The Hidden Surprise in Microsoft Software Assurance

 I have a confession to make...I am revisiting one of my old blog posts. But, when you've been blogging on a topic for over 14 years you would be amazed at how "everything old...is new again" and that applies particularly to Microsoft Software Assurance (SA).

Software Assurance (SA) is known by many as an upgrade and added benefits plan that gets added to a license when it is purchased (if you purchase SA or for any software license purchases made on an Enterprise Agreement). It includes a number of benefits but of particular interest is License Mobility on application servers (such as Microsoft SQL Server) which is the benefit that can help control the number of licenses required in a virtualized setting.

But what you may not know is that Software Assurance (SA) essentially refreshes your underlying license every time you renew. So, the license you bought in 2005 for Microsoft SQL Server (and maintained with SA) will get renewed yet again at your next renewal - to the most current Microsoft Product Terms.

Why is that important?  Typically the licensing rules that apply to software is dependent upon the version you have installed.  However; even if you have an old version installed (like Microsoft SQL Server Enterprise 2005) if you renewed SA on that server in 2020 then you need to apply SQL Server 2019 licensing rules to that install.

This may lead you to want to not have SA on an older server - that is fine if it is a standalone server (physical server or a virtual server that is not allowed to move between hosts) but if not, chances are you require the benefits of SA to be appropriately licensed.

Questions on your licensing and SA - let us know and we'll be happy to help.

Software Contracts - in a Pandemic led Recession

OK, so I am not a financial expert - but if our current world-wide pandemic (COVID-19) does not put us officially into a recession then I will be extremely surprised.

Frankly, I think we are already there - experts are debating.  I'll leave it to them to figure out and in the meantime speak to you about your software contracts and what to think about them in a recession.

As we all know, the US was in a recession just a few short years ago and it was a doozy!  But at that time many companies still had not made the transition to subscription based licensing for most of their business productivity software.

Think about your companies software contracts today - Adobe, Microsoft, Autodesk, Oracle and others on your productivity software are probably all heavily subscription based today.  On your infrastructure/platform software they are also probably heavily "hosted" or subscription based.

Why is this point important in a recession?  Old licensing models were perpetual licenses with maintenance. In most circumstances you could continue using the software regardless of whether or not you maintained the maintenance. So in a recession, if you could get out of the maintenance contract you were arguably still in business. If you are tasked with saving money on software costs your options are more limited in a subscription world.

Subscription licensing models is a pay as you go model.  While that is useful in moving costs to the expense line rather than amortizing it also means you must continue paying or you can no longer use the software.  Your software vendors are now in the drivers seat (although here is a very interesting read on the financial impact of this for software companies by Gavin Baker which I thoroughly enjoyed and you might,too).

So, here are some keys to consider:

• Are your subscription users going to be reduced?
• Inventory your existing contracts to know specific clauses and dates:
• Many multi-year software contracts have an option to reduce subscriptions on an annual basis as long as you do it by the prescribed deadline. 
• Some also have an option for reduction based upon a reduction in force.
• When are your contract expiring for those that do not have a built in reduction option?
• How will this impact your hosted infrastructure/platform needs? Make sure you are aware of those contract terms and dates as well.
• If your user base is not expected to be reduced, will you be asked to cut costs regardless?
• Look for the fat in your current contracts.
• Identify critical vs nice to have suites
• Ensure you are leveraging your legacy licensing benefits when available in your hosted environments.
• Those software audits that have slowed down over the past 2-3 years, expect them to gear back up in different fashions:
• Microsoft - do not be surprised for a server focused "assessment"
• Adobe and Autodesk - I expect to see them come back around to see who still has old on-premise software that is not covered under the existing subscriptions.
• Micro Focus - remember all that software they picked up in the deal with HP Enterprises? They have already been an active auditor, expect that to continue or pickup.

We know the pandemic is hitting us hard, but we cannot afford to be so distracted by life or death news (she says, sadly and somewhat sarcastically) that we get caught by surprise by the longer term economic impact we will all be facing.  If you need a refresher just go back to my blogs from 2007-2010 such as this one.

While each turn is unique, there are aspects that are the same...with over 21 years in the Software Asset Management business Cynthia Farren Consulting can help. Reach out to schedule a conversation with me to discuss a game plan for your organization.

Stay safe and stay well...

Software Asset Management - 2011

What is it about 2011 that makes me think...we have officially reached "the future"? 

