Software Asset Management

The price of software has risen dramatically, especially for large systems.

The price of software has risen dramatically, especially for large systems. Today, software costs can quickly consume the average IT budget. That's why increasing numbers of organizations are turning to Software Asset Management (SAM) to help manage and control their software costs. Yet according to IDC, less than half of 250 companies it recently surveyed actively practice asset management.

The Three Faces of SAM

Discovery: Also known as software auditing or tracking tools, these systems help companies identify exactly what they have. They do so by regularly performing inventories on all company machines. Vendors include Microsoft, Intel, Tally Systems and Tangram Enterprise Solutions.

Repository: Centrally stores information concerning product licensing, cost, support, information, etc. Repository vendors include MainControl and Peregrine.

Usage: The smallest of the three sectors, software usage tools monitor systems to determine which applications are being used and by whom. It helps companies determine their true requirements, giving an upper hand when it comes time to renegotiate contracts. Gartner Inc. predicts that this area will see substantial growth as more vendors move toward subscription-based pricing. Current vendors include ABC Systems and Development and Tally Systems.

SAM systems may also include electronic software distribution and software-license tracking components.

Need for Integration
There has yet to emerge a true end-to-end solution. Most installations are made up of several technologies from different vendors, brought together with the help of a third-party systems integrator.

Gartner's Patricia Adams believes that such a heterogeneous approach isn't necessarily bad. She explains, "Although there is some value in implementing each tool individually, it is in the integration of these tools and processes over time where enterprises will realize the most value."

Problem Spots:

Vendor acquisitions

Always keep in mind the potential impact an acquisition would have on your software licensing strategy. When IBM acquired Informix in the spring of 2001, for example, it soon became clear that IBM would gradually end support for Informix products and push, instead, for a massive customer migration to DB2.

The impact of an acquisition of your primary vendor isn't always negative. Although it may force you to re-examine your technology before you're ready, it can also result in significant savings. Other software vendors almost always offer discounts in an attempt to take over the competition's market share.

If you're an existing Informix customer, for example, analysts agree that you're safe in the short term but should begin considering a migration path to another RDBMS. Expect to be pitched heavily by Microsoft and Oracle. META Group sets a timeframe of two to three years before you should be off Informix completely. Meanwhile, Gartner takes a more moderate view, saying that Informix customers need not worry that they will have to embark on an immediate forced migration away from Informix products.

New releases and expired support
Typically, vendors will discontinue support for previous products only once an upgrade is released. "The cost of software replacement due to a vendor ending support can be high, especially for large enterprises," explains Gartner's Tony Adams. "Therefore, [vendors] providing the ability to better plan migration expenses benefits customers as well as creates a potential competitive advantage for vendors."

PeopleSoft broke away from this practice with a simplified support policy. For PeopleSoft 7.5 and higher, the company will support and maintain all major and minor code releases for four years after that code becomes generally available.

From a Different Angle: The Three Other Faces of SAM

Licenses: What licenses do we have and what are the terms of these licenses? Are we in compliance with those terms, and are we getting what we're paying for or paying for more than we need?

Ownership: What do we legitimately own and possess in-house? Is it actually being used? By whom? Should the contract be renegotiated? Can we replace the product with a lower-priced competitor?

Usage: What do people actually have on their machines? What applications? Are they running the latest versions? Are they running pirated software or software that isn't supported by the company?

Hold Your Horses
Nearly all industry experts are quick to warn that SAM tools in themselves are only part of the equation. Equally important: A strong underlying process and procedure that incorporates representatives from all branches of a corporation, not just the IT staff.

SAM's Friendly Foes: ESD and ASP

ESD: Electronic Software Distribution
The early promise of ESD hasn't materialized. Many ESD providers are rethinking their approach. ESD provided no support once customers purchased and downloaded the software, especially for managing and distributing licenses. Many ESD vendors are now adding SAM services as a part of their overall offerings. ESD vendors Intraware and Corporate Software are two such vendors.

ASP: Application Service Provider
These virtual software hosts may overshadow ESD providers because they host the software and customers simply rent it. Experts predict that ASPs will take over the ESD market share quickly. While ASPs "own" the software and therefore have greater responsibility for adhering to license laws and copyrights, customers still need to include these applications in their overall SAM strategy.

Licensing Updates

Oracle: In June 2001, Oracle ended its much-criticized "universal power unit" license model where users were charged different rates depending on the machine or processor type. Now, all customers will pay a flat fee per processor.

IBM: The company's new License Manager follows a usage-based pricing model where users pay by the flexible, partitioned workload. META Group predicts that this type of model will become standard for software billing across most major server platforms. According to META Group, however, before this model can become the standard on non-mainframe platforms, these platforms will first need to provide more mature partitioning and workload management capabilities.

Microsoft: In May 2001, Microsoft announced dramatic changes to its volume-licensing program, moving toward an annual per-user subscription-style service. Unfortunately, the company gave customers less than five months to transition to the new program. After much public criticism, Microsoft has made several concessions to ease customer transition burdens.

Keep in mind that licensing is only part of the total cost of ownership for any software implementation. Plan on spending between two and six times the license cost on installing and customizing the software.