Why a SKU is important to Software License Optimization

by: Steve Mullins

Background of the SKU
Most folks are familiar with bar codes. Every time we go to the grocery store and check out, the cashier scans our groceries one at a time and the register automatically knows what we purchased, how much it is, and they probably even trigger when they need to reorder that item. Part of that bar code is the SKU (Stock Keeping Unit), which is a uniform method of tracking products sold. As the name implies, the SKU is intended to help producers track inventory in stock, but it can also be used by resellers, and even the people who purchase the item to keep track of what they’ve purchased. So a box of 50 yellow widgets would have one SKU because it can be sold as a box, while one blue widget might have a separate but related SKU because it can be stocked and sold individually as well.
Click here for a more detailed definition of the SKU.

SKU for Software
Software is similar to any product that uses SKUs. You can buy one copy, or multiple copies.  Some software can be purchased with a software license for a specific number of machines, while other times you would purchase the same software to be licensed for a specific number of users. Each of these is a unique instance that needs to be tracked separately. It’s because of the uniformity and broad use of SKUs that it’s imperative that Software License Optimization tools include capabilities to identify purchased software by SKUs.

Most publishers identify their software using a SKU. This SKU is usually attached to every purchase order line to clearly identify which software or package is purchased by a customer. The same software title purchased under different volume purchase programs will usually carry different SKUs.

For instance here are two SKUs.
• SKU: 810-03324;
• Publisher= Microsoft, Product = Microsoft SQL Server 2005 Enterprise Edition Win-64Bit 1 Processor German 2 Years Software Assurance OPEN C

• SKU: 810-03537;
• Publisher= Microsoft, Product = Microsoft SQL Server 2005 Enterprise Edition Win-64Bit 1 Processor German 2 Years Software Assurance OPEN NL

When you import PO information into a Software License Optimzation solution, one of the biggest challenges is to normalize the PO data and understand exactly which applications have been purchased (or upgraded or have maintenance renewed). Most of the time (not always), purchasing departments tend to manually write a short description when issuing a purchase order that is never the same across two otherwise identical POs. They also attach the exact SKU related to the purchase.

Using the SKU data will help a Software License Optimzation solution to automatically:
- Normalize and translate incoming PO data
- Understand what applications, license metrics, and basic maintenance terms are included in the purchase
- Generate new licenses or attach new PO lines to existing licenses
- Understand how the software was purchased and as a result know what additional product use rights came with the license

SKU Data Management
Next generation software asset management solutions include a SKU database based on information available from software publishers and years of experience.  The SKU database should be maintained and updated regularly by the vendor. A good SKU database will have at least 500,000 entries. Each SKU entry should have the following information:
- SKU number
- Manufacturer
- Description
- Family
- Level (Select & Open licenses)
- Group (Microsoft contract: Box, select, open)
- Language
- Type
- Version
- Metric
- Usage Right
- Pool
- Point
- Maintenance Type
- Maintenance Duration

To take full advantage of software product SKUs, a link must be built between SKUs and application recognition library entries– to automate ‘purchased versus installed’ license reconciliation. In addition, there must be linkage between the SKU database and the product use rights libary that captures all of the license entitlements that come with a particular vendor license agreement and product.

Using SKUs in the context of software asset management
SKUs are used within the context of software asset management during a post PO import process. POs are imported into the system using a financial data importer or are manually entered.

If a new license is created from the PO using the SKU:
- The license type should be suggested/used according to SKU definition
- SKU normalized data — description, publisher, version – should be used
- The PO should be tied to the software license and licensing info (quantity) reported in the license record
- Application(s) from the application recognition library should be attached to the software license record. The next inventory import should then use this software license and tie computers/users to it
- Any additional use rights such as the right to upgrade or downgrade should be applied to the license

Existing candidate licenses for POs containing SKUs are the same license with the same SKU in the asset management repository. The benefit is the avoidance of redundant data entry by the Software Asset Manager or license administrator. If a SKU is unknown or the link cannot be found automatically the first time the SKU appears, the end user can manually select an existing license. Once the system has “learned” about this SKU, the second time the same SKU is used in a PO, the link will be suggested by the system.

What you can do today
To take advantage of managing licenses and software purchases using SKUs, a good first step is to check with your purchasing department to see if indeed they do record the SKU for each and every software purchase. If this is the case, then you are half way on your way to automating the linking between purchases and software licenses. If not, you might ask them to start.  The second step is to utimize a Software License Optimization tool that can process the SKU data from your software purchases.

As applications have increasingly become strategic to the business, many companies are awakening to the reality that they don’t have a strategic solution to manage their software estate.  For years, companies have relied on IT asset management (ITAM) and/or software asset management (SAM) systems to manage these assets.  Yet, while such SAM systems were designed for and excel at counting what you have, today’s imperative is to ensure the business is in continuous software compliance and to optimize software license spend.  To do so requires a next generation software asset management solution called Software License Optimization.  Such solutions take advantage of the capabilities we’ve described to help you regain control of your software licenses, delivering continuous compliance, maximized value and optimized usage across your entire software estate.

To learn more about Software License Optimization, please read our whitepaper: What Does it Take to Achieve Software License Optimization?



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