Is it just that I'm now so old that when I thought forward to the future it was anything after 2010? Probably...but since old age seems to keep growing further and further away from me as I age, I refuse to accept that as the answer, LOL! 

What will happen to Software Asset Management in 2011? My crystal ball is far from perfect but I'll take a stab at predicting this year anyway... 

Software audits rise - sorry, I know you've been hearing that threat for years but based on what I've seen so far in 2011 I think you can count on it as a fact. As the economy (and therefore companies) see an improvement I think you'll find publishers starting to come forward to find out what you have (and haven't) been doing in the past couple of years. They know you've been spending less money with them, so they want to make sure you've been licensing appropriately. Software audits are expensive (even if you're fully compliant and don't have to buy anything), so before you respond please reach out to us to see how we can help! 

Cloud Computing continues to grow and initially companies will manage these in a decentralized fashion (you buy it, you manage it). Hopefully some will remember lessons learned from the past and have these managed centrally by their Software Asset Manager. When I spoke on this topic at the IAITAM Conference two years ago there was a lot of uncertainty from Software Asset Managers as to who owned this responsibility - frankly the role that owns it is the role that steps forward to take control of it. My suggestion is that a saavy SAM Manager will realize that they add value to this function and this function adds value to their position. If you don't have your controls in place for managing Cloud contracts, please talk to us about appropriate processes and controls. 

The role of the CIO will become more ambiguous. OK, so this isn't SAM but it is important to SAM. I think we are clearly seeing the assimilation of IT into the whole of the business. Regardless of industry, IT is critical to all areas of the business and business owners are going to want more control of it. While a certain amount of centralization and segregation of duty is imperative to maintain controls and manage cost, I will not be surprised to see the role of the CIO disappear. However; on the flip side, I think you will start seeing more former CIO's transition into the role of the COO (possibly a natural evolution as CIO's have long been advised to become intimately familiar of all the business units they are serving). If this transition does take place, you might well see the role of SAM Manager follow suite (especially if the SAM Manager has taken on the Cloud Computing aspect). 

Is my crystal ball failing me or do others see the same? Let me know! 

One thing I do know for certain is that Cynthia Farren Consulting will launch an updated website in 2011 (OK, I cheated...since it already launched earlier this month). We tried to simplify matters and provide more valuable content - let us know how we did!

Walking Away From a Microsoft Licensing Agreement

When finances are tight it's not uncommon for companies to start expiring their maintenance contracts, including software maintenance. As with any maintenance agreement that is allowed to expire, it's important that an organization understand the full implications of their actions so that it is a strategic event rather than a reactionary one. 

This is a big topic so will cover several postings - check back for more updates or e-mail us with specific questions. 

Microsoft has three primary ways for an organization to acquire licensing rights - subscription licensing (Microsoft Desktop Optimization Pack aka MDOP is an example), perpetual licensing (their traditional model where once you buy it you own the rights forever), or perpetual with maintenance (Microsoft Software Assurance aka SA). 

Subscription licensing expires at the end of the subscription agreement (unless there is a buy-out option). I'm not going into details on this type for this article. 

Perpetual licensing does not expire but also does not have upgrade rights. So again will not be discussed in this article. 

Perpetual licensing with Software Assurance includes upgrade rights until the SA expires. When SA expires, your organization is entitled to the latest version of the product which has been released to volume licensing customers. Those licenses then become perpetual licenses but inherit the licensing terms from the agreement under which they were acquired. 

For example, a customer who had a full platform Microsoft Enterprise Agreement (which automatically includes SA) which they allowed to expire at the end of May 2010 would walk away with perpetual licenses for the following Microsoft products: Office Professional Plus 2010, Windows Server 2008 Client Access License (CAL), Exchange Server 2010 Standard CAL, SharePoint Server 2010 Standard CAL, System Center Configuration Manager 2007 R2 Client Management License and Windows 7 Enterprise (but be aware of any subscription components, those are not perpetual). However; those perpetual licenses will always be restricted to the licensing rights under the Enterprise Agreement (for example, no secondary use rights for Microsoft Office which means if a user has a desktop and a laptop each would require its own license). 

While a license is covered under SA, it is at it's most flexible. Consider your future plans prior to allowing SA to expire. A couple of things to think about: 1) Will you be using any of the enhanced functionality of the Microsoft Enterprise CAL Suite? 2) Will you be increasing your server virtualization efforts and will Microsoft Windows Enterprise Server or Microsoft Windows Datacenter edition provide you with a more cost effective solution? 3) Are you licensed under Device CALs when User CALs might be more effective or vice versa - these can only be changed at time of renewal and guess what...you're not renewing. 

