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!

Microsoft Revamps Partner Program – Costly licensing impact on Partners?

Microsoft has a very generous internal use license program for its partners. In generalities, a Microsoft Certified Partner gets 25 copies of most all desktop software (and Client Access Licenses – CALs) and 1 or 2 server licenses each for most server technology for internal use in the form of annual license grants; a Microsoft Gold Certified Partner gets 100 copies of most desktop software and 1 to 5 server licenses each for most server software. There are additional license grants based upon expertise “competency”. These amounts can be multiplied by each location that qualifies at the same level as the overall company up to a maximum (along the lines of 500 desktop and 2 to 25 servers for Microsoft Gold Partners). 

 These license grants are obviously very valuable to Microsoft Partners in helping them minimize the cost of running their organization. However; Microsoft is now changing their partner program (for the first time in a long time) which will end up reducing the number of internal use software license grants for most partners. The new Microsoft Partner Network will replace the designations of Registered, Certified and Gold Certified with Subscriber, Competency and Advanced Competency. While there are some changes at the Registered and Certified levels (Subscriber and Competency) as it pertains to licensing the real impact comes to Gold Certified Partners who will not qualify for the Advanced Competency designation. $300k Example: One of my Software Asset Management customers is a Microsoft Gold Certified Partner with 1 additional enrolled location and several competencies. This entitles them to about 200 copies of most desktop software and CALs and a number of server licenses including 10 Microsoft Windows Server Enterprise license grants and 8 Microsoft Windows Server Datacenter processor license grants. However; this company will not qualify as an Advanced Competency partner so will instead drop down to a Competency Partner (think Certified Partner). Assuming they continue to have 1 additional enrolled location this will drop their license grants to 50 copies of most desktop software and CALs and about 2 server licenses for some servers (Microsoft Windows Server Datacenter will not be included). The financial implication of this is over $300k. 

Even those partners that do not lose their current level in the program will feel some impact from licenses being excluded from the core licensing (for example, Windows Server Datacenter edition will not be part of the core licenses). One of the hardest challenges is that IT typically manages the licenses and yet the business typically manages the partnering relationships. If these impacts are not discussed between both teams internally there could be a large number of former Microsoft partners who are now out of compliance in their licensing. 

Understanding the Dates: Each year partners have to re-enroll in the program. Those partners who re-enroll prior to 10/10/2010 (now changed to end of October) will be renewing under the existing designations of Registered, Certified or Gold Certified and will have their annual license grants based upon that enrollment. At their anniversary date in 2011 their licensing grants would change. For partners who re-enroll after 10/10/2010 (now changed to end of October) they will be renewing under the new designations and the new licensing grants will take effect. There are other changes that take effect regardless of enrollment status effective 10/10/2010 (now changed to end of October) so please be aware that this information is only as it pertains to license grants. 

What to Do: Obviously it is very important for current Microsoft Partner’s to clearly understand the requirements of the new program and where their company will fit within this program. Microsoft is doing a lot to help and their Partner desk is extremely helpful so leverage these resources! Take a good look at the license calculator tool to determine what your new license grants will be and start the budgeting and communication process internally to avoid a surprise hit to your software budget next year. If things get too confusing or time consuming, consider hiring a professional to handle the transition for you.