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Top ten ways to reduce software costs

PRACTICAL TIPS FOR SOFTWARE ASSET MANAGEMENT

This white paper offers 10 practical tips
for helping reduce software costs, addresses
how IT can be proactive reducing costs
associated with managing software,
and gives you some ideas to take to the
CFO that will result in lower software
maintenance, licensing and operations costs.
Establish/enforce software standards
Key to software savings is establishing
an overarching software management plan.
This plan has to set the tone for how software
is procured, approved, and brought into
the organization.
It is important that this plan get buy-in from
key decision makers, and then be communicated
to appropriate personnel. The plan should
specifically address who should approve
software purchases, how that process should
work, and provide clear disincentives for
departments to go out and just buy whatever
they think they need.
There also must be a rigorous process in place
that forces the users to establish a clear need
for the software that fits into the appropriate
job and responsibilities. It’s important to be
smart about justifying each piece of software
that is acquired.
Justify product substitution
Product substitution must be based on
a user or a business unit determining need
for a specific application, and answering
two questions:
1. Is the application really required for
business?
2. Can we substitute a comparable application
that fits into our existing volume licensing
agreements?
Most organizations are using volume licensing
to try to get the lowest price for their software.
Once volume licensing programs are established,
usually with big vendors with multiple product
offerings like Adobe, Microsoft, and Symantec,
it becomes much more cost effective to drive
as much purchasing through those volume
licensing programs as possible.
Once you have your volume licensing agreement
in place, you might want to swap in or substitute
a comparable product when it makes sense.
Instead of buying HomeSite from Macromedia,
for example, you might have a volume
licensing agreement with Microsoft that
would make it much more cost-effective for
your web development or web design
application to be Front Page.
And even if your web development team
pushes back and makes the case for retaining
HomeSite, thresholds have been set, standards
are established, and licensing decisions are
justified rather than simply occurring by default.
Purchase minimum functionality
Entry level editions of products are a
good starting point for achieving efficiency in
software cost management. They offer a base-
line level of functionality that acts as a plat-
form for growth. Vendors routinely put out
advanced, professional, higher-end editions of
their products that are really aimed at power
users. But to achieve cost-effective standardi-
zation, you have to standardize on the most
basic level of functionality that you can.
Reducing software costs
hinges on
• software procurement:
managing how you buy
your software
• license tracking: keeping
track of software once
you’ve got it
• software usage: tracking
how software is used in
your organization
Use intelligent tools
Our top 10 list provides
concrete ideas that you
can use to reduce software
costs. The question isn’t
whether you want to
implement these tips, it’s
how do you implement
them? The fastest, most
logical approach for this is
the use of intelligent tools.
These tools should have:
• application-level software
identification
• software suite/component
comprehension
• normalized manufacturer/
product names
• categorization of all
software titles
• roll-up to licensed versions
• exclusion of freeware
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10
9
There is a fundamental tension between the finance department and
those in information technology. I Software and technology infrastructure
represent a significant investment for most companies, one that inevitably
gains more attention around budget preparation time and during corporate
mergers, acquisitions, and divestitures. I More and more, IT is called upon
to answer questions about software expenses and budgeting issues in
addition to simply keeping IT systems up and running. Very often these
questions come down to just one: how can we reduce software costs?
8
The real key is selecting and implementing
components of those suites where they are
needed, rather than buying the entire suite.
So one example would be to buy Microsoft*
Office Standard and selectively implement
and roll out Access to those users who need
it, rather than buying Office Professional
for everyone.
Fully leverage upgrade rights
Fully leveraging upgrade rights means
making sure that you have visibility into the
upgrade rights for the software that you own.
Once they standardize on a set of products,
most IT departments plan to stay with them
over a number of years. Typically, this happens
when they buy into a maintenance program or
specific upgrade rights for those products.
Unfortunately, those upgrade rights are
difficult to track, and they are often overlooked
when they are needed the most: when it
comes time to upgrade, IT is often unsure
whether or not they have upgrade rights for
even the most popular products, such as Visio*
or Project. It is important to keep visibility on
those upgrade rights to make sure they are
available to key individuals when they are
making decisions about what to buy and
what to upgrade.
Finally, remember that if products were
released while the maintenance program was
still in effect, you have upgrade rights to the
latest version, even if the maintenance
agreement has expired.
License allocation
Not all users need all software. License
allocation clearly establishes who should have
which applications. IT managers are often faced
with standardized enterprise level software
and various business applications sprinkled
throughout the organization.
If a particular group in an organization is
overlicensed and another group is under
licensed, there’s the question of which group
should really have them, or should anyone
have them at all. This is particularly important
for high-priced applications, such as high-end
engineering applications, where visibility and
usage awareness are very important.
Once you establish software allocations and
roll them out, you really don’t need to track
who has them so much as follow up on excep-
tions. The key is keeping business unit man-
agers apprised of who has which applications
in their environment, and who has something
they shouldn’t.
