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                     Stretching the Software Budget:
                     A Practical Guide to Enterprise License Optimization
Stretching the Software Budget:
                       A Practical Guide to Enterprise License Optimization
                       Organizations can get much greater business value from their software budgets by eliminating waste, more
                       intelligently allocating entitlements, and negotiating more effectively with vendors. These Enterprise License
                       Optimization (ELO) strategies pay particularly big dividends when applied to high-value applications. This white
                       paper explains how ELO works—and offers practical advice about how to implement ELO in the real world.


                       Executive Summary                                                     IT departments t herefore need a partner capable of providing
                       Software is of tremendous importance to today’s IT-intensive          t he	tools,	expert ise,	and	human	resources	necessary	to	fill	t he	
                       organizations. In fact, the appetite of organizations for software    “ELO gap.”
                       is growing at a faster pace than software budgets—especially in
                       light of current economic conditions. It is therefore more critical   Flexera Software is such a partner. By providing a complete
                       than ever for software buyers to get maximum value out of every       turnkey solut ion—including advanced ELO tools, proven
                       dollar they spend on software.                                        ELO expert ise, and rapidly deployable ELO teams—Flexera
                                                                                             Software enables organizat ions to quickly and painlessly
                       To successfully stretch their budgets, software buyers have to:       pinpoint over-spending, mit igate compliance risks, opt imally
                                                                                             allocate exist ing ent it lements, improve budget planning, and
                       	 •		 liminate spending on unnecessary “shelfware” licenses and
                           E                                                                 negot iate much more effect ively. As a result, Flexera Software
                           maintenance fees                                                  customers consistent ly achieve substant ial cost savings and
                       	 •		 itigate the risk of under-licensing and negative audit
                           M                                                                 reap	significant ly	greater	value	from	t heir	software	spending.
                           outcomes
                       	 •		 llocate software entitlements where they provide the most
                           A
                           value
                       	 •		 nify purchases and contracts across the enterprise
                           U                                                                                                                                                 Enterprise License
                       	 •		 ccurately forecast and plan future spending
                           A                                                                                                                                                   Optimization
                                                                                             Software Asset Management Maturity




                         Enterprise License
                       	 •		 onduct smarter, fact-based negotiations with software vendors
                           C
                                  Optimization
                       These budget-stretching best practices are known collectively
                       as Enterprise License Optimization (ELO). ELO advances the
                                                                                                                                               Management


                                                                                                                                                               Management


                                                                                                                                                                            Management




                       maturity of existing Software Asset Management operations
                                                                                                                                                                                           Monitoring



                                                                                                                                                                                                        Discovery/
                                                                                                                                                                             Entitlement
                                                                                                                                                Installation




                                                                                                                                                                                                         Inventory
                                                                                                                                    Security




                       by	bringing	more	insight	and	rigorous	financial	discipline	to	
                                                                                                                                                                                            Usage
                                                                                                                                                                 Patch
    Patch Management




                       software acquisition and ownership. By implementing ELO best
                           Management



                                          Monitoring




                                                       Discovery/
                            Entitlement




                                                        Inventory
                                           Usage




                       practices, organizations of all kinds can achieve substantial cost
                       savings while greatly improving their ability to use software to
                       achieve their strategic objectives.

                       Unfortunately, most organizations lack three things necessary to
                                                                                             ELO advances the maturity of existing Software Asset Management
                       do ELO:                                                               operations

           1. ELO tools t hat provide visibility into how high-value
              applicat ions are being used across t he enterprise—and
              how t hat usage compares to complex software ent it lements
           2. ELO subject-matter expert ise necessary to make t he best
              possible decisions about spending, contract negot iat ion,
              and t he allocat ion of ent it lements based on t he
Enterprise License ion provided by ELO tools
              informat
         	 3.		 LO	staff	t hat	can	perform	required	tasks	in	an	efficient	
              E
  Optimization t imely manner
              and

                       2                                                                                                          Flexera Software: FlexNet Manager Suite White Paper Series
M
Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion




Stretching the Enterprise Software Budget                                   More vendor audits. Tight markets have led vendors to become
Software is a major business expense, typically represent ing               more aggressive about auditing customers. Gartner indicates
more t han 30% of total IT budgets in Nort h American                       that more than 50% of their clients have been audited by at
businesses.1 Software also cont inues to become more and more               least one software vendor in the past 12 months, up from 30%
crit ical to t he business. High-value applicat ions in part icular—        to 35% from previous years.4 These audits raise the risk of
such as t hose offered by Microsoft, Oracle, IBM, and SAP—are               fines	and	can	disrupt	operations	as	software	deployments	are	
a primary means by which IT departments enable t he business                thoroughly inventoried and compared to purchasing records.
to execute core processes more quickly, easily, and accurately.
                                                                            More complex licensing models. In their pursuit of more
Current economic condit ions, however, put severe constraints               revenue, vendors are implementing more complex usage and
on software budgets. Gartner, for example, recent ly revised its            subscription-based	pricing	models—and	defining	more	complex	
project ions for annual worldwide enterprise software spending              contract terms and conditions. They are also bundling functional
downward by $8.8 billion.2                                                  modules in different ways to incent IT departments to buy more
                                                                            software licenses. This complexity presents software buyers
So, to ensure t hat an organizat ion can successfully compete               with new challenges when it comes to negotiating contracts,
in today’s technology-dependent marketplace, software buyers                allocating budget resources, and projecting future requirements.
must squeeze t he greatest possible business value out of every
dollar t hey spend. A good place to start is among vendors                  The growth of virtualization and cloud computing. By creating
where t he majority of spending occurs.                                     more instances of servers, virtualization also creates more
                                                                            instances of applications and databases. This “virtual sprawl”
                                              2008-2009                     creates the potential for non-compliance and much higher
                      2008       2009**                                     licensing costs.
                                               % change
 Microsoft*          $44.55      $42.19            -5%                      A persistent shelfware problem. When budgets were less
 Oracle              $23.53      $22.90            -3%                      constrained, many companies got into the habit of buying more
 IBM                 $22.07      $21.69            -2%                      licenses and support contracts than necessary because they
                                                                            lacked the tools to accurately determine user demand. These
 SAP                 $16.91      $15.36            -9%                      habits have led to millions of dollars in unnecessary spending on
 EMC                  $6.21       $6.11            -2%                      shelfware licenses and maintenance that are no longer tolerable.
 * Forrester forecast                                                       As a recent research report from Gartner explains:
 ** Excludes revenues from sales to consumers
                                                                                    No enterprise has escaped the scourge of shelfware, but few
Largest Software Vendors by Sales to Business and Government                        are aware of the scale of the problem and the significant
(US$ billions)3                                                                     amount of budget waste attributable to it. IT budget is too
                                                                                    precious to fritter it away on solutions that do not deliver
Several market factors make it particularly important for                           appropriate value.5
organizations	to	apply	more	rigorous	financial	discipline	to	their	
software spending:                                                          Responsiveness to organizational change. As businesses respond
                                                                            to changing market conditions through mergers, acquisitions,
Greater disparity between demand growth and budget growth. As               and divestitures, they have to restructure their software
noted above, economic conditions are severely limiting software             entitlements accordingly. If they don’t, they can easily wind
budgets at the same time as organizations are becoming                      up over-spending on redundant licenses or lapsing into non-
increasingly technology-dependent. Buyers must therefore meet               compliance with
escalating demand for software without increasing their budgets             existing contracts.
proportionally.
                                                                            The bottom line is that software buyers have to be savvier than
Rising licensing costs and maintenance fees. In the face of                 they have ever been before. The practices and policies of the
tightening markets, software vendors are raising prices to extract          past	simply	won’t	suffice	in	a	market	environment	where	cost,	
more revenue from existing customers. SAP, for example made its             complexity, and risk continue to escalate.
customers move to a premium support service that costs 22% of
their base licensing fee—compared with the previous standard
service, which cost 17%. Oracle, for its part, increased the cost
of certain options for its database by as much as 40 percent.
And processor licenses for its diagnostic and tuning packs went
from $3,500 in 2008 to $5,000 in 2009.                                       1
                                                                                 IDC, 2008,
                                                                             2
                                                                                 Forecast: Enterprise Software Markets Poised for Recovery in 2010, Gartner, 2009
                                                                             3
                                                                                 Global and US Software Market 2009-2010, Forrester Research, Inc., July 2009
                                                                             4
                                                                                 Polls and Surveys Show an Increase in Software License Audits, Gartner, 2009
                                                                             5
                                                                                 Shelfware Is Stealing Your Budget: Spot It and Stop It, Gartner, May 15, 2009