However; now is still the time to push the envelope on this (before expiration) as there are ways of getting this changed as long as you still have active SA. The first two scenario's would be covered by "Step-up" licenses from lower versions carrying SA. This allows you to leverage the monies you've already spent on the lesser edition by paying a reduced price for the higher edition but can only be completed while you have active SA on the product. 

Watch for more to come...or if you're considering walking away from a Microsoft Licensing Agreement talk to us first, it can help you avoid future costs and headaches!

Mergers & Acquisitions - Software Licensing in the Due Diligence Process

It's been said that 2010 is the year of M&A (LOL...again, there have been many years in the past that have also held that moniker) and having just seen a posting on LinkedIn on this topic reminded me that it's probably time to blog about it again (check out my earlier posting on this topic for additional information).



There are lots of things to be considered, but I'm going to focus on the company doing the acquiring for this posting - if you need other scenarios check out our whitepaper on the topic.



There are typically two scenarios in acquiring: (1) you don't acquire any of the IT assets, or (2) you acquire all the assets of the company, including IT assets. The first scenario is simple as you know walking in that you have to provide these assets yourself. The second scenario is where the waters get muddy.



If acquiring all of the assets, the assumption is typically made that all the software installed at time of acquisition is (a) properly licensed and (b) the license will transfer to the acquiring company. Unfortunately, these are both naive assumptions and too frequently incorrect.



In the ideal situation, IT would have the opportunity to receive the licensing statement (including copies of contracts and proof of licensing) for the company being acquired in advance so it could be factored into the valuation of the company (remember software is frequently the 2nd or 3rd largest line item in the IT budget and represents significant expense).



However; reality is that acquisitions are typically completed without IT's involvement or even if IT is involved they are very limited in the information that can be shared in advance of the completion of the deal.



So, how can IT help the company avoid acquiring someone else's licensing headache? Through education and quick follow up.



A couple of basic steps:

1) Get the issue on the table in advance of M&A activity. During M&A you're going to have a hard time getting the attention of the proper parties so preempt the situation.

2) Get some allies on the topic - legal counsel, CFO, compliance officer and purchasing officer are all key allies. Obviously this means senior level IT to senior level operations discussions.

3) Create a high level IT due diligence checklist of what IT truly needs to (a) help avoid large unnecessary costs and (b) ease integration post acquisition.

4) With the aid of your allies, get the IT due diligence checklist added to the overall company due diligence checklist. Be prepared for push back and be able to quantify through hard dollar and compliance risks the reason behind each item.

5) Post acqusition, work fast. Not only do you have a mandate to get the company integrated but you also need to ensure that if there are any licensing costs associated with acquisition that you're able to identify those for proper accounting in the financial statements as part of the acquisition cost.



Get help - understanding the licensing terms for each major publisher and the transferability of those licenses can be a daunting task. Now is the time to focus on integrating your two companies, have an expert handle the acqusition licensing issues for you.



Any other suggestions? Post them!

Software Licensing - Gaming the System

It seems in a number of my recent conversations with a major software publisher (who has one of the most complex licensing structures going)...that they keep referencing companies that "Game the System" and what a wrong thing that is to do.

Question - when they make the rules, can you really ever "Game the System"? Don't get me wrong, we specialize in helping customers get creative with how to reduce their licensing costs for their software...but if it's allowed within their convoluted licensing terms, how can you be doing anything wrong?

Take the IRS for example (since it's April 15th), their rules are complex (far more complex than any software publisher) but they expect you to take advantage of every credit that you are entitled to through their rules. They don't call foul and say you're "Gaming the System" when you take advantage of rules that work in your favor. Why should a software publisher?

LOL - yes, I did just compare this software publisher to the IRS...LOL!

Frankly, the ones who write the rules hold the cards - if you can work within those rules and minimize your costs, who are they to complain? If they don't like it, they can change their rules.

What do you think...is it possible to "Game the System" in a negative way?

Resellers and Publishers in the world of Software License Management

I woke up this morning to a great Twitter from a good friend and great coach Jak Plihal (http://www.beingsolutions.com/). It was the quote:

"It is hard to get a man to understand something, if his living depends on him not understanding it." by Upton Sinclair.

To me, this perfectly explains the relationship between resellers (VARs, LARs, and any other acronym that is responsible for selling you software), software publishers and the details of software licensing.

