Licence pressure points

There is a sense of unease among IT professionals when it comes to the management of software licences – a sense that existing licensing models and the ability to police licences has fallen out of step with modern software deployment.

Just take one CIO’s dilemma. “In the past, when we wanted to roll out a new application there was a gate-keeper, a point where we would enforce policy on software licences. And that was the financial director’s signature on a purchase order for a new server,” said the head of IT at a large manufacturing company at a recent private gathering of senior IT decision-makers.

“Now through the use of products like VMware, Xen and Hyper-V developers are able to bring virtual servers online and have a whole applications environment up and running in a matter of minutes. Does that put us in breach of our many different software licence agreements for operating systems, for applications software? Definitely and frequently. But those software agreements were never intended to deal with the new complexity of modern software environments.”

Virtualisation – whether server, desktop or applications virtualisation – represents a serious challenge in terms of software licensing but it is hardly the only wildcard that has emerged in recent years: multi-core processors, software-as-a-service, cloud computing, application streaming, service-oriented architecture, mash-ups and user-installed software all have implications for licensing. And they are putting increased pressure on organisations as they try to ensure that they are tracking the software that is out there and that its use falls within contractual terms.

There is a flipside to that compliance concern too. Many are acutely aware that they are paying for licences and ‘shelfware’ they may have acquired during more buoyant economic times, and which they would now like to downscale or eliminate altogether.

New era of complexity

“Software asset management [SAM] is going through a renewed period of interest. And a lot of that is driven by this new era of licensing complexity,” says Steve Butler, CEO of IT asset management company ManageSoft.

And virtual environments are the perhaps the best manifestation of that.

“With the ease and flexibility that virtualisation gives, it brings an absolute management nightmare from a licensing perspective. With a [traditional] distributed management approach, it takes a fairly hands-on process to produce a new machine, put it onto the network and load all the software on it, whereas with virtualisation you can create hundreds of machines in minutes by just copying files across the network,” explains Phil Heap, head of consultancy at FAST Corporate Services, the educational arm of the Federation Against Software Theft.

And some view that situation as a barrier to virtualisation strategies.

“It was becoming clear to us some time ago that licensing was going to be a potential roadblock for virtualisation,” says Butler. “It has risen to the top of the stack in terms of interest.”

“Customers are saying they are not going to roll out VMware to collapse their data centre server environments until they get a hard answer on what is going to happen on licensing. Companies are worried that if they go full bore into the use of virtualisation, then at some point the whole cost of virtualisation may be negated by the licensing cost they have taken on,” says Butler.

Consolidated view

The starting point in addressing that problem is visibility – the ability to build an inventory on each virtual machine and present it as a consolidated view.

“The approach should be to give people a consolidated view of how individual software elements are viewed, regardless of how they are used,” says Mark Cresswell, CEO of software asset management specialist, Scalable Software.

And that applies as much to server virtualisation as it does to a desktop virtualised using a Citrix or Terminal Server, or application virtualisation through products such as Thinstall or SoftGrid.

Indeed, those examples of desktop virtualisation and application streaming software present some real challenges.

“Even if the software streams are not installed on the target device in the old-fashioned sense, you still need a licence for the application,” counsels Oliver Bendig, senior product manager at FrontRange.

In the case of Microsoft’s SoftGrid, the applications run in a ‘virtual bubble’, he explains. To discover them you need to be able to view what is running inside that bubble – and that is something that has only been possible in the last few months with an upgrade to SoftGrid.

That underlines the multi-dimensional nature of modern software monitoring.

Says Scalable Software’s Cresswell: “It is highly unlikely that across an entire organisation you are going to have one delivery mechanism for software. There are people that will only want it installed locally; people who only want it installed via a virtual desktop; and people who want a combination of both.”

So when organisations are negotiating a licence agreement with a vendor, they are going to have to cater for all kinds of possible scenarios.

“Regardless of how the applications are delivered, we’ll track the usage. So you have one place that documents you have, say, 350 users of this particular application (based on its actual usage). The vendors may not really be geared up yet to take those usage figures and fold them into licence agreements but, as a customer, going into audit meetings with that puts you in a better position,” says Cresswell.

SAM automate

Those higher levels of complexity demand that software asset management becomes a much more automated and sophisticated process.

“The way that customers used to handle software licence management was, for the most part, with an Excel spreadsheet. Or they would discover their assets – put it into a relational database, write scripts against that and try to come up with their inventory. Then based on that, they would manually compare it to their contacts and try to come up with a picture of what their actual licence position is.”

But, until recently, little has been done to make the second part of that process much easier.

There are essentially two fundamental parts to SAM: discovery and reconciliation. There are scores of tools that can sniff out applications on the network – some are more sophisticated than others. In fact, the bigger challenge is in reconciling the actual licence constructs with the management of the assets they relate to.

“A lot of organisations will have some form of discovery technology – often something thrown in for free with a volume licensing agreement,” says Fisher. “But where they fall down is that they won’t have any automated tool to manage the licensing side and the reconciliation of the licenses against the discovered software.”

Indeed, the automation of licence reconciliation has become the new battleground for SAM vendors.

The emerging generation of products use business rules technology to map the constructs of licence agreements onto libraries of discovered software, built up from hundreds of customer audits.

“SAM has moved away from simply focusing on compliance in the last few years, from an ‘Am I licensed or not’ question to ‘What is the most effective way of being licensed’,” says Matt Fisher, VP of marketing at asset management vendor FrontRange. And one of the reasons is overspend: “The reality is that organisations can be compliant and still be wasting a hell of a lot of money.”


In the current economic climate, customers want to find cost savings in their catalogue of software licences.

“As well as ensuring compliance, SAM is now much more about looking at the licence agreements you are currently under and the maintenance contracts you have, and figuring out where you are spending money you simply don’t need to spend,” says Fisher.

For example, a lot of organisations still have a policy of ‘new employee/new build’, he says. “Historically, people weren’t tracking all the old stuff [they were disregarding]. And now when they put SAM processes and technology in place they can start to recover licences they had neglected,” says Fisher.

And, in many cases, that recovery can involve big numbers. It is not uncommon in large organisations for the licence base for individual users to be as much as $5,000.

For example, when Rentokill Initial, the pest control and cleaning company, ran an audit of its software using ManageSoft’s tools, it was able to claw back a six-figure sum from one software vendor alone. The issue there was that whenever Rentokill retired a hardware asset, the company rarely took any of the software off it. A new CIO banished that wasteful practice and enforced ‘re-harvesting’ of software assets.

“People in purchasing, in IT, think they have long ago solved this problem: ‘Surely we are not buying stuff we don’t need’,” says Cresswell. “It is breathtaking how much waste there is among large corporations on software, simply because they are unable to identify those software assets that are lying dormant.”

“They are perfectly within their rights to recycle that software to a new user, but they have not been doing that. They were just buying more,” says Cresswell.

Whether the issue is overspend, a compliance shortfall or the lack of visibility that virtualisation can trigger, organisations are having to take a more strategic view of the management of their software assets.

“You have got to be able to determine if you are getting full business value from those assets,” says Cresswell. “And if you are not getting that value, then there is plenty of scope for you to claw back the expense of them,” he adds.

Further reading

Flexible terms
The licensing crisis as buyers reject old ways to pay and vendors struggle to adopt new models

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David Cliff

David Cliff is managing director of Houghton le Spring-based Gedanken, a company specialising in coaching-based support and personal development. Cliff is an experienced trainer, manager and therapist,...

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