Flexera Software: FlexNet Manager Suite White Paper Series                                                                                                          3
Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion




ELO: The Savvy Software Buyer’s Response
Savvy software buyers are responding to the new challenges                                   A leading global consumer products company lacked clear
they are facing by enhancing their Software Asset Management                                 visibility into its usage and compliance position relative to
(SAM) programs with Enterprise License Optimization                                          Oracle and SAP. By implementing ELO best practices, the
(ELO) capabilities.                                                                          company was able to reduce its spending on Oracle alone
                                                                                             by $3.3 million over three years by moving to a named user
The maturity of SAM programs varies widely among                                             license model and buying application-specific licenses for the
organizations. Often, such programs are focused primarily                                    Oracle databases supporting its SAP implementation.
on making sure that the number of software licenses
purchased matches the number of copies installed in order
to ensure compliance.

But mere avoidance of non-compliance does not prevent                                      2. The ability to accurately understand complex license agreements.
overspending, nor does it help ensure that software budget                                    Contracts for high-value applications often specify entitlements
dollars are allocated where they will provide the most value                                  for many diverse software components. A vendor like SAP
to the organization. To achieve these objectives, software                                    may also specify multiple types of named users in its
buyers	must	be	able	to	answer	more	difficult	questions	such	                                  licensing model.
as “What separately licensed components of the software are
being used?”and “How can we structure a licensing deal so that                             In addition, organizations may have multiple contracts for
we get all the functionality we really need—and don’t pay for                              multiple departments or business units. ELO requires the
functionality that we don’t really need?”                                                  ability to understand both the letter and the intent of these
                                                                                           complex agreements.
To	answer	these	questions—especially	for	costly	back-office	
application suites such as SAP and Oracle, which have complex                              3. The ability to map usage to complex license agreements. To
entitlements and usage characteristics—IT departments and                                     optimally structure a licensing agreement with SAP, a software
procurement teams have to enhance their SAM operations                                        buyer needs a precise understanding of each user’s role
with ELO best practices. Several key characteristics distinguish                              and behavior. In the case of Oracle, a software buyer may
mature, ELO-capable SAM programs:                                                             have to carefully consider the comparative advantages and
                                                                                              disadvantages of a processor-based license vs. a named user
                                                                                              license. ELO provides this essential insight. Conventional SAM
    1 Insight into                                                                            does not.
      usage data
                                                      • Cut waste
                                                                                           4. The ability to perform trend analysis for usage of software
                                                      • Maintain compliance                   components across the enterprise. To pinpoint potential
               3 Ability to map use     4 Trend       • Optimize use                          savings, IT departments need to be able to track usage trends
                                                                                              for software components across the enterprise. For example,
                     and entitlements    Analysis
                                                      • Consolidate purchases                 they may need to be able to see that usage of an especially
                                                                                              expensive component of a high-value application is declining
                                                      • Plan accurately
                                                                                              in one area of the business while it is increasing in another
    2 Understanding of                                • Negotiate effectively                 area. The ability to perform this type of analysis differentiates
    complex license terms                                                                     mature, ELO-capable SAM from less mature programs.

                                                                                           From this perspective, ELO enablement can be viewed as
                                                                                           significant	enhancement	to	conventional	SAM—since	it	brings	a	
1. The ability to capture relevant usage data from high-value                              new	level	of	insight	and	financial	discipline	to	the	ownership	of	
   applications. Existing SAM programs may be able to detect                               business software.
   the installation of basic desktop software, but they are
   typically unable to provide full insight into the usage of the
   various	components	of	back-office	applications	that	may	be	
   itemized in a complex vendor contract. ELO, on the other
   hand, requires the ability to easily extract more sophisticated
   usage data—including such subtleties as indirect access—
   without subjecting software managers to “information
   overload.”




4                                                                                                 Flexera Software: FlexNet Manager Suite White Paper Series
Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion




