Reign in the Chaos – Eight Steps to Managing Software Licensing

By Jenny Schuchert

Software Asset Managers routinely manage the complexities of software licensing, including; the choices offered by specific publishers, matching the actual use to the licensing, and keeping track of all of the necessary documentation. Sometimes, technology advances upset the effectiveness of these efforts, generating confusion for publishers and customers alike. Virtualization options and the impending cloud computing choices are currently creating a new level of chaos, forcing software asset managers to play catch-up with the reconfigurations already in place as well as prepare for additional technology changes within the next two years. While most Software Asset Managers have experience with server virtualization, the broad set of technologies called “virtual” is still in flux. The publishers are still reworking their license models and marketing options, particularly as the publishers vie for a bigger piece of the virtual/cloud pie that is expected to change how organizations conduct their IT tasks.

Sometimes, there is as much confusion for the publisher’s team as there is for Software Asset Managers. An IAITAM member shared a recent experience with me where the publisher’s consultant came in to sell and then help reconfigure the environment with a new virtualization model. Within weeks of the consultant’s visit, the auditors from the same company showed up for a forced audit. Obviously, the member was disappointed that the consultant did not mention the licensing implications arising from the new configuration. The Software Asset Manager had an expectation that if current contracts and license types were insufficient that the publisher would have included a discussion of the choices during the sales and implementation processes.

With virtualization seen as new opportunity for savings in the midst of shrinking budgets, fast adoption cycles may leave the business questions and the Software Asset Manager uninformed during the decision making process. Unfortunately, new configurations lead to licensing model changes and new marketing opportunities lead to new packages and pricing opportunities. From a practical perspective, the amount of work associated with these types of changes is broad, requiring the Software Asset Manager to examine:

  • Contract renewal schedules, which may be the wrong types of licenses and too late to stop noncompliance
  • Processes and automation, which may not be capturing the correct information to evaluate choices
  • Expertise of publisher’s representative, who may be just as confused as the Software Asset Manager
  • Internal strategic and tactical information sharing, where operations need to include the Software Asset Manager in the decision and planning processes
  • IT awareness of change, where departments may make rogue decisions to switch to an outside software source such as Software as a Service without including the normal communication channels

The risk for compliance problems and the subsequent poor savings results is greatly increased when the business aspects of technology changes are not considered in the selection and planning phases. Ordinary information sharing may be insufficient for this level of change and with everyone’s busy schedule; it is easy to miss secondary implications. Software Asset Managers need to break this cycle and get ahead on current and new licensing issues. I suggest that Software Asset Managers adopt the following 8 step program to not only license effectively and to be in compliance, but to help the organization make decisions about technology that include the SAM focused business implications.

Step 1: Research the Technology per Virtual Vendor

The timing for a push of virtualization and cloud computing couldn’t be better because the message of optimization is exactly what organization executives are looking for in tough economic times. The hot market has led many technology companies to leap into the fray, adding new products to their portfolio to capture new customers as well as generate add-on sales to existing customers. The rapid innovation and development creates a wide range of technology approaches, inconsistent terminology and vendor-specific requirements. Vendors are focused on developing portfolios of virtualization options and on building centers for cloud computing. The business management issues are not on the top of anyone’s list except for the Software Asset Manager.

To manage in this level of chaos, the Software Asset Manager must investigate the trends and each vendor individually. In order to understand the impact to licensing, start with exposure to the vendor’s vocabulary and the purported benefits for that particular vendor’s options. Reading press releases, articles in the media and listening to webinars whenever an opportunity arises are a good way to gain a general understanding. This basic understanding of the architecture and implementation of the technology is an important preparatory step to licensing the software.

Step 2: Understand IT Operation’s Plans and Impact

By gathering vendor-specific information, the Software Asset Manager is ready for step two, taking an active role in the IT planning discussions about the technology change. With the vocabulary gained from reading and listening to industry sources, the Software Asset Manager asks questions to clarify the technical and logistical aspects and begins to discern how those changes may impact software configurations. Virtualization strategies typically alter where software is located physically without changing how the user perceives the service. For instance, a virtualized desktop performs as if the desktop still has the applications installed on the desktop while they are actually on a server.

