent licensing can look like.

Merry Christmas and a Happy New Licensing Year!

Lizzy's Christmas Dreams

Increase your discount at year end in your SAP negotiations

Peter November 18, 2013

Recent customer cases show that vendors are granting high discounts during the year-end rallye, but they also tweak terms that are to their own advantage. For customers, it is essential to carefully check proposals to avoid unpleasant surprises. It may not be intentional, but the complexity of rules make it easy for mistakes: Customer reported that in a recent offer the vendor more than doubled the list price to grant a 90% discount. The effective discount was only 77% which could be corrected after a simple call.

iStock_learn_lead_000018373145XSmall

What does it mean for you?

End-of-year are hectic and workload becomes overwhelming especially when it gets close to the seasons break.

Use external advice to check what requires your attention. If you cannot engage directly, use web-based advice like License12. There, you only upload the proposal and get a complete validation and an optional benchmark that tells you exactly if you have achieved well. It saves time and money and shows your vendor that you understand licensing. Even when it gets complicated!

Why pay 16% more for software every year?

Peter November 5, 2013

After a new verdict in a case between SAP and susensoft in Hamburg, Germany, the applicability of selling or buying ‘used software’, as allowed earlier by a court ruling of the European High Court in 2012, have been re-confirmed. As the software efficiency reports 2011 for the US and the UK suggest, this will have an impact to user organizations that suffer from 16% shelfware every year. The remaining question is how to identify the right licenses and how to execute the adjustment with the vendors.

Now, Doctor-License is offering a tiered consulting approach to facilitate the execution of software re-use or retirement which is expressed in the following promotional offer:

ShelfwarePromo_DE

The English version will follow shortly.

 

Nach einem neuen Richterspruch zu einer Klage zwischen SAP und susensoft in Hamburg, Deutschland, ist die Anwendbarkeit von Gebrauchtsoftware für den An- und Verkauf erneut bestätigt worden, nachdem bereits die Entscheidung des Europäischen Gerichtshof in 2012 diese Möglichkeiten für dauerhafte Lizenzen gezeigt hatte. Nach den Software Efficiency Reports 2011 für die USA und UK wird dies alle Anwenderfirmen betreffen, die laut Report jährlich 16% ungenutze SOftware verzeichnen. Die offene Frage ist die richtigen Lizenzen für die Stilllegung auszuwählen und die notwendige vertragliche Anpassung mit dem Vendor zu erreichen.

Doctor-License bietet hierfür jetzt einen gestaffelten Beratungsansatz, um die  Wiederverwendung oder Stilllegung zu erleichtern. Details finden sich in folgender Angebotsbeschreibung:

ShelfwarePromo_DE

Die englische Version folgt in Kürze.

Interessante Vorträge liefert aktuell susensoftware im Rahmen seiner Roadshow im November in Hamburg, Köln, Mannheim und München: Roadshow

Software business will only change if you change!

Peter October 4, 2013

With the advent of cloud computing, customers were expecting that new competition will change the attitude of vendors. This is largely not the case. Even the recent announcement of SAP to allow customers exchange shelfware against something more useful, shows not much change of attitude:

  • Allowances are treated like mercy by the vendor
  • Top discounts are taken away if customers try to execute on vendor promises
  • The lock-in dilemma is now spreading to cloud solutions as well
  • More cases of dispute are taken to court or threatened to do so

dsag2009

Therefore, the principle judgement of Peter Wesche during the 2009 German user group meeting remains unchanged and still represents an excellent summary of how you can prepare for better software investment management. See three parts of that speech: Guidance

New SAP allowances create exciting options

Peter September 23, 2013

There has been a lot of discussions among user groups and SAP’s license model. The most pressing issue lately was SAP’s reluctance to let user organizations only pay for what they use.

Calculate the Savings with Clipping Path

The full story: Over years, SAP has been selling its software agressively, using high discount options to create shelfware, and to establish recurring cost by charging maintenance also for unused licenses. User organizations have called this practice questionable. Now, SAP starts to respond to their demands and has launched two important announcements:

  • Allowance to exchange licenses towards a hybrid model of SAP on-premise and SAP cloud solutions. See press-release.
  • Allowance for companies to de-commission licenses they do not use and re-calculate the associated maintenance fee. See press-release by dsag.

Both options are significant, as they allow all user organisations to exchange their unused software against more useful ones during a new purchase. The second announcement allows even to reduce maintenance cost when not buying new software, however applying a re-calculation of the old transaction which in many cases does not yield any refund or reduction at all! For more information, see CCC_Tag2_Ofner_Braendli

If you want to find out about your specific ability to reduce cost, call +49 6205 922885 for Doctor-License! We offer a 20-min quick assessment on the phone for free!