ELO Benefits                                                              Unify purchases and contracts across the enterprise
Software	buyers	reap	a	variety	of	highly	compelling	benefits	             All	kinds	of	inefficiencies	arise	when	organizations	acquire	and	
when they enhance their existing SAM programs with ELO.                   manage software entitlements in a fragmented manner. One
These	benefits	become	even	more	compelling	as	the	demand	for	             department may not have enough licenses, while another has
software across the organization continues to outpace software            more than it needs. Licenses on multiple individual processors
budgets—and as the consequences of inadequate software                    may each be under-utilized, even though it would be more
governance, such as over-spending and non-compliance,                     efficient	to	consolidate	some	of	those	instances	on	a	single	
become less tolerable.                                                    multi-processor machine. ELO helps eliminate these common
                                                                          inefficiencies	by	providing	an	enterprise-wide	view	of	licenses,	
As IT departments and procurement teams gain ELO capabilities,            contracts, deployments, and usage—along with reporting that
they are able to:                                                         highlights opportunities for budget-stretching re-allocations
                                                                          and consolidations. ELO reports can also be used to structure
Eliminate unnecessary licenses and maintenance fees                       chargebacks, so that costs can be fairly distributed as software
By providing precise insight into which software entitlements are         resources	are	more	flexibly	shared	between	different	groups.
being used and which ones are not, ELO helps software buyers
quickly pinpoint and eliminate unnecessary spending. ELO is               Accurately forecast and plan future spending
especially useful for moving away from expensive enterprise               IT	departments	that	underestimate	their	licensing	needs	can	find	
license agreements—which many organizations bought into as                themselves	unable	to	fulfill	key	business	requirements	in	a	timely	
a	way	of	avoiding	the	difficulties	of	tracking	usage,	negotiating	        manner. If they overestimate their needs, on the other hand,
contracts based on that usage, and then monitoring ongoing                they may wind up unnecessarily withholding funding from some
compliance with the resulting agreement. ELO overcomes these              other worthwhile IT project. ELO reporting provides software
difficulties	so	that	organizations	can	avoid	enterprise	licenses	         decision-makers with the trending data they need to align
wherever	they	are	not	cost-efficient.                                     budget projections as closely as possible with future business
                                                                          demand, so they can avoid either over-funding and/or under-
Mitigate the risk of under-licensing and negative audit outcomes          funding critical IT initiatives.
Conventional SAM implementations typically only track
inventories of installed titles on desktops and, in some cases and        Conduct smarter, fact-based negotiations with software vendors
in some rudimentary ways, on servers. This basic inventorying             Negotiators who don’t know exactly what their companies
is	not	sufficient	for	maintaining	compliance	with	the	complex	            need and don’t need can’t press for the concessions that will
licensing agreements and usage models that characterize                   be	most	financially	advantageous—or	make	concessions	that	
high-value	back	office	applications.	ELO	extends	visibility	into	         will have little bottom-line impact. The insight that ELO provides
these more complex applications to address these potentially              can thus be extremely valuable when it comes to negotiations
significant	compliance	exposures.                                         with software vendors. Using this insight, negotiators can
                                                                          press for deal structures that align well with their actual usage
Allocate existing software entitlements where they provide the            requirements. They can also gain leverage by bringing the full
most value                                                                potential sales revenue represented by the entire organization
When budgets are limited, it is essential to allocate software            to the table, rather than negotiating multiple small contracts for
entitlements where they can provide the most value. An                    each business unit.
organization that can only afford to buy 40 administrator-
level licenses for a given software title, for example, has to            ELO	can	provide	many	other	business	benefits	as	well.	It	can,	
make sure that those license are allocated to the top 40 users            for	example,	help	prevent	the	disruptive	“fire	drills”	that	typically	
of that software—instead of wasting them on users who only                take place when a major vendor audit looms—since the data
need occasional access to administrator-level entitlements. ELO           necessary to respond to such an audit is collected on an ongoing
provides the kind of granular usage reporting that is essential           basis. By providing granular visibility into the usage of high-
for this kind of decision-making.                                         value software across the organization, ELO also makes it
                                                                          easier to calculate chargebacks—and to make sure that those
                                                                          chargebacks are fair. These chargebacks can improve P&L
                                                                          accounting and help secure additional IT funding from business
                                                                          units as appropriate.


  After discovering discrepancies in an audit of its SAP                  These	benefits	make	the	implementation	of	ELO	a	very	
  licensing during a manual audit, a $4 billion mechanical                worthwhile undertaking for any organization that spends a
  contracting company decided to implement mature ELO                     significant	amount	of	money	on	high-value	software.	With	ELO,	
  practices. As a result, the company was eventually able to              organizations can make much better use of limited software
  avoid purchasing 2,872 SAP licenses for a total savings of              budgets	and	free	up	financial	resources	for	other	strategic	
  $4.3 million.                                                           business requirements.




Flexera Software: FlexNet Manager Suite White Paper Series                                                                                                 5
Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion




The ELO Gap: Tools, Expertise, and Human Bandwidth                                         The expertise gap
Despite	the	fact	that	organizations	can	substantially	benefit	                             ELO is a unique discipline that falls between multiple domains
from ELO, a relatively small percentage are actually doing it.                             of expertise. On the technical level, it requires application and
Considering how attractive a 15%-25% reduction in high-value                               database administrators who understand how complex, high-
software costs would be to any organization, it is natural to ask                          value software is architected—including the components of that
why this is the case.                                                                      software, the functionality those components provide, and how
                                                                                           that functionality is used on a day-to-day basis.

                                                                                           On the management level, ELO touches IT, procurement, and
                                                                                           finance.	As	a	recent	research	report	from	Gartner	explains:

                              Tools gap
                                                                                             IT can’t operate without budget information from finance.
                                                                                             Procurement needs accurate data that reflects the installed asset
                            Expertise gap                                  Enterprise
        Today                                                                                base and how those assets are being used. Finance also needs
                                                                            License
                                                                                             accurate inventory information, with regard to future technology
                             Human                                        Optimization
                                                                                             requirements, to set realistic financial goals and budgets. Without
                          bandwidth gap                                                      this information sharing, procurements may be less than optimal.6

                                                                                           The report adds that “Siloed behavior of the groups will create
                                                                                           potential process gaps within each group and among them.”
                                                                                           Finance managers focus on determining which spending is truly
         Maturity of SAMPrograms
          Maturity of SAM Programs                                                         necessary and which is not. Procurement managers focus on
                                                                                           figuring	out	the	best	way	to	structure	a	deal.	IT	managers	focus	
Even the most cursory review of the typical enterprise reveals                             on making the best use of whatever software assets they have.
three factors that prevent the further maturation of SAM                                   These	differences	can	make	it	difficult	to	collaborate	to	the	extent	
programs	required	to	reap	the	full	benefits	of	ELO:	                                       that is required for effective ELO.

The tools gap                                                                              Also, the personal experience of these process participants is
Most organizations have acquired SAM tools in order to                                     typically limited to the few companies where they have worked.
inventory desktop applications, administer support agreements,                             This limited range of experience limits their expertise in key ELO
and perform other core software asset management tasks. These                              issues—such as the allocation problems commonly found in
conventional	SAM	tools,	however,	are	insufficient	for	ELO.	To	do	                          enterprise environments or the idiosyncrasies of certain vendors’
ELO, software buyers need tools that can:                                                  negotiating tactics.

