It was not long ago that technology became an important part of the workplace. As soon as companies realized it could be the major differentiator for their organization, there was a larger focus of investment into IT programs. However, when the economy began to struggle, so did IT budgets. Many were frozen and the IT department had no other choice than to work with what it had.
Now, there is a different cycle developing. Companies are starting to understand how technology directly ties to the bottom line of the business. Technology is now being handled as a business asset and requires the same due diligence as other significant investments. Pressures around the investment are building both internally for cost justification and externally through publisher audits and compliance programs.
Software, just like any physical asset, has real value. As a result, a software asset or license has to be managed as you would manage any other business asset.
This may leave you asking many questions. Which industry trends should your company implement, and how can you gain internal support? How will this impact your bottom line? And how will you manage these new assets and plan for the future?
This is an exciting time to be in the IT industry – technology and licensing are changing rapidly, and you can get a lot more out of your IT investments. There are new products and services that may be just what your IT department needs to enable business productivity. The key to maximizing your company’s IT investments is an adequate understanding of the full lifecycle of the technology, from procurement planning to end-of-life. Trends to be aware of include:
Contractual obligations: As technology changes, so does the way we deploy it. It is necessary that you understand the licensing implications before you deploy software. It is possible you could do all of the work to finish a project deployment and then realize your licenses do not cover the new configuration, but new licensing may be cost-prohibitive. Then what would you do? Be aware of your licensing programs and strategies. Make it fit for today AND tomorrow.
Drastic technology changes: Microsoft has released licensing changes with most of their core products. As technology changes, you also need to understand the impact to your licensing. A higher level of detail is required around Windows Server infrastructure, SQL Server and Office deployment.
One recent technology change is the initiative to integrate with the cloud. Azure is Microsoft’s cloud offering, which is very flexible in how it can fit with your environment. You can maintain the data center infrastructure you already have while supplementing with virtual data storage. When looking to gain internal support for the cloud integration, explain that this technology is an infrastructure as a service (IaaS), Test/Dev environment and much more.
Office deployment considerations: We live in a world of fast-moving information. Users want access to technology from everywhere and from any device at any time. Microsoft Office is not just installed on a single desktop at work anymore. It is being accessed through a virtual desktop infrastructure as a published application; with technology like Remote Desktop Services or Citrix XenApp, from an iPad or any other tablet or device. Roaming Use Rights, a Software Assurance (SA) benefit, provide users with the flexibility to access Office off-premise. Some of Microsoft’s Office 365 offerings also provide a licensing avenue that allows the incorporation of multiple devices per user, covering up to five (5) devices through the user-based licensing subscription.
Complexities of SQL footprint: SQL Server can be intimidating to discuss due to its complex licensing model. There are many considerations when looking at the best way to apply licensing to your SQL footprint. Many Microsoft customers have SQL in both the physical and virtual environments. There are multiple programs in which SQL licensing can be purchased. How do you choose the correct one? There are also multiple ways to license the exact same environment. Which licensing model makes sense for your environment, needs and budget?
Many of our clients find themselves completely changing their licensing around SQL due to consolidation and virtualization. Clients are able to deliver a technology feature such as high availability through the virtualization platform instead of through the application itself. We have found that it is necessary to go through a process that focuses just on the SQL licensing. It is important to take a look at every SQL install in the environment, in relation to licensing entitlements, to get a clearer picture of what strategy makes sense moving forward.
CAPEX vs OPEX and cash flow: Now that the economy is beginning to improve, there is a renewed focus on Capital Expenditures (CAPEX) and Operational Expenditures (OPEX) of IT departments. CAPEX is a business expense that is incurred for future benefit, while OPEX refers to the cost of doing business. Generally speaking, the purchasing of licenses would be considered a CAPEX allocation, while maintaining your software licenses is part of your OPEX budget. Allocation of assets, in relation to Microsoft licenses, can be categorized in different ways depending on the organization. Software Assurance (SA) adds complexity through deployment rights, affecting the validity of traditional allocation methods.
As software is starting to be treated as an investment and not simply an expense, many businesses are looking into how much they’re spending and what the appropriate allocation values are. This value is not spelled out in the contract, so it is important to find a licensing partner that can help your finance and audit teams determine the correct approach for your organization.
Like any business entity within your company, be sure to keep open communication with your internal finance department. Products on the Customer Price Sheet (CPS) as part of the Enterprise Agreement (EA) can be deployed throughout the year and handled via true up 30-60 days before the anniversary date. While you do have the option to deal with licensing once a year, no CFO wants a large purchase surprise. You will need an estimate of what the figure will look like, so suggest having quarterly meetings about your current deployments to prepare for your annual true up. Depending on the size of your company, it may make sense to have an established team to take ownership for this responsibility.
Managing Your Assets
The management of your software assets is possibly one of the most impactful industry trends for your IT budget. Spreadsheets are no longer the standard for managing your licenses. Now there are systems specifically made to help you make the most of your time and your investment.
Software is a significant investment, and many companies are finally seeing that they need to treat it as one. Here is the process you should use when managing your assets:
- Discover what you are entitled to by completing an entitlement analysis. Create a comprehensive licensing position document based on your normalized Microsoft License Statement (MLS).
- Create a dynamic roadmap that will align your technology goals with your licensing requirements. Make sure you understand how your software is being used and determine if there are ways to optimize your licensing purchases. And make sure you are taking full advantage of your Software Assurance benefits.
- Analyze your scenario, and create a concise representation of all relevant licensing models. Should you add technology? What about downsizing? Based on the information you have, predict what your future needs may be.
- Create your justifiable licensing strategy and ensure you are in the right agreement.
When you are managing your software assets, you need an asset management solution that allows you to see a real-time view of any specific license and manage it with ease. With such a system, you can create consistent policies and procedures and enforce proper multi-level authorizations.
To save money on software, you should make sure that you are utilizing the assets you already have available to you such as assigning specific licenses from bulk licensing purchases to different areas of your business and moving licenses between. So, if you discover that you have unused software assigned to your finance department, you can transfer those licenses to a different business entity that needs them.
Like every other aspect of your business, planning for the future is important for your budget. By tracking the life cycle of each license, you are able to gain strategic intelligence and plan for the future.
Your software is an investment and needs to be treated like one. Traditional allocation between CAPEX and OPEX needs to be re-evaluated since technology and licensing has changed drastically.
When seeking internal approval for your software acquisition, it is important that you thoroughly understand your agreement and all of the licensing included within it.
One of the most important things you can do to improve your IT bottom line is manage your software assets. You need to understand where your money is going, where your software is, and make sure you are always in compliance. A software license management system can help you easily view your software assets in real-time, manage them and plan for the future.