 

Seit Jahren gibt es eine Menge von Diskussionen unter Benutzergruppen über das SAP-Lizenz-Modell. Das dringendste Problem in letzter Zeit war SAP’s Weigerung, ihre Kunden nur für die Lizenzen zahlen zu lassen, die auch verwendet werden.

Die ganze Geschichte: Über Jahre hat SAP den Markt überverkauft, indem mit hohen Rabatten Shelfware erzeugt wurde und die laufenden Kosten durch die Wartungsentgelte auch für ungenutzte Lizenzen erhöht wurden. Anwenderorganisationen fanden diese Praxis fragwürdig. Jetzt beginnt SAP auf ihre Forderungen reagieren, mit folgenden wichtigen Ankündigungen:

Beide Optionen sind signifikant, da nun alle Anwenderorganisationen ihre ungenutzte Software gegen nützlichere während einer Neuanschaffung austauschen können. Die zweite Ankündigung ermöglicht sogar die Wartungskosten zu reduzieren, wenn nicht den Kauf neuer Software damit einhergeht. Allerdings erfolgt dies mit einer Neuberechnung der alten Transaktion, die in vielen Fällen überhaupt keine Gebührenverringerung erzeugt! Weitere Informationen auf CCC_Tag2_Ofner_Braendli

Über Ihre Möglichkeiten, Kosten zu senken, informiert Sie unter +49 6205 922885 gern Doctor-License! Wir bieten eine 20-min telefonische Schnelleinschätzung kostenlos!

License12 now adding detailed entitlement documents to track rights to functions

Peter June 11, 2013

One big dilemma of licensing is to get from the licensed product to what you really own in terms of features and functions. I have described the value of proper licensing and refered to possible solutions in my speech in Houston this April, see IAITAM2013SPRINGACE_PPT_pwesche

The SaaS-repository License12 now adds functionality in their recent release 2.0 to allow browsing your licenses down to the functional details.

It’s cool, check it out!

Magnifier over Figures

Ein großes Dilemma der Softwarelizenzierung ist es, für die lizenzierten Produkte Hinweise auf die Merkmale und Funktionen zu erhalten. Ich habe den Wert eines ordnungsgemäßen Lizenzmanagements beschrieben und verwies auf mögliche Lösungen in meiner Rede in Houston im April dieses Jahres, unter IAITAM2013SPRINGACE_PPT_pwesche

Der Service License12 erweitert nun seine Funktionalität in ihrer jüngsten Version 2.0, um ein effektives Durchsuchen Ihrer Lizenzrechte bis hin zu den funktionellen Details zu ermöglichen.

Es ist cool, probieren Sie es aus!

Software Procurement Automation on the Rise

Peter April 30, 2013

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.

BreakfastTalk

Während der IAITAM-Konferenz in Houston wurde  in diesem Monat diskutiert, wie SAM Fachleute und Einkäufer zu einem höheren Grad an Automatisierung gelangenen, vor allem, um die Datenerfassung und die workflow-gesteuerte Nutzung von SAM-Tools zu erleichtern. De bisherige, Snapshot-orientierte Ansatz der SAM-Programme ist veraltet und mehr Echtzeit-Denken greift beim Publikum Raum.

Eines der ersten Werkzeuge verwaltet die stromaufwärts von SAM: License12 bietet die automatisierte Umwandlung von Software-Beschaffungsdokumenten, indem alle Daten innerhalb eines Arbeitstags extrahiert und in den ContractSafe des Kunden, einem Repository für die zugehörigen Lizenzberechtigungen, übertragen werden. Nun können alle Anbieter von Softwarepaketen verarbeitet werden, im Vergleich zu der früheren Version, die nur auf die ‘Big Four’, IBM, Microsoft, SAP und Oracle fokussiert wurde. Der Internet-Service ist im Abo-Modell verfügbar und bietet eine tragfähige Grundlage für alle nachgeschalteten SAM-Tools.

Eine weiterer Denkimpuls der Konferenz bestand in der Fokussierung auf die großen Investitionen in Software-Lizenzen. Damit verglichen erscheinen Hardware-Assets wie Rohstoffe, für die ein gleicher Aufwand für die Verwaltung nicht angemessen erscheint.

What to do when SAM gets under financial pressure?