	 •		 iscover	the	various	modules	and	components	of	high-value	
    D                                                                                      The human bandwidth gap
    software suites                                                                        Time may be the scarcest resource of all for today’s
	 •		 rack	usage	of	those	modules	and	components
    T                                                                                      organizations. IT staffs, for example, are being pushed to their
	 •		 orrelate	software	instances	to	server	configurations	(such	as	
    C                                                                                      limits as they try to deliver more services, prevent downtime, and
    number of processors and number of processor cores)                                    fend off cyber-threats. Few IT departments therefore have time to
	 •		 aintain	information	on	all	vendor	agreements,	regardless	
    M                                                                                      evaluate ELO tools, learn how to use whichever tool they choose,
    of their structure or complexity                                                       and	then	manage	communications	with	finance	and	procurement	
	 •		 rovide	the	reporting	and	analytics	necessary	to	pinpoint	
    P                                                                                      so that the data generated by that tool can be properly used to
    opportunities for savings, consolidation, and re-allocation—                           fully optimize software licensing and maintenance budgets.
    as well as any potential compliance issues.
                                                                                           Finance and procurement managers don’t have much time to
Gathering this information manually is not an option. For one                              spare, either. They are unlikely to invest much time in learning
thing, manual processes are too error-prone and time-consuming.                            the complexities of high-value software or the historical
For another, manual inventories are not likely to be performed in                          negotiating patterns of multiple enterprise software vendors. Nor
a consistent manner by technicians working in entirely different                           are they likely to pore over detailed ELO reports in the hopes of
areas of the enterprise. This further compromises any resulting                            finding	cost	savings	that	will	make	it	worth	their	while	to	do	so.	
data. An automated ELO toolkit is therefore essential for reaping
the	benefits	of	ELO	best	practices.                                                        It stands to reason, then, that most companies need an ELO
                                                                                           partner who can provide them with the right tools, expertise,
                                                                                           and out-tasking services on an on-demand basis. To obtain the
                                                                                           benefits	of	ELO	without	diverting	limited	resources	from	other	
                                                                                           critical	tasks,	these	companies	will	need	to	offload	the	burdens	
                                                                                           of both their initial ELO ramp-up and their ongoing
6
    The Finance, Procurement and IT Connection Is a Three-Way Street, Gartner, 2008        ELO processes.


6                                                                                                 Flexera Software: FlexNet Manager Suite White Paper Series
Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion




Flexera Software’s Turnkey Solution                                         3. Optimize
To help companies overcome the ELO gap, Flexera Software                       Once a consensus has been reached on which
has developed a full-service solution that delivers the tools,                 recommendations to pursue, Flexera Software supports
expertise,	and	services	they	need	to	reap	the	business	benefits	               their implementation. This may include reviewing license
of true enterprise license optimization.                                       re-allocation, providing counsel during active negotiations
                                                                               with vendors, and/or helping to establish new business
The technology foundation for Flexera Software’s ELO solution is               processes	that	engage	IT,	procurement	and	finance.	These	
FlexNet Manager Suite for Enterprises™, which collects detailed                process improvements augment immediate cost savings with
license usage data for enterprise software from vendors such                   sustainable ELO best practices.
as SAP and Oracle—as well as the nearly 20,000 high-value
applications licensed with Flexera Software’s FlexNet® Publisher            4. Manage
technology.	FlexNet	Manager	Suite	for	Enterprises	unifies	                     Flexera Software can continue to perform ongoing ELO
the data required to analyze usage trends by business unit,                    activities over time on an out-tasked basis. These activities
geography, and other parameters across the organization.                       include the ongoing monitoring of changes in application
                                                                               usage	and	the	identification	of	potential	compliance	issues,	
Flexera Software’s solution also enables companies to leverage                 as well as more intensive short-term activities associated
the expertise and experience gained from over 20 years of                      with preparation for contract renewals and audits. By
specialization in software licensing. With their unmatched                     providing out-tasked services, Flexera Software can cost-
wealth of knowledge, Flexera Software professionals can quickly                effectively keep ELO processes on track while enabling
and effectively analyze license usage data from even the largest               organizations to avoid new hiring and training burdens.
companies in order to discover shelfware, assess compliance
risks, and make intelligent recommendations for license re-              Flexera	Software’s	flexible	engagement	terms	allow	
allocation and improved procurement.                                     organizations to adopt whatever model best meets their needs.
                                                                         They can engage Flexera Software for all four lifecycle phases
Using this technology and expertise, Flexera Software provides           or	just	the	first	three.	They	can	opt	to	engage	for	all	four	on	a	
complete ELO lifecycle services that help companies to rapidly           temporary basis, while pursuing transfer of expertise in order to
achieve their ELO objectives without diverting internal resources        take on ongoing ELO processes internally in the future. They can
that are needed for other critical tasks. This ELO lifecycle is          also opt to acquire and implement FlexNet Manager Suite with
comprised of four phases:                                                only minimal logistical support from Flexera Software.

  1. Assess                                                              Whatever engagement model they choose, organizations that
     Flexera Software guides the implementation of FlexNet               work	with	Flexera	Software	can	quickly	fill	their	ELO	gap.	Any	
     Manager Suite so that usage data from across the                    current lack of tools, expertise, and/or human bandwidth can
     enterprise can be accurately correlated to current                  be	overcome	to	reap	the	full	benefits	of	proven	ELO	
     licensing agreements. Flexera Software also creates usage           best practices.
     projections based on the gathered data to determine where
     current licensing may become inadequate in the near term.

  2. Recommend
     Leveraging its unmatched expertise in vendors’ licensing
     rules, policies, business practices and negotiation
     strategies,	Flexera	Software	provides	specific,	unbiased	
     recommendations for optimizing license and maintenance
     spends. These recommendations take into account technical
     requirements, current contractual obligations, corporate
     policies, and other relevant factors. Flexera Software also
     quantifies	potential	cost	savings	and	may	provide	multiple	
     alternative approaches as appropriate.


  When a multi-national chemical manufacturer went into its
  first contract negotiation with SAP, its IT and procurement
  teams did not know exactly what types of licenses its users
  would need for their diverse roles and responsibilities. Using
  ELO, the company pinpointed users who didn’t actually need
  licenses—as well as those who could be downgraded to less
  expensive licenses. This allowed the company to purchase
  30% fewer total licenses than it had originally estimated.


Flexera Software: FlexNet Manager Suite White Paper Series                                                                                                7
Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion




An Optimized Path to Optimization                                                          Greater long-term adaptability. While ELO represents an
The	benefits	of	ELO	are	well-documented.	They	include	                                     important step in the ongoing evolution of SAM, it is certainly
substantial cost reductions, reduced compliance risk, better                               not	the	final	step.	Organizations	that	plan	on	continuing	to	
allocation of software assets, consolidated software agreements,                           evolve their SAM processes in response to constantly changing
more accurate budget planning, and more effective negotiation                              business conditions need a partner with a proven ability to
with primary IT vendors.                                                                   respond to the radical changes that have taken place in the
                                                                                           industry over the past quarter-century.
A working relationship with Flexera Software greatly enhances
the outcome of any ELO initiative by providing the following                               High-value software is likely to become even more critical to
additional	benefits:                                                                       organizational performance in the coming years. It is also likely
                                                                                           to become increasingly expensive and complex as leading
Faster time-to-benefit. Few organizations can afford to invest time                        software	vendors	seek	to	fulfill	the	demands	of	their	shareholders	
and money in an ELO initiative without seeing some concrete,                               in	a	difficult	global	economy.	Software	buyers	therefore	need	
near-term results. Flexera Software’s expertise and experience                             to take reasonable steps to defend their organizations against
help companies avoid project delays and pitfalls so that the                               unnecessary spending and unacceptable risk. ELO offers a
benefits	of	ELO	are	realized	sooner,	rather	than	later.                                    proven way of doing so. And Flexera Software uniquely offers a
                                                                                           proven way of achieving ELO excellence.
Higher ROI. By taking advantage of Flexera Software’s
sophisticated ELO technology and unmatched knowledge about                                 About Flexera Software
software licensing, companies can uncover opportunities for                                Flexera Software is the leading provider of strategic solutions
more cost savings and can negotiate even more effectively with                             for Application Usage Management; solutions delivering
software vendors. The result is greater long-term total returns on                         continuous compliance, optimized usage and maximized value
their ELO investments.                                                                     to application producers and their customers. Flexera Software
                                                                                           is trusted by more than 80,000 customers that depend on
Reduced project risk. Any IT initiative has its share of risks—                            our comprehensive solutions- from installation and licensing,
including project delays, cost over-runs, and inadequate results.                          entitlement and compliance management to application
A partnership with Flexera Software helps neutralize these risk                            readiness and enterprise license optimization - to strategically
factors by leveraging the lessons learned from a broad range of                            manage application usage and achieve breakthrough results
ELO implementations.                                                                       realized only through the systems-level approach we provide. For
                                                                                           more information, please go to: www.flexerasoftware.com
Greater industry credibility. With more than 20 years of
experience delivering market-leading solutions such as
InstallShield and FlexNet, Flexera Software is well-known
throughout the industry as a pioneer in software licensing and
management. Because of this, companies that partner with
Flexera	Software	will	have	a	significant	credibility	advantage	
with vendors when it comes to audits and negotiations.

