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Why is Gartner forecasting 400% growth in SLOE?

As part of our ongoing review of our content to ensure it is up-to-date, this blog has been updated on 10/18/2016. “By 2017, 20% of organizations will have implemented a SLOE tool up from >5% in 2014.”

From 2014 to 2017, Gartner expects a four-fold explosion in the adoption of Software License Optimization & Entitlement (SLOE) solutions worldwide.

It’s a big claim for sure, but why are the analysts forecasting such a sharp rise in Software Asset Management technology adoption?

 

Let’s explore some of the possible explanations:

1. Software audits continue to rise

In separate research, also released by Gartner, the analyst firm states that audits in the twelve months for 2016 organizations now have a 68% chance of being audited by at least one software vendor. Our own research at our 2016 Snow End User Forum suggests that 42% of organizations are actually going through three or more vendor audits in one year. As Gartner itself advises, it’s not “whether” you will be audited by a software publisher, but “when”.

The adoption of SLOE technologies is often the result of a painful audit experience. Again, analysts state quite firmly that organizations that do not have control of their software usage and licensing prior to a publisher audit will face significantly higher costs and disruption than those organizations that are prepared. Having been burned once or twice already, more organizations are understanding the value that SLOE solutions bring to the compliance and audit game.

Of course, it would be better not to be burned at all, and part of the uptake of SLOE solutions will be down to organizations seeing second-hand what happens when others are audited (you only need to scan the press to see a number of ‘settlement’ stories from the BSA and software publishers), and deciding that proactivity trumps waiting for disaster to strike.

2. Increasing license complexity

Despite many software publishers’ claims to the contrary, the continual introduction of new license schemes (even if they are ‘simplified’) only adds to the complexities facing those charged with managing an organization’s software licensing. At best, new licensing schemes just mean more to manage (publishers rarely retire older licensing schemes at the same time as introducing new ones, which generally only apply to new products anyway!).

At worst, the new licensing models are themselves more complex than their forebears. The move towards named user, processor and capacity-based licensing models increases both the number of metrics that need to be managed and the complexity of the actual calculation methods for assessing the appropriate licensing for different scenarios. Just look at Microsoft making the recent move to core licensing for Windows Server and you start to see the challenge.

These metrics and calculations are often far too difficult to manage manually, even for one vendor. So a good solution that can help across many vendors’ distinct licensing models is going to save a lot of time and provide more accurate (and thus financially sound) results.

3. Difficult to identify what’s in use

For many organizations, there was a historic trend to equate Software Asset Management or SLOE with ‘inventory’. If they had an audit of what was installed on the network, they were in ‘control’. If this belief was misguided ten years ago, today it’s positively dangerous for the organization. Investments in virtualization technologies, thin client computing and cloud-based application have rendered many traditional inventory tools obsolete.

If the organization cannot understand the full view of the software estate (blind spots), both on physical and virtual machines (and indeed understanding the relationship between virtual guests and their physical hosts), then it is all-but impossible to calculate and prove that the right licensing models are being used. It is little better in terms of physical audits. Many inventory solutions fail to identify specific ‘editions’ of products (think SQL, for example) which may use common installation files, but come at a very different price.

Previously an organization might have gotten away with using ‘light’ licenses to cover ‘enterprise’ installs – but with audits now at nearly 70%, such poor management is more likely than ever to be uncovered. The cost of being found to be using ‘pro’ when you only have licenses for ‘standard’ can far outweigh the investment in a decent SLOE solution.

4. Getting licensing expenditure under control

The concept of ‘doing more with less’ is not new and IT budgets have been under heavy scrutiny for some time already. But looking at our own research, we still see a strong perception with many public and private sector organizations that they spend too much money on purchasing and supporting software.

As such, we see one of the strongest drivers in Software Asset Management adoption as cost optimization – organizations know that of course they have to buy licenses, but there is now a growing focus on making sure they are buying the right licenses, at the right time, for the right price. And as the number of software vendors that needs to be managed grows, the need for a solution to manage them also grows. Organizations aren’t just concerned with Microsoft licensing now.

There are over 50 software publishers with active compliance programs and all of the big names are there: IBM, Oracle, SAP, Adobe, Autodesk…

These are just four examples of drivers for the adoption of Software License Optimization & Entitlement solutions.
There are many more. But suddenly Gartner’s forecast of a 400% growth rate in the adoption of SAM and SLOE doesn’t seem that far-fetched.
Whether it is purely a precautionary measure, or whether it is balanced with a sense of driving cost savings, the adoption of SLOE makes good business sense.

Snow Software is pleased to offer you complimentary access to the Gartner whitepaper “Cut Software Spend Safely with SAM” in which Gartner suggests you can reduce 30% on your software spending through Software Asset Management.