There are details in software licensing agreements and product use rights that can be turned to a benefit for a company in legally reducing their software licensing costs...but you're not going to find them all out by asking your reseller or publisher for help.

Why? Not because they are necessarily trying to mislead you or keep you in ignorance - instead it's because they honestly don't even think of those options...because their living (or magnitude of it) depends on them not thinking of those options.

Now, there are definitely some that are better than others (I love working with Softmart for example as their reps have demonstrated to me a strong ability to keep the customer's needs in focus) but as long as their income relies upon what you buy then Upton Sinclair's quote will continue to apply.

When it comes to negotiating the best deal for licensing - the bulk of the savings opportunities comes from making full use of the product use rights and volume licensing agreements terms - not from the discount you negotiate (or not from the discount you negotiate without knowing these items intimately). Get your advice and education from an independent expert...know in advance who profits from your purchase and what their motivation is so you can better analyze their advice.

Remember, "It is hard to get a man to understand something, if his living depends on him not understanding it." Upton Sinclair.

Thanks Jak!

The Timebomb - IT Backoffice Applications

We seem to spend so much time focusing on desktop licensing and trying to get that right...but frequently it is our IT backoffice applications that get us into trouble.

Despite change control on our desktops and servers, it seems that we continue to find an abnormally high number of IT management tools that are underlicensed. This is also an area where we find a lot of functionality redundancy.

IT will police the end users, but typically no one is policing IT's software. Here are some common costly issues we see at new customers:

Symantec NetBackup - it may be part of standard operations to automatically cover new servers by the technology but where is the automatic purchasing of the necessary additional licenses? Also we frequently see resellers selling the Express program licenses, even when the customer is already a Rewards program customer - make sure you're getting the benefits of your overall Symantec spend on each purchase.

Development/Test/Disaster Recovery - typically all of these instances require licensing. Make sure your servers are licensed appropriately, don't assume you can build a Test server and not license it!

Imaging/Virus scan/Desktop management - yes these are all standards of doing business but frequently they don't get reviewed to ensure that sufficient licenses exist to cover usage.

Client Access Licenses - if you're running Microsoft Windows server, each user or device requires a CAL. If you then add Sharepoint on that server, you also then need a CAL for that. If you're running SQL server to support Sharepoint, you need a CAL or a processor license for SQL. The list goes on and on...if you're using the resources of the server chances are there is a corresponding license requirement. This typically falls to IT to manage.

In short, make sure you're looking at licensing requirements on your IT management apps as well as your end-user apps.

As always, if you need help - let us know!

Software Licensing - 2010

Wow, can't say I'm upset to see the end of 2009! Having been in business since 1999 I've seen some ups and downs (think California, technology, early 2000's...ouch!) and am happy that with business maturity comes a certain tolerance to economy and business shifts...but I'm ready for this year to be over!

What's in store for licensing in 2010? I think we will continue to see a lot of acquisitions occur this year - which means eventual changes to volume licensing agreements. Be sure to keep an eye on mergers, acquisitions and divestitures to see which of your software licenses are impacted. It typically takes at least a year for any changes to volume licensing agreements but it might have a big impact on your maintenance decisions.

For Microsoft users there will be several new releases this year in Office, SharePoint and SQL Server to name a few. SQL Server is also being purported to have a couple of new editions and changes to some of the licensing terms (in particular SQL Enterprise and SQL Datacenter edition). Be sure to keep a close eye on these, especially if you have a virtualized model.

SaaS will continue to feel it's way and don't be surprised to hear more about the Microsoft Enterprise Subscription agreement...an agreement that has long existed but (in my opinion...as is all of this blog) wasn't priced well for most businesses.

Also, for those renewing Microsoft agreements there are some changes to your terms and conditions that you might not be aware of...the loss of the 30 day "grace" period on renewing of Software Assurance and an increase to 90 days for notice of change of reseller (hint, this determines who gets paid for your purchases and impacts any incentives resellers will offer to you - be sure to handle this on a timely basis if changing. You don't want the reseller you're "firing" to get paid for the renewal you do next month.)

What do you expect to see happen with software in 2010? Any licensing trends you know are happening or changes to PURs?

SaaS Contracts - A function of Software Asset Management?

Earlier this month I spoke at the IAITAM conference in Nevada on the topic of Licensing Implications in the Cloud (Saas), it was a lively group and an interesting subject. However; the most interesting piece was the conversation it sparked about "Should Software Asset Management (SAM) be responsible for SaaS?".