Minimized disruption of existing operations. With internal
resources already stretched thin, few organizations can afford
even a short-term diversion of too many internal resources for an
ELO launch. Flexera Software helps minimize such disruptions
by	allowing	much	of	the	initial	“heavy	lifting”	to	be	offloaded—
and by keeping ELO projects focused on the most lucrative
opportunities for cost savings.

Easing of potential political conflicts. Anyone who has been
involved in an organization of any size knows the potential
political pitfalls that can results when an initiative requires
collaboration across departmental lines. The objectivity and
impartial authority that a third party like Flexera Software
brings to the table can help prevent these territorial issues from
undermining the progress of an ELO initiative.




8                                                                                                 Flexera Software: FlexNet Manager Suite White Paper Series
Flexera Software LLC                      Schaumburg                                United Kingdom (Europe,                   Japan (Asia,                                For more office locations visit:
1000 East Woodfield Road,                 (Global Headquarters):                    Middle East Headquarters):                Pacific Headquarters):                      www.flexerasoftware.com
Suite 400                                 +1 800-809-5659                           +44 870-871-1111                          +81 3-4360-8291
Schaumburg, IL 60173 USA                                                            +44 870-873-6300

Copyright © 2011 Flexera Software LLC. All other brand and product names mentioned herein may be the trademarks and registered trademarks of their respective owners.
                                                                                                                                                                        ELO_WP_StretchingBudget_Oct11

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Stretching the Software Budget: A Practical Guide to Enterprise License Optimization

