Make the domain of licenses and subscriptions manageable
Many organizations unknowingly and unintentionally commit licensing violations - often with a hefty back payment due. Not surprising, as violations are easy to occur if you do not know what has been agreed upon in your software licenses with the software vendor. As a Software Asset Manager (SAM Manager) it is your job to be aware of all the agreements and conditions, but this is a complex matter. How do you keep that huge number of contracts manageable?
For a SAM manager, it is all about control and insight. You always want to know what software you have, what you can do with it and how the software is used. That is after all what you are assigned to do. The underlying reason for such a software asset management strategy (which makes the CIO and the CFO happy): to discover hidden costs and thus avoid fines and back payments. These usually come to light with an audit, but if you have your software administration in order and even pro-actively submit the software administration to your major software vendors, you do not give reason to conduct an audit. If the audit does happen, then at least you are well prepared.
By always having insight, you rule out that you exceed your annual budget by an unexpected back payment. It is also the basis for optimizing costs, effective spending of your budget, making new purchases and any other business decision that is taken regarding software in your organization. In short, there are opportunities everywhere, but because of the complexity of their licensing landscape, many organizations miss out on these opportunities.
But how complex is the licensing domain? It starts with the number of licenses you have obtained as a company. The bigger a company, the more software contracts there are. An average company has about three hundred and fifty vendors, each delivering ten to three hundred products. For enterprises, you can easily multiply this number by ten.
In addition, each product has its own terms and conditions, which tell you what your rights and obligations are. This varies by vendor: Oracle has different requirements than Microsoft, for example. Moreover, many suppliers refer in their contracts to the general conditions which are available online and are updated regularly. Obtaining overview and insight in this huge mountain of contracts, terms and conditions is obviously a huge challenge for any SAM manager.
More and more organizations now also use cloud solutions in subscription form, often in addition to the existing license agreements. In the previous blog, I already explained that this development does not necessarily reduce the complexity of your software landscape. In fact, managing your software and the cost is even more important.
As SAM manager, especially at enterprise level, you have to deal with a huge number of licenses and subscriptions. The big question: how do you manage this without losing overview? A software asset management approach starts with making difficult choices. The reality is that you can never manage all those thousands of products from hundreds of suppliers simultaneously. The good news is that you don’t have to. Focus on the three main suppliers, where you spend the most money on. These have the greatest impact: the higher the costs are, the greater potential back payment or penalty to a license violation will be. This information can be obtained from your capex / opex analysis.
Do it fully and firmly. There is no such thing as being “90 percent in control”, the 10 percent of the conditions that you miss can make up 90 percent of the risk. This requires proper depth, but purely focusing on key vendors such as Oracle, Microsoft, IBM and SAP makes it a lot more manageable.
The next step is to gain insight into all licenses or subscriptions and the associated terms and conditions of your three largest providers: the contract analysis. For most companies, it begins with the purchase of software asset management software, such as Snow, Flexera, Landesk, iQuate or Matrix42. The choice for the right SAM software is precise (more on that in a future blog). Each tool has its own characteristics: which tool fits your company best strongly depends on the data requirement for your licenses and subscriptions, which you can derive from the terms and conditions mentioned earlier.
Obviously, only the purchase of such a tool is not sufficient to take over your contract analysis: if the license information is not uploaded and configured correctly, nothing comes out. Moreover, a tool alone is not sufficient to determine your complete license position. Part of the data collection you can automate, but you are still dependent on specialist knowledge and information that you get from other sources. The difference between being or not being compliant is in the details and sometimes in those details that cannot be determined technically. Consider hosting or use by unauthorized users or user groups. This can often only be detected by experts who read all contracts.
Treat it like a regular financial administration
Real manageability arises only if it becomes an ongoing process - just like a regular financial administration. Analyzing your licenses, subscriptions and charges and put them in a list once is nice but of little value in your ever-changing software landscape. Changing conditions, new products, your whole business model transforming - an organization is constantly changing and it all affects your compliance position. Only when you constantly and completely monitor your maintenance contracts and subscriptions, you get a complete insight in the true cost of your software.
This article is also published in Dutch on Computable.nl .