Software License Optimization Maturity Model

By Cyndi Tackett and John Emmitt

There are a number of different Software Asset Management (SAM) maturity models out there that address the fact that organizations are at different points in their journey to optimized license management. Below is Flexera Software’s version of the maturity model and shows that the goal is to get to Level 4—the Optimized level of maturity. This is where you will achieve the highest return on your investment (ROI)—both in terms of your SAM program investment as well as your overall software investment. In other words—this is where you will save the big bucks!

SLO Maturity Model Sept13

Level 1 – Installed
Many of the organizations that we work with start off at a fairly low level of maturity– usually at around level 1– where they have config mgmt and/or inventory tools in place that tell them, at least to some extent, what they have in their IT environment. Level 1 answers the question “What do I have”.  Most organizations have a good handle on the hardware installed and have tools and processes in place to track hardware through its lifecycle. However, accurately identifying software is much trickier for several reasons:

  1. Unlike hardware, there is no physical asset you can count to determine how much software is installed in the environment.  Managing software is much different than typical ITAM because you need to manage very expensive assets that are difficult to find.  There is also more risk in the software estate – your hardware provider is never going to come into the organization and audit you because you have too much hardware installed!
  2. Without the proper software asset management tools, organizations must comb through reams of data to determine the applications installed on any one machine.  If your organization uses SCCM or a similar inventory tool, you are probably drowning in inventory data.  To make sense of the software inventory without SAM automation (e.g. in the form of an Application Recognition Library), you would need to hire armies of people to analyze software signatures or installation evidence.  It is analogous to trying to determine the title of a book if you only have access to the individual pages.  For example, the inventory data on my machine returns around 1,500 executables, but in reality, there are only three software assets on my machine that are interesting to my company – Windows, VMware Workstation, and Microsoft Office.  How can you effectively track that I am only consuming three licenses?
  3. Hardware assets have a very predictable lifecycle.  The software lifecycle is more unpredictable – it’s lifetime within your organization could be limited or could last for decades.  You cannot look at software at a point in time and feel confident about the results because the software estate is so dynamic.  Software is upgraded, retired, shelf-ware, or sprawling throughout your IT environment at an uncontrollable rate (for example, via virtualization) on a daily basis.

Companies that reach Level 1 maturity know the commercial software installed in their environment and can leverage processes to reclaim software when hardware assets are retired.  These companies are also in a position to consolidate vendors and applications which can improve volume purchase discounts and reduce internal support costs. Understanding the software installed and in use in the IT environment is the foundation of Software Asset Management and Software License Optimization. However, level 1 is just the starting point; at this level, you don’t even know if you are in compliance with your software license agreements.

Level 2 – Managed
At Level 2 maturity, the organization is keeping track of what software the company has purchased and can begin to compare that to what is installed (Level 1).  Level 2 starts to answer the questions “What do I own” and “Am I Compliant”. These organizations have manual processes in place to bring in purchasing and contract data so that they can do a license reconciliation for some compelling event—often this is for a software audit.

Understanding what you own sounds simple but has its own set of challenges:

  1. Mergers, Acquisitions and Divestitures (M&A&D) – Most organizations have gone through M&A&D making it difficult to understand what is currently under the company’s control or what has been transferred to/from other organizations.  M&A&D also makes it difficult for your software vendors to track what you own and is the number one trigger of audit activity.
  2. Decentralized Procurement – The control of software coming into the organization is often not streamlined through a centralized procurement department or single reseller.  If cost centers or end users can purchase software on their own, then maintaining an accurate count of ownership is daunting.
  3. License Models – Software license models are getting more complicated.  For example, Microsoft SQL Server has multiple editions, multiple license models (processor, core, CAL, etc.), and multiple purchasing programs (EA, Select, Open).  Knowing only that you bought SQL Server is not enough information – you need to understand how it should be counted.

Generally, organizations at level 2 are doing license reconciliation on an ad hoc rather than a continuous basis. Part of the reason for this is that without the right processes and tools in place, it just takes too long to perform the task. For example, it takes a lot of IT time and resources to pull together the necessary data and reports to answer a software license audit. More automation is needed.

Level 3 – Continuously Compliant
At level 3, organizations have the processes and tools in place to automate the collection and processing of purchase order data—to understand basic license entitlements—how many licenses did you buy for a specific software title.  This is where a Stock Keeping Unit (SKU) Library comes into play. PO’s with SKUs can automatically be processed to understand exactly what has been purchased and then this can be compared to the inventory data—a ‘purchased versus consumed’ license position can be calculated. Consumption at this level equates to install counts or user counts, or processor counts, etc., depending on the license metric in effect.

The organization is now in a position to be continuously compliant.  Traditional SAM tools only get you to level 2 and don’t have the built-in SKU Library to help automate the license reconciliation process. Organizations that are at level 3 can either avoid software audits altogether or dramatically reduce the cost and effort to address an audit. Furthermore, they can eliminate unbudgeted audit true-up expenses.

Level 4 – Optimized
At level 4, organizations are fully leveraging their license entitlements—product use rights, to minimize license consumption and reduce ongoing costs for software.

With Level 1, we now know what is installed, but how many licenses do I need to own to cover those installations?  “Consumed” licenses mean taking the product use rights into account.  As a simple example, if a user installs Visio on a laptop and a desktop, that user is only consuming one license because of second use rights.  In the datacenter, product use rights can be very complex.  For example, if I am under current maintenance, I do not need to allocate licenses for IBM Websphere installed on development or cold backup machines.

At Level 4, the organization is able to quickly calculate how many licenses are needed to cover the installations and usage of software based on product use rights. This is where a ‘Product Use Rights Library’ comes into play. A Product Use Rights Library helps automate the process of applying these entitlements to generate an Optimized License Position.

The organization should now be able to put processes in place to avoid over-buying and under-buying of licenses by proactively using the Optimized License Position in day to day decision making processes.

At level 4, the organization:

  • Can easily move through vendor audits with minimal business disruption
  • Is armed with information needed to effectively renegotiate contracts based on actual license position – get the upper hand in the negotiation process
  • Can proactively reduce maintenance on shelf-ware
  • Can check the available license level before purchasing any software as part of an App Store workflow process
  • Stop systemic over-buying that exists at Levels 2 and lower
  • Flatten the upward software spend curve by buying only what they need

At the top of the maturity model, the company is in the driver’s seat.

As discussed, the goal is to reach Level 4. But this doesn’t have to be a daunting process– there are a couple keys to quickly achieving the highest level:

  1. Put together a software asset management project plan that focuses on your most critical vendors first and allows you to realize your desired business outcomes fairly quickly
  2. Put in place SAM best practice processes and Software License Optimization tools to automate complex steps in those processes

To learn more, please read our white paper: Moving Up the Software License Optimization Maturity Curve to Drive Business Value



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