  • 1. W H I T E PA P E R Stretching the Software Budget: A Practical Guide to Enterprise License Optimization
  • 2. Stretching the Software Budget: A Practical Guide to Enterprise License Optimization Organizations can get much greater business value from their software budgets by eliminating waste, more intelligently allocating entitlements, and negotiating more effectively with vendors. These Enterprise License Optimization (ELO) strategies pay particularly big dividends when applied to high-value applications. This white paper explains how ELO works—and offers practical advice about how to implement ELO in the real world. Executive Summary IT departments t herefore need a partner capable of providing Software is of tremendous importance to today’s IT-intensive t he tools, expert ise, and human resources necessary to fill t he organizations. In fact, the appetite of organizations for software “ELO gap.” is growing at a faster pace than software budgets—especially in light of current economic conditions. It is therefore more critical Flexera Software is such a partner. By providing a complete than ever for software buyers to get maximum value out of every turnkey solut ion—including advanced ELO tools, proven dollar they spend on software. ELO expert ise, and rapidly deployable ELO teams—Flexera Software enables organizat ions to quickly and painlessly To successfully stretch their budgets, software buyers have to: pinpoint over-spending, mit igate compliance risks, opt imally allocate exist ing ent it lements, improve budget planning, and • liminate spending on unnecessary “shelfware” licenses and E negot iate much more effect ively. As a result, Flexera Software maintenance fees customers consistent ly achieve substant ial cost savings and • itigate the risk of under-licensing and negative audit M reap significant ly greater value from t heir software spending. outcomes • llocate software entitlements where they provide the most A value • nify purchases and contracts across the enterprise U Enterprise License • ccurately forecast and plan future spending A Optimization Software Asset Management Maturity Enterprise License • onduct smarter, fact-based negotiations with software vendors C Optimization These budget-stretching best practices are known collectively as Enterprise License Optimization (ELO). ELO advances the Management Management Management maturity of existing Software Asset Management operations Monitoring Discovery/ Entitlement Installation Inventory Security by bringing more insight and rigorous financial discipline to Usage Patch Patch Management software acquisition and ownership. By implementing ELO best Management Monitoring Discovery/ Entitlement Inventory Usage practices, organizations of all kinds can achieve substantial cost savings while greatly improving their ability to use software to achieve their strategic objectives. Unfortunately, most organizations lack three things necessary to ELO advances the maturity of existing Software Asset Management do ELO: operations 1. ELO tools t hat provide visibility into how high-value applicat ions are being used across t he enterprise—and how t hat usage compares to complex software ent it lements 2. ELO subject-matter expert ise necessary to make t he best possible decisions about spending, contract negot iat ion, and t he allocat ion of ent it lements based on t he Enterprise License ion provided by ELO tools informat 3. LO staff t hat can perform required tasks in an efficient E Optimization t imely manner and 2 Flexera Software: FlexNet Manager Suite White Paper Series M
  • 3. Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion Stretching the Enterprise Software Budget More vendor audits. Tight markets have led vendors to become Software is a major business expense, typically represent ing more aggressive about auditing customers. Gartner indicates more t han 30% of total IT budgets in Nort h American that more than 50% of their clients have been audited by at businesses.1 Software also cont inues to become more and more least one software vendor in the past 12 months, up from 30% crit ical to t he business. High-value applicat ions in part icular— to 35% from previous years.4 These audits raise the risk of such as t hose offered by Microsoft, Oracle, IBM, and SAP—are fines and can disrupt operations as software deployments are a primary means by which IT departments enable t he business thoroughly inventoried and compared to purchasing records. to execute core processes more quickly, easily, and accurately. More complex licensing models. In their pursuit of more Current economic condit ions, however, put severe constraints revenue, vendors are implementing more complex usage and on software budgets. Gartner, for example, recent ly revised its subscription-based pricing models—and defining more complex project ions for annual worldwide enterprise software spending contract terms and conditions. They are also bundling functional downward by $8.8 billion.2 modules in different ways to incent IT departments to buy more software licenses. This complexity presents software buyers So, to ensure t hat an organizat ion can successfully compete with new challenges when it comes to negotiating contracts, in today’s technology-dependent marketplace, software buyers allocating budget resources, and projecting future requirements. must squeeze t he greatest possible business value out of every dollar t hey spend. A good place to start is among vendors The growth of virtualization and cloud computing. By creating where t he majority of spending occurs. more instances of servers, virtualization also creates more instances of applications and databases. This “virtual sprawl” 2008-2009 creates the potential for non-compliance and much higher 2008 2009** licensing costs. % change Microsoft* $44.55 $42.19 -5% A persistent shelfware problem. When budgets were less Oracle $23.53 $22.90 -3% constrained, many companies got into the habit of buying more IBM $22.07 $21.69 -2% licenses and support contracts than necessary because they lacked the tools to accurately determine user demand. These SAP $16.91 $15.36 -9% habits have led to millions of dollars in unnecessary spending on EMC $6.21 $6.11 -2% shelfware licenses and maintenance that are no longer tolerable. * Forrester forecast As a recent research report from Gartner explains: ** Excludes revenues from sales to consumers No enterprise has escaped the scourge of shelfware, but few Largest Software Vendors by Sales to Business and Government are aware of the scale of the problem and the significant (US$ billions)3 amount of budget waste attributable to it. IT budget is too precious to fritter it away on solutions that do not deliver Several market factors make it particularly important for appropriate value.5 organizations to apply more rigorous financial discipline to their software spending: Responsiveness to organizational change. As businesses respond to changing market conditions through mergers, acquisitions, Greater disparity between demand growth and budget growth. As and divestitures, they have to restructure their software noted above, economic conditions are severely limiting software entitlements accordingly. If they don’t, they can easily wind budgets at the same time as organizations are becoming up over-spending on redundant licenses or lapsing into non- increasingly technology-dependent. Buyers must therefore meet compliance with escalating demand for software without increasing their budgets existing contracts. proportionally. The bottom line is that software buyers have to be savvier than Rising licensing costs and maintenance fees. In the face of they have ever been before. The practices and policies of the tightening markets, software vendors are raising prices to extract past simply won’t suffice in a market environment where cost, more revenue from existing customers. SAP, for example made its complexity, and risk continue to escalate. customers move to a premium support service that costs 22% of their base licensing fee—compared with the previous standard service, which cost 17%. Oracle, for its part, increased the cost of certain options for its database by as much as 40 percent. And processor licenses for its diagnostic and tuning packs went from $3,500 in 2008 to $5,000 in 2009. 1 IDC, 2008, 2 Forecast: Enterprise Software Markets Poised for Recovery in 2010, Gartner, 2009 3 Global and US Software Market 2009-2010, Forrester Research, Inc., July 2009 4 Polls and Surveys Show an Increase in Software License Audits, Gartner, 2009 5 Shelfware Is Stealing Your Budget: Spot It and Stop It, Gartner, May 15, 2009 Flexera Software: FlexNet Manager Suite White Paper Series 3
  • 4. Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion ELO: The Savvy Software Buyer’s Response Savvy software buyers are responding to the new challenges A leading global consumer products company lacked clear they are facing by enhancing their Software Asset Management visibility into its usage and compliance position relative to (SAM) programs with Enterprise License Optimization Oracle and SAP. By implementing ELO best practices, the (ELO) capabilities. company was able to reduce its spending on Oracle alone by $3.3 million over three years by moving to a named user The maturity of SAM programs varies widely among license model and buying application-specific licenses for the organizations. Often, such programs are focused primarily Oracle databases supporting its SAP implementation. on making sure that the number of software licenses purchased matches the number of copies installed in order to ensure compliance. But mere avoidance of non-compliance does not prevent 2. The ability to accurately understand complex license agreements. overspending, nor does it help ensure that software budget Contracts for high-value applications often specify entitlements dollars are allocated where they will provide the most value for many diverse software components. A vendor like SAP to the organization. To achieve these objectives, software may also specify multiple types of named users in its buyers must be able to answer more difficult questions such licensing model. as “What separately licensed components of the software are being used?”and “How can we structure a licensing deal so that In addition, organizations may have multiple contracts for we get all the functionality we really need—and don’t pay for multiple departments or business units. ELO requires the functionality that we don’t really need?” ability to understand both the letter and the intent of these complex agreements. To answer these questions—especially for costly back-office application suites such as SAP and Oracle, which have complex 3. The ability to map usage to complex license agreements. To entitlements and usage characteristics—IT departments and optimally structure a licensing agreement with SAP, a software procurement teams have to enhance their SAM operations buyer needs a precise understanding of each