For me the not so private laugh was the fact that several audience members asked the question right when we got to my slide asking the same question...always nice to have evidence that I do think like a SAM Manager! OK, thanks for sharing my pat on the back...

This is a topic we hear more frequently at our clients. Does subscription software such as SaaS belong under the SAM umbrella or does it belong elsewhere? Certainly businesses have used subscription software for a long time, and commonly it is not handled by IT but instead handled by the business unit that is using the service (think Payroll, HR services, etc).

I don't think there is a global answer for this, but I would urge companies to think about what's at stake if that subscription is suddenly no longer available. What happens if the provider goes out of business or the server hosting the service fails? These are examples of topics that belong in the contract signed for the service...but will a business unit necessarily think to negotiate these into the contract? How is the usage being tracked to ensure that the billing is accurate? Is the business unit going to track it or are they just going to pay the bills (start thinking telecom audit if you don't think subscription billings can be inaccurate)?

While subscription software services might not fall under the traditional SAM umbrella, it needs to fall under someone's umbrella and the SAM Manager is probably the best suited to take on the challenge.

Would love to hear other's thoughts on this...

Practical Advice to Reduce the Cost of Your Software Spend

It is not uncommon for software licensing and maintenance to be the 1st or 2nd largest budget line item for a company, so for all those companies getting ready to go into their budgeting cycle during this tough economy...reducing that number is going to be key to getting budgets approved and getting other key IT projects into the budget.

Here are some practical steps to reducing the cost of your software spend:

1. Get informed - What software contracts do you have, when do they renew, what soft costs are included in the price tag, who's using the software and why?
2. Clean house - Get rid of items not being used or consolidate where two products cover the same functionality (particularly key in IT management software). Focus on products you're still paying for, not those that aren't costing you any licensing fees currently.
3. Research - For your software contracts, when is the publisher's year end (and by default their quarter ends)? Same thing for your reseller. Can you modify any of your contracts to fit those time periods? What would you want in exchange for making these modifications? What new technology are you implementing this year? Does that tie into any of your publishers "hot new products"?
4. Examine all software maintenance contracts - Is maintenance mandatory or optional, what value have you received from maintenance to date, what is the roadmap for that product for the future and does it fit the timeline of your maintenance fees, are you fully leveraging what you've already spent?
5. Evaluate your software reseller - How many resellers are you using? (If multiple, consider consolidation - and ask for increased savings in return.) How are they performing? What value are they bringing to the table for you? How dialed in are they to the publishers, their product use rights, incentives, licensing programs, roadmaps?
6. Ask for help - Throw a challenge to your resellers and the publishers, have a clear picture of what you want as the outcome and ask for their help in reaching that outcome. Do this early in the game, it doesn't matter if your contract isn't up until next August - is there a significant financial benefit to renewing in December, May, June?
7. Negotiate, Negotiate, Negotiate - Everyone is hurting in this market which means deals will be made. Play fair, recognize that everyone needs to make a profit to survive but make sure that profit includes your company.

This takes some leg work, it takes some investment of time and it takes some creativity but the payoffs are there. Alternatively, ask for help.

What Your Software Inventory Tool Isn't Telling You!

Hopefully by now you've realized that in order to manage your software (or other IT assets) you need to have an inventory tool. As you will know from my other posts, you can't stop there...but it is a good place to start.

However; you need to understand your tool and how it reports data to you. Otherwise you might get an ugly surprise later on down the road when you find software installed on your systems that wasn't showing on your reports!

Inventory tools have a database of software titles associated with publisher and typically associated with a flag to indicate if it is licensable software (versus freeware, etc). The completeness of this database is the biggest value to you of the tool. With most tools if an executable is not in this database than it gets grouped into a "Misc" category and will fall into an exception report, a "catch all" report or might not be reported at all.

This could include new releases from publishers or simply publishers that your tool publisher doesn't categorize. These "unidentified" programs can cause you a lot of headaches - from a security, licensing and support angle.

Most inventory tools are updated on an ongoing basis as the publisher becomes aware of new software, but if you're not keeping current on your maintenance with that software you might not be getting this updated information.

Protect yourself - keep your maintenance current on any inventory tools you use, check the frequency of the tool publishers updates and include a check of "Misc" or "Catch All" software reports in your Software Asset Management process.

