The computing world is in a constant state of change. Right now, the greatest shifts are happening in the move from premise-based applications and infrastructure to SaaS/IaaS platforms together with the acceleraton towards these applications and services being accessed from mobile devices rather than PCs and laptops.
And that doesn’t even include the much-fabled Internet-of-Things (IoT) which everyone seems to agree will change things forever, yet the scale of change is so vast that noone can quite predict what that quite means. But what have SaaS/IaaS, mobile devices and the Internet-of-Things got to do with Software Asset Management? Well, everything.
IGNORING CHANGE = COSTS
With the pace of technology change, one thing is for sure: organizations cannot afford to stand still. Whether public or private, in the commercial or government sectors, a failure to adopt new technologies will at best leave the organizaiton inefficient and at worst put them out of business as competitors steal market share. But equally, blindly adopting new technologies and processes just because you can is a recipe for disaster.
Leaping before looking has historically brought with it a delayed set of dramatic costs that can be just as crippling to the organizaiton as if it had taken no action in the first place. Sprawl, indirect usage, platform independence and user-based licensing are about to become a big deal to Software Asset Managers and CIOs alike.
For enterprise IT and governance leaders, changes in the way software and infrastructure is procured, licensed and paid for will cause a massive impact to the business. The foundation from which decades of software licensing has been based is shifting underneath the feet of the enterprise.
Premise-based perpetual licensing, while likely to remain for decades to come, is already beginning to take a back-seat to newer Cloud-based and mobile-oriented applications and licensing schemes. As the shift from laptop/PC towards mobile has steadily gained momentum, several factors are converging to create both a headache and an opportunity for SAM manager:
- Mobile apps typically ‘free’ for personal use are increasingly being used for business purposes, simultaneously rendering them no longer free and, in some cases, a risk to the organization (we’ve discussed in previous blogs how many mobile apps get access to far more data on employees’ mobiles than you’d like them to).
- Vendors are increasingly wise to the commercial licensing opportunities presented by mobile devices. In some cases they are adjusting licensing models to increase revenues from apps deployed to mobiles, in others they are extending PC licenses to cover mobile devices in an effort to landgrab on the new technology platform.
- Mobile apps are often not where the real value lies; that resides on servers back at the datacenter, sitting on apps and databases developed by the likes of Microsoft, Oracle, IBM and SAP. Technically the mobile and user are not accessing these systems directly. But the mobile user is still benefitting from them. This is a largely-untapped money-maker for a growing number of software vendors (see indirect usage below).
It sounds obvious, but large enterprise software publishers aren’t charities. Their business is to develop valuable applications and then monetize them. Sometimes their monetization practices lag behind usage trends, but it always catches up.
THE MOBILE LICENSING TSUNAMI
Today, much of the software licensing for mobile requirements in an enterprise environment is less centrally controlled and less methodical than the datacenter or desktop.
This is not atypical in the earlier stages of application adoption, especially when there are no auditors knocking at the door. Many SAM mangers today are busy enough managing software and entitlements on the desktop and in the datacenter.
Cloud and mobile aren’t really on the radar as they are not seen as significant corporate spends (so-called Shadow IT is partly to blame here, as the balance of IT spend swings from centralized budgets controlled by the CIO to local expenditure by department managers and end users).
Up until now, many organizations have not seen a strong financial case for managing mobiles.
Microsoft is one example. Although it has recently shown more willingness to enter into coopetition with rival platforms from Android and Apple, it has thus far had little focus in its own audit efforts on these platforms.
Other vendors like SAP are leading the charge in increasingly aggressive audit practices that take into account ‘new’ ways of deploying and accessing their software. What is currently a small ripple in the licensing, compliance and optimization world is set to become something of a Tsunami in the near-future. Let’s look at these two examples in greater detail. Today Microsoft, and in part two next week, SAP.
Microsoft, while still being the dominant desktop player, has had mixed fortunes on the mobile platform in the last decade. With new executive leadership, Microsoft has begun introducing its products on popular mobile operating systems such as Apple’s IoS and Google’s Android. Together these constitute more than 90% of all smartphone operating systems in the world.
Its current strategy appears to be to establish a presence and relevance in the mobile side of the revolution by making its Office product and other new applications like Cortana available.
While these applications are not as addictive as they may been on the PC/laptop, they will still prove essential for those road warriors trying to do more than watch TV, query on Google, or listen to music on their enterprise mobile devices. Microsoft is putting the glide-path in place to shift the bulk of their enterprise desktop software users over to cloud-based Office 365 solutions.
This allows it to be present and relevant on a wide range of devices, and to recover value back from their software through the monthly subscription model.
This also allows it to monitor application usage much more easily.
INCREASE IN DEVICES MEANS A RISE IN CALs
Microsoft recently raised its CALs (client access licenses) pricing as a way to cover more device support. In the summer of 2015 they increased the CALs licensing costs by 13% after having already increased that same license cost by 13% only three years earlier. On average, a user in an enterprise today has three devices that are used to access information. If licensing is user-based, one CAL is required for multiple devices.
However if licensing is device-based, the enterprise would require three User CALS which may cost substantially more.
By 2020, the average number of devices for users is expected to exceed four. For organizations shifting to Cloud-based Office 365 and Azure, their users can access applications and data from up to 11 devices (five PC/laptops, five mobile devices and an iPad). On one hand this is good news for customers as users employ multiple devices to access Microsoft apps and systems.
But it’s also good news for Microsoft as it both shifts its revenue model to subscription licensing (see as more valuable by investors than perpetual incomes) and locks-in customers across more than just the desktop and server. But that’s just the tip of a large iceberg that is steathily making through the dark waters of software licensing.
In part two of this blog series, I’ll turn my attention to SAP and how organizations using its software need to take heed of developments such as the new relationship with Apple as well as legacy system architecture and integration decisions.
Mobile is changing the way your organization needs to manage Software Asset Management, whether you realize it or not!
Scott Maysonave is the Business Manager of the Mobility business unit at Snow Software in Austin, Texas.