Peter March 10, 2013

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:

  1. Digitalize your contracts to get a consolidation of all license entitlements
  2. Use existing field mapping to map your  discovery tools’ software IDs with the license products names from the downloaded inventory
  3. 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.

One-Stop-SAM the new enigma!

Peter February 13, 2013

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.

OSSsmall

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!

How react in ITAM with more cloud solutions gaining traction?

Peter January 25, 2013

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.

For automation of license management, you need to check how your cloud contracts are treated in the respective interface to the buying side. Cloud solutions regularly do not provide perpetual rights to the software usage and you need more control of deadlines for renewals and other allowances.

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

New approaches to software licensing savings: Whitepaper

Peter January 8, 2013

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:

WhitePaper_DE

WhitePaper_EN

How far can you go with reselling used software licenses?

Peter December 22, 2012

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.

 

How can you improve your vendor relationship?

Peter November 16, 2012

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 .

Software price benchmark now on the web

Peter November 2, 2012

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.

Year end provides opportunities, even if it’s not your vendor’s fiscal year

Peter October 29, 2012

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:

  1. 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
  2. If you have budget left, ask your most promising vendor what special deal they can offer for forward buying
  3. Review critical contract clauses that have given you trouble during the year, to change them as a pre-conditio for additional procurement
  4. 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
  5. 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.

New Oracle Pricing for BI and core products, technology and eBusiness-Suite!

Peter October 14, 2012

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.

Smart Software Compliance Remediation

Peter September 28, 2012

The resaon to enter into larger scale SAM programs is to reduce non-compliance with a high probability. 100% assurance is not achievable with today’s complex licensing rules.

But before investing heavily into an internal admin program, CIOs might look to the issue from the other side: How do we manage when caught non-compliant?

This is where vendor management comes into play, both from a general and from a contractual perspective:

  1. Does my vendor value me as a customer and my brand?
  2. Is there additional license demand that can be used as a lever in case of non-compliance?
  3. Have I negotiated the software verification rules to determine when non-compliance occurs un-intentional?
  4. Can I prove to my vendor that I am not deliberately lagging with my controls?

These 4 questions give you directions to establish the notion of being a good guy, even if you do not have the best SAM program in place. Or if you rather focus on improving the license price, when using optimization tools like License12. To further reduce the impact of remediating the non-compliance, there is a fifth very key question:

Did I negotiate a minimum discount for licenses to balance the over-usage, in case of no leverage?

 

 

How to save most from your software compliance problem?

Peter September 13, 2012

When talking about cost risk in software, many deplore the compliance problem being escalated by ever more complex licensing rules invented by the big vendors. In early days, you only had to count your users and look at the total you had licensed.

Experienced CIOs ask the question how to best circumvent the issue and to define a strategy that goes right to the point: the vendor’s hunger for revenue. They know that multi-billion software giants need to feed a huge crowd of sales staff and come up with creative ideas how to ask for more money. While there is not much new problems solved by software, auditing has become particularly popular after the 2008 economic melt-down and is effecting all companies who do not define a strong methodoly to resist to such ideas.

We have found three components to get to the highest savings:

  1. Put new emphasis on the procurement effectiveness for better pricing to shield the baseline
    Get away from price-holds to price-dropping, from maintenance cap to maintenance freeze or decrease, from transfer injunctions to free resale of unused software. Besides such paradigms when looking at the terms, also optimize the real price by context-oriented benchmarking. Some providers, like License12, are even offering such capabilities via the web.
  2. Track your entitlements over time and be rigorous about license migrations for perpetual licenses
    Re-naming and re-bundling has become a standard vendor practice. What happens with the entitlements that were associated with the old products, are we sure we do not loose them? Looking closely, you often find no better functionality in the re-named items but it breaks your monitoring capabilities. Who in all honesty wants to keep track with such details? But it is not only for marketing, it is for printing money, because by re-naming you are more likely to buy more and re-license entitlements you already hold, e.g. by changing the metrics. When the vendor offers you to migrate existing licenses, be very careful about the return!
  3. Tackle the vendor compliance verification methodology
    Noone will question the vendor’s legitimate right to protect their intellectual property. But do vendors explain their intent when selling licenses at 10 different metrics in one transaction? What is the cost of ownership to keep tracking such licenses and is it fair to prescribe the monitoring vendor-based audit programs? And how about the confidentiality that may be at risk when running un-documented audit scripts? Who is auditing the auditors?

Cost-conscious CIOs should prepare their organizations to address these three tasks and to educate themselves in order to perform effectively with respect to the intense climate generated by software audits and their resolutions.