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Getting a fair deal on software licensing

By Axel Kling | December 15, 2014

At Snow we believe that organizations deserve a fair deal when it comes to software licensing: not over-paying for the software they consume, but not paying too little either. Our goal is to bring transparency and control to the business of consuming and licensing software – enabling organizations to optimize the availability and cost of software without creating compliance risks.

The simple fact is, however, that compliance audits are big business for software vendors.

As a recent report from Gartner states: “Since we started tracking audit levels in 2009, when 54% of respondents were audited, the percentage of respondents indicating one or more audits in the past 12 months has risen to this year's record high of 68%.”*

In fact, if you’re an enterprise-size organization, you might be lucky to only be audited by one vendor. We’ve seen examples of organizations being reviewed by as many as four different vendors in the same 12-month time period.

Even to a well-prepared organization, there’s some level of disruption. For an organization with no SAM practices or technologies in place, the consequences of four audits in a year is almost unthinkable. And so some organizations inevitably come to the conclusion that they are getting a raw deal when it comes to licensing. It’s a view we have some sympathy with.

After all, we’re a SAM vendor and we find it challenging to stay up-to-date with all the latest licensing schemes and rules adopted by thousands of software vendors worldwide. If it’s challenging for us, I must be near-impossible for most end user organizations.

Then there are arguments about vendors deliberately obscuring licensing plans in order to make money from customers that unwittingly fall foul of new licensing conditions. Based on what we’ve seen, it’s difficult to disagree with this view.

But focusing on the pain, disruption and cost of software compliance risks missing the main point of Software Asset Management (SAM) and Software License Optimization (SLO). Done right, SAM doesn’t just reduce the impact of the inevitable audits; it opens the door to a world of cost savings and reductions that the majority of organizations continue to miss.

A well-executed SAM program delivers ROI quickly (Gartner itself historically suggests organizations can reduce software expenditure by as much as 30% in the first year) and keeps adding value as processes mature and the program expands to cover more platforms and vendors.

Snow customer, Man Investments, has realized savings of UK £1.2 million (US $1.9m) by re-negotiating contracts and agreements with key software publishers, plus an additional £1.1 million (US $1.7m) of cost-avoidance by re-harvesting and re-deploying unused software licenses.

Ultimately, SAM has to always be viewed as a two-sided coin. On one side, there will (for the foreseeable future) be the need to be compliant. But on the other side is all the intelligence you need to ensure that your organization is truly optimized in terms of balancing the entitlements it is paying versus the actual needs.

To help you better understand the first side of the coin, Snow has created a new SAM Newsletter featuring a full-length research note from Gartner titled “Survey Analysis: Software License Audit Surveys Show Shift in Focus and Intensity in 2014”. This research paper will help you understand the practices of vendors and why being prepared for an audit is more important than ever.

You can read the full story on how MAN Investments recognized its £2.3m savings after the Gartner report.

Download your complimentary copy of the SAM Newsletter, featuring research from Gartner, today.

* Source: "Survey Analysis: Software License Audit Surveys Show Shift in Focus and Intensity in 2014", Gartner, September 2014

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