Additionally, if you are concerned about potential risk in this area you might want to consider having all of your software identified. Software ID Technologies has services that will identify all software in your environment. We've teamed with them on a number of engagements and they do a good job of taking the mystery out of those "unidentified" applications.

Software Asset Management, Common Sense and Saving Money

Have you ever noticed how cyclical everything seems to be in this world? Well, one of the cycles I've watched since the early 1990's has been Software Asset Management.

The cycle (at least in the US, I frankly didn't track it much internationally) seems to be: Avoiding the topic, Awareness of an issue, Deciding to do something about the problem, Doing a full fledged project, Pairing that project down, Letting nature take care of itself and then the cycle starts again.

Obviously there may be some missing stages and some more "refined" terms than those I used but the basic concept is the same. When times are lush we seem to get into this phase where we feel the need to do a full bore SAM methodology but as soon as money and resources get tight we abandon the methodology in favor of "just making due".

This topic has been reinforced to me lately through two things: (1) a brand new client who emphasized the desire to have a "ala carte" proposal for SAM implementation - our existing clients know that providing options is the ONLY way we work, and (2) reading a fellow SAM practioner's (Kylie Fowler) blog which focuses on the "practical" side of ITAM and SAM (check it out...some great information).

In all our methodologies, let's not loose sight of the basic concept here...SAM is supposed to save money, manage risk and provide the business with the technology tools needed to be competitive. None of this requires complexity, extraordinary costs and it should all fit easily into common sense business practices.

If you're finding yourself ignoring your SAM methodology to run your business, do a quick re-evaluation of the methodology. What is valuable and what is just extra work? Streamline it, modify it, replace it with something simpler...do what you have to do, but don't abandon or ignore it altogether as you'll then be doomed to repeat the cycle (losing out on all those great cost savings and risk management in the meantime!).

If this is still too much for your business right now - consider outsourcing your SAM. We do this for a number of clients and they've found that (a) our costs are ridiculously low compared to in=house, (b) we typically save them more than our annual fee in increased savings, and (c) it frees their staff up to focus on running the business. Talk to me if this is of interest to you.

Ways to Cut Costs - Software Licensing

It's funny - when times are lush, companies feel they don't have the time to put in a SAM program...when times are tight, companies feel they don't have the money to put in a SAM program.

Unfortunately, it's a Catch 22...if you had a SAM program, your staff would have more time because they would be more efficient and you'd have more money because you wouldn't be wasting it on higher maintenance fees and over priced products.

Sorry, I'm on my soapbox and I know it. Just remember, it doesn't take as much time or as much money as you think it does and the benefits far outweigh the costs.

Two recent items have come up that impact the costs of software licensing:

1) Microsoft Financing - they've just changed the rules.
2) Webinar Series "Cutting Costs - Software Negotiation"

Microsoft Financing (for those of you who didn't know it, Microsoft will finance your deals that involve purchases of Microsoft software as well as hardware and other services) has changed the rules a bit. It used to be that you didn't have to buy much software to finance your whole deal...apparently they are now going to require that at least 35% of the deal be for Microsoft software. Read the details for Scott Bekker's blog.

Webinar Series on cutting costs through software negotiations. For 10 years we've been helping our clients cut their costs (after they've already internally negotiated the deals). We're now offering a webinar to help teach you some of our techniques. This series isn't about contract law, it's about understanding the insides of the deal and turning it into cash and benefits for your company.

So, I know many of you are trying not to spend money right now on software...don't forget - those annual maintenance agreements you're paying is still spending money and many of them can still be renegotiated to lower your costs!

Software Licensing - What You Don't Know Can Cost You!

I was having a conversation with a gentleman on Friday night at a business mixer and discovered that he was an IT infrastructure consultant advising a fairly large size enterprise on a new structure to support their very distributed user-base.

During the conversation he mentioned his surprise at the amount of money it was going to cost his client to implement Microsoft Office 2007 for their 7500 users. We talked a little more as I wanted to understand what program the company was considering purchasing through - and I found out that they had formerly had Software Assurance but it had expired almost 2 years ago. What this consultant didn't know (and neither did his client and no one else was bothering to point it out) is that Office 2007 was released to the general public on 1/27/2007 and (don't quote me on this date) was available to their volume licensing customers around October 2006. Software Assurance entitles you to the latest version of the software released as of your expiration date - whether you've installed it or not. That is in perpetuity (for traditional licensing).