user’s role with ELO best practices. Several key characteristics distinguish and behavior. In the case of Oracle, a software buyer may mature, ELO-capable SAM programs: have to carefully consider the comparative advantages and disadvantages of a processor-based license vs. a named user license. ELO provides this essential insight. Conventional SAM 1 Insight into does not. usage data • Cut waste 4. The ability to perform trend analysis for usage of software • Maintain compliance components across the enterprise. To pinpoint potential 3 Ability to map use 4 Trend • Optimize use savings, IT departments need to be able to track usage trends for software components across the enterprise. For example, and entitlements Analysis • Consolidate purchases they may need to be able to see that usage of an especially expensive component of a high-value application is declining • Plan accurately in one area of the business while it is increasing in another 2 Understanding of • Negotiate effectively area. The ability to perform this type of analysis differentiates complex license terms mature, ELO-capable SAM from less mature programs. From this perspective, ELO enablement can be viewed as significant enhancement to conventional SAM—since it brings a 1. The ability to capture relevant usage data from high-value new level of insight and financial discipline to the ownership of applications. Existing SAM programs may be able to detect business software. the installation of basic desktop software, but they are typically unable to provide full insight into the usage of the various components of back-office applications that may be itemized in a complex vendor contract. ELO, on the other hand, requires the ability to easily extract more sophisticated usage data—including such subtleties as indirect access— without subjecting software managers to “information overload.” 4 Flexera Software: FlexNet Manager Suite White Paper Series
  • 5. Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion ELO Benefits Unify purchases and contracts across the enterprise Software buyers reap a variety of highly compelling benefits All kinds of inefficiencies arise when organizations acquire and when they enhance their existing SAM programs with ELO. manage software entitlements in a fragmented manner. One These benefits become even more compelling as the demand for department may not have enough licenses, while another has software across the organization continues to outpace software more than it needs. Licenses on multiple individual processors budgets—and as the consequences of inadequate software may each be under-utilized, even though it would be more governance, such as over-spending and non-compliance, efficient to consolidate some of those instances on a single become less tolerable. multi-processor machine. ELO helps eliminate these common inefficiencies by providing an enterprise-wide view of licenses, As IT departments and procurement teams gain ELO capabilities, contracts, deployments, and usage—along with reporting that they are able to: highlights opportunities for budget-stretching re-allocations and consolidations. ELO reports can also be used to structure Eliminate unnecessary licenses and maintenance fees chargebacks, so that costs can be fairly distributed as software By providing precise insight into which software entitlements are resources are more flexibly shared between different groups. being used and which ones are not, ELO helps software buyers quickly pinpoint and eliminate unnecessary spending. ELO is Accurately forecast and plan future spending especially useful for moving away from expensive enterprise IT departments that underestimate their licensing needs can find license agreements—which many organizations bought into as themselves unable to fulfill key business requirements in a timely a way of avoiding the difficulties of tracking usage, negotiating manner. If they overestimate their needs, on the other hand, contracts based on that usage, and then monitoring ongoing they may wind up unnecessarily withholding funding from some compliance with the resulting agreement. ELO overcomes these other worthwhile IT project. ELO reporting provides software difficulties so that organizations can avoid enterprise licenses decision-makers with the trending data they need to align wherever they are not cost-efficient. budget projections as closely as possible with future business demand, so they can avoid either over-funding and/or under- Mitigate the risk of under-licensing and negative audit outcomes funding critical IT initiatives. Conventional SAM implementations typically only track inventories of installed titles on desktops and, in some cases and Conduct smarter, fact-based negotiations with software vendors in some rudimentary ways, on servers. This basic inventorying Negotiators who don’t know exactly what their companies is not sufficient for maintaining compliance with the complex need and don’t need can’t press for the concessions that will licensing agreements and usage models that characterize be most financially advantageous—or make concessions that high-value back office applications. ELO extends visibility into will have little bottom-line impact. The insight that ELO provides these more complex applications to address these potentially can thus be extremely valuable when it comes to negotiations significant compliance exposures. with software vendors. Using this insight, negotiators can press for deal structures that align well with their actual usage Allocate existing software entitlements where they provide the requirements. They can also gain leverage by bringing the full most value potential sales revenue represented by the entire organization When budgets are limited, it is essential to allocate software to the table, rather than negotiating multiple small contracts for entitlements where they can provide the most value. An each business unit. organization that can only afford to buy 40 administrator- level licenses for a given software title, for example, has to ELO can provide many other business benefits as well. It can, make sure that those license are allocated to the top 40 users for example, help prevent the disruptive “fire drills” that typically of that software—instead of wasting them on users who only take place when a major vendor audit looms—since the data need occasional access to administrator-level entitlements. ELO necessary to respond to such an audit is collected on an ongoing provides the kind of granular usage reporting that is essential basis. By providing granular visibility into the usage of high- for this kind of decision-making. value software across the organization, ELO also makes it easier to calculate chargebacks—and to make sure that those chargebacks are fair. These chargebacks can improve P&L accounting and help secure additional IT funding from business units as appropriate. After discovering discrepancies in an audit of its SAP These benefits make the implementation of ELO a very licensing during a manual audit, a $4 billion mechanical worthwhile undertaking for any organization that spends a contracting company decided to implement mature ELO significant amount of money on high-value software. With ELO, practices. As a result, the company was eventually able to organizations can make much better use of limited software avoid purchasing 2,872 SAP licenses for a total savings of budgets and free up financial resources for other strategic $4.3 million. business requirements. Flexera Software: FlexNet Manager Suite White Paper Series 5
  • 6. Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion The ELO Gap: Tools, Expertise, and Human Bandwidth The expertise gap Despite the fact that organizations can substantially benefit ELO is a unique discipline that falls between multiple domains from ELO, a relatively small percentage are actually doing it. of expertise. On the technical level, it requires application and Considering how attractive a 15%-25% reduction in high-value database administrators who understand how complex, high- software costs would be to any organization, it is natural to ask value software is architected—including the components of that why this is the case. software, the functionality those components provide, and how that functionality is used on a day-to-day basis. On the management level, ELO touches IT, procurement, and finance. As a recent research report from Gartner explains: Tools gap IT can’t operate without budget information from finance. Procurement needs accurate data that reflects the installed asset Expertise gap Enterprise Today base and how those assets are being used. Finance also needs License accurate inventory information, with regard to future technology Human Optimization requirements, to set realistic financial goals and budgets. Without bandwidth gap this information sharing, procurements may be less than optimal.6 The report adds that “Siloed behavior of the groups will create potential process gaps within each group and among them.” Finance managers focus on determining which spending is truly Maturity of SAMPrograms Maturity of SAM Programs necessary and which is not. Procurement managers focus on figuring out the best way to structure a deal. IT managers focus Even the most cursory review of the typical enterprise reveals on making the best use of whatever software assets they have. three factors that prevent the further maturation of SAM These differences can make it difficult to collaborate to the extent programs required to reap the full benefits of ELO: that is required for effective ELO. The tools gap Also, the personal experience of these process participants is Most organizations have acquired SAM tools in order to typically limited to the few companies where they have worked. inventory desktop applications, administer support agreements, This limited range of experience limits their expertise in key ELO and perform other core software asset management tasks. These issues—such as the allocation problems commonly found in conventional SAM tools, however, are insufficient for ELO. To do enterprise environments or the idiosyncrasies of certain vendors’ ELO, software buyers need tools that can: negotiating tactics. • iscover the various modules and components of high-value D The human bandwidth gap software suites Time may be the scarcest resource of all for today’s • rack usage of those modules and components T organizations. IT staffs, for example, are being pushed to their • orrelate software instances to server configurations (such as C limits as they try to deliver more services, prevent downtime, and number of processors and number of processor cores) fend off cyber-threats. Few IT departments therefore have time to • aintain information on all vendor agreements, regardless M evaluate ELO tools, learn how to use whichever tool they choose, of their structure or complexity and then manage communications with finance and procurement • rovide the reporting and analytics necessary to pinpoint P so that the data generated by that tool can be properly used to opportunities for savings, consolidation, and re-allocation— fully optimize software licensing and maintenance budgets. as well as any potential compliance issues. Finance and procurement managers don’t have much time to Gathering this information manually is not an option. For one spare, either. They are unlikely to invest much time in learning thing, manual processes are too error-prone and time-consuming. the complexities of high-value software or the historical For another, manual inventories are not likely to be performed in negotiating patterns of multiple enterprise software vendors. Nor a consistent manner by technicians working in entirely different are they likely to pore over detailed ELO reports in the hopes of areas of the enterprise. This further compromises any resulting finding cost savings that will make it worth their while to do so. data. An automated ELO toolkit is therefore essential for reaping the benefits of ELO best practices. It stands to reason, then, that most companies need an ELO partner who can provide them with the right tools, expertise, and out-tasking services on an on-demand basis. To obtain the benefits of ELO without diverting limited resources from other critical tasks, these companies will need to offload the burdens of both their initial ELO ramp-up and their ongoing 6 The Finance, Procurement and IT Connection Is a Three-Way Street, Gartner, 2008 ELO processes. 6 Flexera Software: FlexNet Manager Suite White Paper Series