Smart true-ups
Microsoft invented the term “true-up“ to
describe their policy of annually requiring
licensees to “true-up” volume licensing
agreements based on the “true” current
installation and usage of the product. The
smart way to true-up is to make adjustments
prior to those true-up anniversaries.
You can prepare by looking at your environment
three months before that true-up, and cleaning
things up. If you no longer need installations
that are hanging out there, uninstall them,
and make sure that’s reflected in your true-up.
The goal is to make sure you’re not truing up
for licenses that you really don’t need.
Usage analysis can also play a key role in
this smart true-up process by seeing which
applications are being used by which users
in which departments. The last thing most
organization want to be doing is buying
maintenance and upgrading applications
that aren’t being used in the first place.
Scrutinize maintenance agreements
One of the biggest line items in software
budgets today is software maintenance:
organizations often pay ongoing maintenance
for an upgrade stream to a set of vendors.
Every year, and sometimes even every
quarter, there is an opportunity to adjust
those maintenance agreements and decide
on a renewal.
In most of those agreements, there’s nothing
that says that you have to renew maintenance
on every single license that you own. In
scrutinizing license agreements, make sure
that you’re getting the value out of them,
and that you don’t buy upgrade rights to
licenses that are not being used.
Novell® ZENworks® Asset
Management: We have
what you need
Intelligent, practical
management tools are what
Novell is all about. We use
a knowledgebase approach
for all our asset management
products that involves
technology analysts here
at Novell working for you.
This team works hard to
make sure that you have
the right information,
organized in a way that
enables software savings
and minimizes risk from
things like underlicensing.
Over 15,000 customers
have used the recognition
technology at the core of
the ZENworks Asset
Management software.
What keeps them coming
back? These customers are
convinced, year in and year
out, that IT asset tracking is
an important place to devote
effort and money, and that
their organization gains by
making that investment.
Novell customers realize a
positive and quick return
on investment from the
products and services they
use—they are keeping
projects on track and on
budget and avoiding
unnecessary expenses.
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7
6
5
4
Usage factor in vendor negotiations
Management of vendor negotiations is a
discipline and skill, one where IT managers
can gain leverage through better understanding
of software usage patterns in their organizations.
It is difficult to sit across the table from
big software vendors—talking about business
requirements and price, negotiating for
software needed by the organization—without
usage information in hand.
IT managers can turn the tables on software
vendors when they bring detailed usage
information into those negotiations and by
being well-informed about how their users are
currently using the applications in question.
Some vendors don’t have a formalized pricing
policy that recognizes different usage levels,
yet, with competitive pressures, software
vendors are more and more willing to
negotiate. Software vendors will often
take into consideration what you’re actually
using—if you’re armed with that data. We
have seen a lot of IT departments drive costs
way down simply by highlighting actual usage
data during vendor negotiations.
Avoid software hugging
Users get very emotionally attached to
their software—even software they never use.
So-called “software hugging” (similar to server-
hugging encountered during server consolidation
projects) is the phenomenon where users hold
on to their software for dear life, not wanting
to let it go at any cost.
The key to defeating software hugging is
the idea of formalizing usage-based decision
making in your software policy. The trick is to
use empirical evidence to avoid emotional
conversations that result in users “hugging”
their software even more tightly. Making the
rules clear and sticking to them keeps the
discussion rational, not emotional.
Reduce wasted resources
Up to this point we’ve been talking about
procurement practices, looking at license
tracking, and software usage; most people
understand at a gut level how they might try
to enact some of these savings. They know
they don’t want to spend money on software
that’s not being used, they just lack the tools
to find out exactly which software is not
being used and how to embed that in the
decision making process.
The number one cost savings for software
costs is to reduce the number of wasted
resources in trying to collect this information,
normalize it, and report on it. One example
here is with a commonly used management
tool, Microsoft SMS. This is a classic
configuration management tool, it’s very
good at producing a lot of information about
all the software files on all the PCs in your
organization, but ill-equipped to provide the
information needed for software asset
management and license compliance.
So what we find is that people spend hour
after hour, day after day, consultant after
consultant, trying to get those kinds of tools
to produce information that can be used in
the kind of smart decision making that we’ve
talked about—efforts that could be greatly
reduced or eliminated by using the right tools
and processes in the first place. These are
the biggest time sinks for your people:
> collecting data
> massaging/normalizing data
> researching
> reconciling
> management reporting
p ten ways to
reduce soft-
ware costs
PRACTICAL TIPS FOR SOFTWARE
ASSET MANAGEMENT
For More Information
For More Information
Visit our web site at:
www.novell.com/zenworks
You may also call Novell at:
1 888 321 4272 US/Canada
1 801 861 4272 Worldwide
1 801 861 8473 Facsimile
© 2005 Novell Inc. Novell, the Novell logo,
ZENworks and the N logo are registered
trademarks of Novell, Inc. in the United
States and other countries.
* Microsoft and Visio are registered
trademarks of Microsoft Corporation.
All other third party trademarks are the
property of their respective owners.
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