The result being, that was $2m the client was going to spend for software they were already licensed for! I told the consultant to go back to the client and have them review their licensing statement of the Microsoft Volume Licensing web site to make sure dates were good but that it looked like that was money they could keep in the bank (and to hire us in to review the rest of their licensing plans to avoid any other costly mistakes).

This is an area where we frequently find clients uninformed or misinformed. Talk to an unbiased licensing professional before making a software investment - what you don't know can cost you a lot of money!

Software Licensing and Tough Economies

Is your company tightening its pursestrings? Have you been told to hold off on all "unnecessary purchases" for a couple of quarters? Did your 2009 budget just go through rather drastic cuts? Have layoffs occurred or are they looming?

If you answered yes to any of the above, you're not alone. For any of us who came through the "Dot Bust" of the early 2000's (particularly in Northern California), we may remember these signs well. I remember heading into it (as a not yet 2 year old consulting business) and the phases that it went through. However; I also have worked with many businesses since and have seen the outcome of decisions they made to "save costs" that had long term negative impact.

Here are some things to think about:
1) You can't manage what you don't know. Software costs are one of the line items you're going to be watching closely - make sure you have the tools in place to tell you exactly what is being used and what you own. Then you can continue to provide your business users with the tools they need to do their job but ensure that you're not over-purchasing in this category.

2) Servers and client access licenses - get expert advice. This is consistently the area where I see costly mistakes being made, typically on the basis of relying on the knowledge of someone who doesn't keep current with publisher's product use rights. A recent half day consultation with us saved one of our clients $30,000 in server licensing costs. This is an area where it doesn't cost much to get advice that can save you a bundle!

3) Review your maintenance agreements and renewal contracts - in the past several "lush" years we've seen many clients opting for convenience over cost savings. Now that things are leaner, you might need to re-think some of your past decisions to ensure they are meeting your current goals.

4) Evaluate your reseller. Just like #3 above, are the "value added services" provided by your reseller justifying their markup on your software? This is another area where that client we mentioned in #2 received significant benefit from that consultation. They needed to change resellers and leveraged us to make the change - it resulted in $15,000 in free consulting services from us as a "thank you" from their new reseller...that's paying for them to have us manage their software license situation monthly for the next year!

5) If you're downsizing and having to "do more with less", we can ensure you still have the information you need on a monthly basis to get full value of your software assets...for a fraction of the cost of doing it internally - call or e-mail me and free up some of your staffs limited time.

These are just some suggestions, the important thing to remember is this...in times of financial hardship it is our responsibility to ensure our decisions help our companies (a) survive the downturn, and (b) are positioned to prosper immediately in the upturn.

Digital Asset Management - Respecting IP and Staying Out of Trouble!

Intellectual property rights cover a wide spectrum, and while I typically talk to software licensing IP - I don't want to overlook other forms of digital IP that can place an organization at risk if used improperly.

Just because something is available in digital format doesn't mean it can be readily copied, shared or paraphrased. Check those licenses! The hard part is that the digital format frequently makes it that much easier to do something wrong when it comes to IP.

It cost this California company $300,000 because they were internally distributing "press packages" that included unlicensed copies of articles. This was not an intentional act, it was a mistake made by someone who didn't know better...could this happen to your company?

I attended Scott Bain's (SIIA's Litigation Analyst) presentation "Reduce Legal Risks by Managing Digital Content" in June at ECPweb's SAM Summit 2008 in Chicago - a terrific presentation and education for me (I try to be very aware of potential IP issues...but I found that even so I had unknowingly acted illegally in the past when it came to digital piracy).

Let's think about some common examples of potential piracy: Music or Video's stored on your corporate network, subscription based content forwarded through e-mail or stored to the network for others to use, excerpts from e-mail newsletters that you copy and send to others...the list goes on.

I'll let you in on my guilt...like most professionals I get a number of newsletters e-mailed to me on a regular basis. Before I had it pointed out to me that it was wrong, I would think nothing of copying the full contents (author, etc) of an article and sending it to someone I felt would be interested. The problem - those e-mail newsletters are sponsored by companies that pay to have people see their ads...but circumventing the advertising I was cheating them. If you want to share, use the built in mechanism most newsletters have to "Share with a Friend", or send the link to the owners website so the person you're sharing with can access the source. Better yet, check the license terms for sharing the content.

There's a great educational site by the SIIA to help you and your employees make the right choices (www.AskBeforeYouAct.com). Digital assets are a bit tougher to monitor than software assets, but they are every bit as important to manage them appropriately.

