Jerry Seinfeld used to have a bit in his stand-up routine about a person's demeanor before and after dinner at a nice restaurant. Before dinner, when everyone at the table is hungry and excited at the prospect of a good meal, everyone is eager to order as much off the menu as possible.
"More appetizers! More wine! Bring it all," Seinfeld would riff in his comedy act.
But once dinner was finished, and everyone was groggy with full stomachs, Seinfeld notes how the mood turns sour once the bill arrives.
"This can't be right. Who ordered all this stuff?", Seinfeld would ask, looking at an imaginary check.
Not surprisingly, this can happen to business in the software licensing and support space during times of significant growth. I've seen it time and again. The Sales Group purchases a big data analytics software package to that its salespeople can gain insight into their customers, while at the same time, marketing is purchasing the same software to help understand the larger marketplace. Eventually, companies find themselves with a disorganized mess of licenses and support agreements that are duplicitous, or worse yet, not being used. But that's okay, because the company is hungry and it wants to innovate and use every tool it can get it's hands on to try and improve it's bottom line.
However, when the inevitable downturn that occurs in every business at one point or another arrives, management is now like Seinfeld looking at the check. "Who ordered all this stuff?" More importantly, how do we optimize what we have, shed unneeded licensing and support, and rightsize our technology?
Here's an overview of some best practices when rightsizing software and support:
1) Know what you own
Start pulling contracts. Look at the number of licenses the organization has purchased and understand how the structure of the agreement. Were perpetual licenses purchased or were the licenses purchased on a subscription basis? Look to see if there is a clause that allows the company to sell back some or all of the licenses. Also understand the underlying software support agreements that are in place. Those can cost upwards of 25-35% of the yearly cost of a license subscription.
2) Validate your findings with leadership
Once you've learned how many licenses you have, you need to approach management to learn how many of those licenses are being used. This is important on a couple of levels. For one, it will inform the organization as to whether or not they are in compliance with the terms and conditions of the licensing agreement. Secondly, it will allow to you have all of the facts on hand when it is time to go back to the software company and negotiate a better contract for the licensing needs you need today. Finally, it will allow the business to understand how it's current licensing agreements may affect future IT related projects. For example, IT may expect to save money by transitioning from an in-house data center to a outsourced cloud infrastructure, but existing license and support agreements may not allow for that to happen right away.
3) Begin optimizing your licenses
This is the most difficult task primarily because a deep dive into license rights needs to be completed and rarely are two license agreements ever alike, even within the same software vendor, (We're looking at you, IBM). This must be done however as the software account representatives tend to be less than forthcoming when explaining licensing terms and conditions (if they even understand it)
Another, easier way to optimize licensing is to remind IT staff to mine active licenses when decommissioning servers. This is particularly important when the organization is paying for licensing and support on a processor basis.
Software rightsizing and optimization is a very complicated subject and this blog post only scratches the surface of everything that goes into helping an organization reduce costs and run more efficiently. If you would like to learn more about this topic, Source One has great Spend Analysis, Benchmarking, and Contracting and Negotiations teams that can guide you through the path to rightsizing your organization's software licensing and support needs.
"More appetizers! More wine! Bring it all," Seinfeld would riff in his comedy act.
But once dinner was finished, and everyone was groggy with full stomachs, Seinfeld notes how the mood turns sour once the bill arrives.
"This can't be right. Who ordered all this stuff?", Seinfeld would ask, looking at an imaginary check.
Not surprisingly, this can happen to business in the software licensing and support space during times of significant growth. I've seen it time and again. The Sales Group purchases a big data analytics software package to that its salespeople can gain insight into their customers, while at the same time, marketing is purchasing the same software to help understand the larger marketplace. Eventually, companies find themselves with a disorganized mess of licenses and support agreements that are duplicitous, or worse yet, not being used. But that's okay, because the company is hungry and it wants to innovate and use every tool it can get it's hands on to try and improve it's bottom line.However, when the inevitable downturn that occurs in every business at one point or another arrives, management is now like Seinfeld looking at the check. "Who ordered all this stuff?" More importantly, how do we optimize what we have, shed unneeded licensing and support, and rightsize our technology?
Here's an overview of some best practices when rightsizing software and support:
1) Know what you own
Start pulling contracts. Look at the number of licenses the organization has purchased and understand how the structure of the agreement. Were perpetual licenses purchased or were the licenses purchased on a subscription basis? Look to see if there is a clause that allows the company to sell back some or all of the licenses. Also understand the underlying software support agreements that are in place. Those can cost upwards of 25-35% of the yearly cost of a license subscription.
2) Validate your findings with leadership
Once you've learned how many licenses you have, you need to approach management to learn how many of those licenses are being used. This is important on a couple of levels. For one, it will inform the organization as to whether or not they are in compliance with the terms and conditions of the licensing agreement. Secondly, it will allow to you have all of the facts on hand when it is time to go back to the software company and negotiate a better contract for the licensing needs you need today. Finally, it will allow the business to understand how it's current licensing agreements may affect future IT related projects. For example, IT may expect to save money by transitioning from an in-house data center to a outsourced cloud infrastructure, but existing license and support agreements may not allow for that to happen right away.
3) Begin optimizing your licenses
This is the most difficult task primarily because a deep dive into license rights needs to be completed and rarely are two license agreements ever alike, even within the same software vendor, (We're looking at you, IBM). This must be done however as the software account representatives tend to be less than forthcoming when explaining licensing terms and conditions (if they even understand it)
Another, easier way to optimize licensing is to remind IT staff to mine active licenses when decommissioning servers. This is particularly important when the organization is paying for licensing and support on a processor basis.
Software rightsizing and optimization is a very complicated subject and this blog post only scratches the surface of everything that goes into helping an organization reduce costs and run more efficiently. If you would like to learn more about this topic, Source One has great Spend Analysis, Benchmarking, and Contracting and Negotiations teams that can guide you through the path to rightsizing your organization's software licensing and support needs.
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