Ideally, the Software Asset Manager is a member of the IT planning team already, but if not, proving the value to the organization from a software perspective is fairly easy to justify based on the research already conducted. The participation in the planning also allows the Software Asset Manager to identify the stakeholders, the IT departmental goals as well as the organizational goals that are driving this virtualization project.

The Software Asset Manager successfully completes this step by translating the experiences and background information into SAM questions such as:

  • What features of the new technology create issues for software licensing?
  • Are current licenses inadequate or inappropriate with this technology and if so, are those changes anticipated in the savings expectations?
  • Are there terms and conditions related issues such as location, disaster recovery copies, upgrades and others that must be considered?
  • What data is going to be available to help manage the software in this new environment?

Additional questions are necessary to expose the impact to IT operational activities such as change management, testing, configuration management, version control, and disaster recovery. Each of these practices has a need for well-defined processes and controls in the environment.

Physical reconfigurations of server farms often occur in conjunction with virtualization. The Software Asset Manager must next investigate the impact to Hardware Asset Management. How are naming conventions changing to reflect virtual instead of physical servers? Is a physical audit of servers occurring as part of the process?

Step 3: Research the Software Publisher’s Licensing Choices

The software license model may have to change because the older model is no longer appropriate or does not adequately capture the usage of the software. However, the changes to licensing may also be opportunistic, seeking to preserve and build revenue, leading to unique packaging and marketing programs. The software licensing typically varies by vendor and is influenced by the vendor’s licensing model history, the scope of products in their portfolio, the specific configuration and on the perceived value of the technology. The Software Asset Manager will need to use everything learned in the first two steps in order to understand what must be licensed and to evaluate any choices. In order to license correctly, the Software Asset Manager must ascertain:

  • What is the vendor’s licensing units and how do those units apply to the configuration of software? Some units for virtualization and cloud are mixing real and virtual subsets of the server’s capabilities such as cores, sub-capacity or number of virtual servers. Sometimes there is an equation to be understood and applied. A comparison to the current licensing units determines the applicability of current licensing and the presence of a licensing gap that must be corrected.
  • How many levels or layers of licensing are required? Just like the adoption of the CAL model in conjunction with application licensing, virtualization introduces different sets of required licensing depending on the specific technology and the vendor. For instance the Microsoft virtual desktop environment requires 6 levels of licensing.

The Software Asset Manager is now ready to review the packages being offered by this vendor, along with the requirements and consequences. For instance, there may be a special price if the vendor’s entire suite is used such as “use our virtual environment and receive this pricing for our other products.” Some may offer tools to help measure according to their units and without a licensing fee. Another option might include a special deal based on previous agreements. Each option will have pros and cons that will certainly involve the price, but could also impact other licensing and how the environment is configured.

Step 4: Assessing the Choices and Determining the Impact

While other IT staffers are immersed in the logistics and workload created by a technology change, the Software Asset Manager is one of the few people thinking about the immediate business implications to the expensive and important portfolio of software. The Software Asset Manager is in fact uniquely qualified to help maximize the value of technology changes, either directly through licensing correctly or by raising the issues for other related processes. There are critical pieces of information that only the Software Asset Manager has, such as:

  • Past contractual obligations and choices, including the impact to the licensing choices
  • Goals for the SAM program and ITAM program in general
  • Impact to SAM automation, processes, policies, etc.
  • Impact to other business processes that rely on SAM

The Software Asset Manager works with security, disaster recovery, the service desk, versioning, and Hardware Asset Management, all of whom may be on the sidelines of the change and perhaps not aware of possible impacts. Since each potential impact is some type of risk (financial, intrusion, accuracy, control), the investigation required to make good licensing decisions can also deliver a significant reduction in ripple effect risk.