  • 7. Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion Flexera Software’s Turnkey Solution 3. Optimize To help companies overcome the ELO gap, Flexera Software Once a consensus has been reached on which has developed a full-service solution that delivers the tools, recommendations to pursue, Flexera Software supports expertise, and services they need to reap the business benefits their implementation. This may include reviewing license of true enterprise license optimization. re-allocation, providing counsel during active negotiations with vendors, and/or helping to establish new business The technology foundation for Flexera Software’s ELO solution is processes that engage IT, procurement and finance. These FlexNet Manager Suite for Enterprises™, which collects detailed process improvements augment immediate cost savings with license usage data for enterprise software from vendors such sustainable ELO best practices. as SAP and Oracle—as well as the nearly 20,000 high-value applications licensed with Flexera Software’s FlexNet® Publisher 4. Manage technology. FlexNet Manager Suite for Enterprises unifies Flexera Software can continue to perform ongoing ELO the data required to analyze usage trends by business unit, activities over time on an out-tasked basis. These activities geography, and other parameters across the organization. include the ongoing monitoring of changes in application usage and the identification of potential compliance issues, Flexera Software’s solution also enables companies to leverage as well as more intensive short-term activities associated the expertise and experience gained from over 20 years of with preparation for contract renewals and audits. By specialization in software licensing. With their unmatched providing out-tasked services, Flexera Software can cost- wealth of knowledge, Flexera Software professionals can quickly effectively keep ELO processes on track while enabling and effectively analyze license usage data from even the largest organizations to avoid new hiring and training burdens. companies in order to discover shelfware, assess compliance risks, and make intelligent recommendations for license re- Flexera Software’s flexible engagement terms allow allocation and improved procurement. organizations to adopt whatever model best meets their needs. They can engage Flexera Software for all four lifecycle phases Using this technology and expertise, Flexera Software provides or just the first three. They can opt to engage for all four on a complete ELO lifecycle services that help companies to rapidly temporary basis, while pursuing transfer of expertise in order to achieve their ELO objectives without diverting internal resources take on ongoing ELO processes internally in the future. They can that are needed for other critical tasks. This ELO lifecycle is also opt to acquire and implement FlexNet Manager Suite with comprised of four phases: only minimal logistical support from Flexera Software. 1. Assess Whatever engagement model they choose, organizations that Flexera Software guides the implementation of FlexNet work with Flexera Software can quickly fill their ELO gap. Any Manager Suite so that usage data from across the current lack of tools, expertise, and/or human bandwidth can enterprise can be accurately correlated to current be overcome to reap the full benefits of proven ELO licensing agreements. Flexera Software also creates usage best practices. projections based on the gathered data to determine where current licensing may become inadequate in the near term. 2. Recommend Leveraging its unmatched expertise in vendors’ licensing rules, policies, business practices and negotiation strategies, Flexera Software provides specific, unbiased recommendations for optimizing license and maintenance spends. These recommendations take into account technical requirements, current contractual obligations, corporate policies, and other relevant factors. Flexera Software also quantifies potential cost savings and may provide multiple alternative approaches as appropriate. When a multi-national chemical manufacturer went into its first contract negotiation with SAP, its IT and procurement teams did not know exactly what types of licenses its users would need for their diverse roles and responsibilities. Using ELO, the company pinpointed users who didn’t actually need licenses—as well as those who could be downgraded to less expensive licenses. This allowed the company to purchase 30% fewer total licenses than it had originally estimated. Flexera Software: FlexNet Manager Suite White Paper Series 7
  • 8. Stretching t he Software Budget: A Pract ical Guide to Enterprise License Opt imizat ion An Optimized Path to Optimization Greater long-term adaptability. While ELO represents an The benefits of ELO are well-documented. They include important step in the ongoing evolution of SAM, it is certainly substantial cost reductions, reduced compliance risk, better not the final step. Organizations that plan on continuing to allocation of software assets, consolidated software agreements, evolve their SAM processes in response to constantly changing more accurate budget planning, and more effective negotiation business conditions need a partner with a proven ability to with primary IT vendors. respond to the radical changes that have taken place in the industry over the past quarter-century. A working relationship with Flexera Software greatly enhances the outcome of any ELO initiative by providing the following High-value software is likely to become even more critical to additional benefits: organizational performance in the coming years. It is also likely to become increasingly expensive and complex as leading Faster time-to-benefit. Few organizations can afford to invest time software vendors seek to fulfill the demands of their shareholders and money in an ELO initiative without seeing some concrete, in a difficult global economy. Software buyers therefore need near-term results. Flexera Software’s expertise and experience to take reasonable steps to defend their organizations against help companies avoid project delays and pitfalls so that the unnecessary spending and unacceptable risk. ELO offers a benefits of ELO are realized sooner, rather than later. proven way of doing so. And Flexera Software uniquely offers a proven way of achieving ELO excellence. Higher ROI. By taking advantage of Flexera Software’s sophisticated ELO technology and unmatched knowledge about About Flexera Software software licensing, companies can uncover opportunities for Flexera Software is the leading provider of strategic solutions more cost savings and can negotiate even more effectively with for Application Usage Management; solutions delivering software vendors. The result is greater long-term total returns on continuous compliance, optimized usage and maximized value their ELO investments. to application producers and their customers. Flexera Software is trusted by more than 80,000 customers that depend on Reduced project risk. Any IT initiative has its share of risks— our comprehensive solutions- from installation and licensing, including project delays, cost over-runs, and inadequate results. entitlement and compliance management to application A partnership with Flexera Software helps neutralize these risk readiness and enterprise license optimization - to strategically factors by leveraging the lessons learned from a broad range of manage application usage and achieve breakthrough results ELO implementations. realized only through the systems-level approach we provide. For more information, please go to: www.flexerasoftware.com Greater industry credibility. With more than 20 years of experience delivering market-leading solutions such as InstallShield and FlexNet, Flexera Software is well-known throughout the industry as a pioneer in software licensing and management. Because of this, companies that partner with Flexera Software will have a significant credibility advantage with vendors when it comes to audits and negotiations. Minimized disruption of existing operations. With internal resources already stretched thin, few organizations can afford even a short-term diversion of too many internal resources for an ELO launch. Flexera Software helps minimize such disruptions by allowing much of the initial “heavy lifting” to be offloaded— and by keeping ELO projects focused on the most lucrative opportunities for cost savings. Easing of potential political conflicts. Anyone who has been involved in an organization of any size knows the potential political pitfalls that can results when an initiative requires collaboration across departmental lines. The objectivity and impartial authority that a third party like Flexera Software brings to the table can help prevent these territorial issues from undermining the progress of an ELO initiative. 8 Flexera Software: FlexNet Manager Suite White Paper Series
  • 9. Flexera Software LLC Schaumburg United Kingdom (Europe, Japan (Asia, For more office locations visit: 1000 East Woodfield Road, (Global Headquarters): Middle East Headquarters): Pacific Headquarters): www.flexerasoftware.com Suite 400 +1 800-809-5659 +44 870-871-1111 +81 3-4360-8291 Schaumburg, IL 60173 USA +44 870-873-6300 Copyright © 2011 Flexera Software LLC. All other brand and product names mentioned herein may be the trademarks and registered trademarks of their respective owners. ELO_WP_StretchingBudget_Oct11