Do It Yourself or Have a Professional Do It For You?

Sorry I've been rather quiet the past couple of months...we've been launching a new service (or more accurately - finally marketing an old service) and that's been distracting me a bit.

What we're doing is finally offering our SAM managed services offering (LOL...OK, when we started doing this 10 years ago we were calling it Outsourcing) to all of our clients.

Basically, we do everything to give you the information you need to run your business with the appropriate software licensing at the appropriate cost. See, for us - that's easy. We live and breathe software licensing, processes, controls and negotiations. We keep up with what's going on in the marketplace, because it's our business. Typically companies (excluding large enterprises) simply can't dedicate the resources to do this in a cost efficient manner. For us to do it, the service pays for itself and you're not running the risk that you're relying on a staff member whose knowledge is from 2 versions ago.

We're not looking to replace your current staff members...we're looking to free up their time so they can focus on areas that move you forward.

Our service has been extremely successful - we've been told by our clients that the price is attractive, the deliverables timely and needed, and the independent relationship (not the reseller, etc) extremely beneficial and ties in well with internal governance programs.

However; I'm curious, what are your thoughts?...What would you want in such a service? How often would you want it? What would you want to pay for it? Would you want a service like this?

Here We Go Again...

Let's take a walk down memory lane....the year is 1994 and a mid-size national firm (1,200 PC's) has a new software manager who realizes that the firm needs to be buying their software on a volume license, so she starts down the path of finding out everything she needs to know to make this happen.

Since there's no one she can find who can educate her on this, she turns to her reseller...who invests a lot of time and energy into educating her. Finally, time comes to seal the deal and another reseller walks in the door and tells her a few more things that the first reseller didn't tell her....things that would have a strong impact on the financial viability of the purchase.

Time passes, this software manager continues to learn and comes to realize that there were even more things she should have been told that neither reseller told her...that money was lost on the deal because she hadn't known them when the deal was made. Unfortunately, there hadn't been anyone to advise her that didn't have a vested interest in the deal.

Fast forward to 2008, that software manager (and yes...that was me) would no longer have to rely on the advice of a reseller...there are instead a number of small Software Asset Management (SAM) consulting firms that would appropriately advise her on all important aspects of the deal - helping her make the right choice and the best deal for her business.

However; we have to be careful that this valuable source of independent information remains available to consumers.

Most major resellers are now starting up SAM consulting businesses in response to publisher requirements. Here's the problem with that...since consulting isn't the primary business line a reseller can price their consulting services at a price that an independent firm can't compete with...and the next thing you know, the only source of information for you on that major purchase is someone who has a vested interest in the outcome...

Are we coming full circle? I hope not - the reason I started my firm in 1999 was because I saw a need for companies to have someone on their side of the deal....whether it's me or another small SAM firm, I don't want companies to lose that independent perspective.

What are your thoughts?

Stop wasting money on your software purchases!

LOL...OK, don't misread my title...you probably still need to spend money on software purchases - my point is, you should stop the waste that goes on in most purchases.

Are you getting the most you can out of your software purchases? I doubt it. Frankly, I've proven time and time again that companies aren't...you see, there really are "tricks" to doing this right and unless your purchasing agent has lived the experience from both the consulting and the reseller side, they're not going to know them.

A couple of examples of major savings we negotiated this past year:

• $260,000 on a $1.6m purchase through leveraging publisher relationship
• $65,000 in free services on that same purchase through leveraging vendor relationship
• $150,000 in savings on hardware purchase associated with that same software purchase
• $180,000 in savings through education on product use rights options
• $15,000 in free services on a $200,000 purchase through leveraging vendor relationship
• $52,000 in free services on a $900k purchase through leveraging vendor relationship
• $250,000 in savings through education on product use rights options

Now, these were all fairly large purchases....but percentage wise these are still sizeable dollar savings. In all cases, these companies had saavy purchasing agents...but these are not deals those purchasing agents would have been able to negotiate. It requires someone who specializes in this industry to know the ins and outs and negotiate the best deals.

CIO Insight says 44% of the CIO's reported "cutting costs" as a top priority for 2008 (http://www.cioinsight.com/c/a/Research/Management-Priorities/).

CIO's know they are going to have to watch their spend this year...unfortunately too many assume that they're getting their best deal on their software because they've compared prices and negotiated agreements. But they don't know the money they're leaving on the table.

Call us before you make that next purchase...let us show you how much money we can save you - money you can spend on new projects rather than on just maintaining your software!