Of course, the impact to Software Asset Management isn’t trivial either, especially with the large financial investment that organizations have in software. Previous contracts may have to be scrapped, decisions on maintenance re-examined and savings expectations adjusted.

Overall, unless the impact to savings and the rest of the organization’s goals is assessed as part of the technology decision, the project may become highly contentious internally and externally. The damage to vendor relationships alone from poor handling of the transition can lead to the loss of strategic and tactical advantages for both sides.

Step 5: Communicate the Assessment

As the Software Asset Manager communicates the licensing assessment and describes the actions necessary to become compliant, this assessment may lead to serious concerns about the technology change. There is no sugar-coating such a message, but an objective approach instead of taking the role of a martyr is definitely recommended. Remember, we want to create a working environment where the Software Asset Manager is considered a valuable resource and automatically included during IT technology strategic and tactical planning meetings.

By sharing the potential implications with other functional areas such as security or disaster recovery, the Software Asset Manager starts productive conversations that can lead to successful elimination or reduction of risks in those areas. Bottom line, the Software Asset Manager has the opportunity to be seen as a process advocate with a good understanding of the internal workings of the organization in addition to SAM expertise.

Another positive result from communicating the licensing assessment is the education of technologists to the business issues surrounding software. This understanding empowers the technical team to ask questions in the discovery phase and to consider the business management of new configurations.

Step 6: Accept Responsibility for Changing SAM

The Software Asset Management job may indeed become harder after the planned change. Expectations as to what software costs, or what can be measured or reported, may have to be changed. With the research and an objective approach, resetting these expectations is not impossible or career-ending. Not anticipating the issues or not voicing them in advance, whether fair or not, all definitely do put the Software Asset Manager’s job in jeopardy.

In step 6, the Software Asset Manager plans and conducts negotiations for the transition of contractual language to reflect the new model, attempting to balance maximum value with successful compliance. The schedule for this work should coincide with or precede the technical implementation.

Process changes are incorporated into a project plan and implemented, with documentation updated. A review of SAM automation for accuracy and completeness in the new environment should include an investigation of any new data elements that are relevant to licensing. Any interface or reporting changes necessary will have to be planned as well.

The overall SAM program infrastructure may have to be updated, whether recommending new policy language, communicating changes to processes to end users or building in new measurements and reports.

Step 7: Become a Knowledge Source

Software Asset Management responsibilities interface with a number of departments outside of the IT department. If there are financial changes that will impact reporting, chargeback, general ledger, taxes or capitalization, the Software Asset Manager is the ideal candidate for communicating with finance about the change. Similarly, end user departments may also see changes, such losing the “department’s server” or high functioning desktop computers. The service catalog and budget changes should be proactively explained to the budget managers as well.

Communication that includes the why, such as benefits to the organization, any service improvements and anticipated cost savings, is highly recommended to forestall the more major consequences related to a negatively perceived change. Diplomacy in delivery is essential so that the Software Asset Manager is perceived as a fellow professional also impacted by the change and not the owner or cause of the change. Such negative associations are damaging to ongoing relationships.

Step 8: Do it Again

These steps need to be executed for most software vendors. The consequences to the overall software licensing portfolio are likely to be significant, although the biggest impacts will certainly be restricted to a finite subset. The obvious targets for the Software Asset Managers are the virtual/cloud vendors like VMWare, Oracle, IBM and Microsoft. However, vendor contracts for applications or for desktop software must also be examined for any licensing issues. In these cases, prioritizing the highest spend, the largest software portfolio installed and the mission critical software is the most likely course of action for the Software Asset Manager.

For those with ITAM automation that includes searchable information about T&Cs, a review of language about where the software has to be installed and the permissions is a wise choice. The unfortunate consequences to the early adopters of grid computing and their immediate loss of software compliance when the software was installed on another company’s hardware are a warning to be heeded. Let’s try to avoid such a negative and costly experience and position ourselves as informed, proactive representatives for the company’s investment in software.

About the Author

Jenny Schuchert is the Content Director for IAITAM