Cost Optimization Programs in Software Asset Management


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Cost Optimization Programs in Software Asset Management

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  • Open iT Gründerskolen 2005 08. februar 2005 Open iT, Inc. All rights reserved. About the Author: Signe Stenseth is based in Houston where Open iT has its headquarters for Sales and Marketing. She holds an MBA from Norges Handelshøyskole (The Norwegian School of Economics and Business Administration) with additional studies in economics from Universität Mannheim in Germany, and College d’Europe in Belgium. Prior to joining Open iT, Signe served on its board of directors. She has worked as an advisor to the Norwegian Government and for the EU Commission in Brussels, in addition to prior experience in the oil & gas industry. About the Company: Open iT, Inc. is an independent software provider founded in 1999, present in the Americas, Europe and Asia. Open iT creates software for IT resource monitoring, reporting and optimization. Companies around the globe use Open iT to reduce the cost and complexity of managing corporate assets. Open iT has extensive experience serving customers in a variety of verticals such as Energy, Electronics, Telecom, Insurance, Automotive, and R&D.
  • Cost cutting is painful – working on cost optimization includes opportunities! Opportunities for doing the “right” thing at “right” time. I will discuss 3 key steps to achieve cost optimization: Capture Usage 360: Be sure you capture how you are using your resources – and ensure you can trace usage back in time. ”If you can measure it, you can optimize it.” Analyze – put the usage data to work for you!: Get your 10 views – your 10 favorite graphs, tables, that show how you are using your resources – who is using them, when and where. Are there any resources that are not used in an optimal way? Are there any shortages? Communicate – get all parties involved – verify your analysis – Optimize! Then realize the Return on Investment – reinvest your resources where it has greater effect.
  • The traditional way of cutting costs hurts: How many of you have been in a situation like this – where there was a ”tug a war” – and you had to fight – you might win the battle – but you all lost something - including the conditions for improving together as a team... We don’t want to go there! We want to find a better way to cut costs – by focusing on how to optimize IT...
  • But it is not a quick and simple fix. We are caught in a squeeze: The old saying was "better, faster, cheaper — pick any two." You can usually achieve any two of these goals, at the expense of the third. However, as the business environment has grown more competitive, expectations continue to rise. IT infrastructure and operations groups are now expected to continue reducing costs, while improving the quality of the service they deliver and responding with greater agility to meet changing business needs. Trying to juggle these three often-competing priorities can result in thrashing, which only makes the job more difficult.
  • Politics is often the enemy of sound investment decisions. In many cases, the interests of the IT organization, the business units, and the executive team can differ dramatically. The key to cost optimization is to standardize the justification process for new IT investments. Various departments are often at odds with one another over what represents an appropriate use of the IT budget. Cost Optimization programs that are based on measurable IT usage data – that can document how the assets are being used – can help facilitate and play a major role in ensuring that the IT budget is being spent efficiently and with greatest value to the business. Software Inventory – or discovery – gives you just the baseline – what tools you have installed and should be using…
  • Software Inventory – or discovery – gives you just the baseline – what tools you have installed and should be using… Usage data gives you the real picture: Capture usage of all applications! Local and server-based, web-based and applications on Citrix or terminal servers. You might have them in different ”buckets” – some more important than others – some more ”expensive” than others – but remember that even less expensive software can have a high total cost of ownership. It costs you to support users, train them, back them up, etc. Usage Metering Tools automate 100% of the data collection process – store it – so you can access the usage data any time you need it to support your business decisions. You should be able to zoom in on any details and slice and dice the information into any measurement that is critical for you: active vs. passive usage of any application, feature, feature-group or by products, usage by user, user-group, business unit or global usage… Some Software Usage Metering tools also include realtime usage reporting – so you can compare trends with what is going on right now.
  • Does this sound complicating??? Not worth to mess with it?
  • Market Research says “yes!” to implementing Software Usage Tools -- they give you ”...Quick Payback with Minimal Effort after Implementation”. The same study released by Gartner last year states that “Enterprises that implement software usage capabilities will achieve savings of 5-25% in the first year. After the first full cycle of contract renegotiations, the savings will likely stabilize at 2-3 % in subsequent years.” These are hard dollar savings. But it is more than that. It is also the fact that these cost savings can help you get to the right mix of tools that will support the business of finding more oil and gas quicker... Again, it is about cost optimization, as opposed to just cutting costs.
  • How can you know when you don’t know? Slice and Dice — Prepare for Multiple Views of Budgets IT application spending can be broken down and represented in many ways. Business leaders need to break down their cost structures in different ways to provide for multiple views of the business; IT leaders should be able to do the same thing. These breakdowns are typically snapshots in time; however, this should be the basis for cost trending. Some examples of this include: Budget by business unit or location — IT organizations should be able to communicate how much of the IT budget is dedicated to supporting a particular business unit or a location. This does not mean that every organization should go to the extreme of allocating every last cost to a particular part of the business. Shared resources that support applications that everyone uses can be represented in a "corporate" or "enterprise" category. However, IT spending that is dedicated to a particular part of the business, such as business-unit-specific projects or functional applications (and the dedicated infrastructure to support them — such as servers, storage or databases), should be tracked and represented. Budget by application or application suites — Understanding the overall spending with portfolios of projects, is critical for the application planning process Budget by users or user-group helps clarify what is really going on in the IT organization By fixed vs. variable costs – you want to track those add-on licenses that you are leasing or have as a pay-per-use agreement with your vendors By vendor – group applications or products together to give an overall picture of usage from a vendor Budget top projects — Organizations must be able to communicate overall project spending and the allocation of money across top projects. This can be a little tricky because projects do not all start and end at the same time, and may have radically different mixes of capital investments vs. expenses. The key is highlighting the big picture and noting these additional details
  • Open iT, Inc. ©2006. All rights Reserved. 10/17/12 Presented for LSI Logic Take this simple graph as an example. This graph can be used for any view. You can use it for individual users – for user-groups, business units, locations, global usage – depending on what kind of information is critical to your analysis. Let’s say I am the global application manager for a bundle of four applications. I need to discuss cost optimization with my users. How powerful this graph can then be – both to discuss the right sizing and service levels on training, etc. The graph s hows the global daily maximum license usage in February for my four selected applications/features. As you can see in parentheses, there are fifty available licenses for each product. However, the chart shows that a maximum of only 33 licenses have been used for the blue product and the yellow product has not been used at all. It is easy to see what actions needs to be taken if Cost Optimization is a focus. Either Train your users on how to use this tool – and let them know it is a company standard to be used, or Get rid of the tool. In your organization you might have 8-10 key users of these types of reports: Budget holders on different levels, Application managers, Support and Training Staff... They could all benefit from viewing usage of these assets to make the right decision on both sizing and support levels. These reports should be easily available as templates, which can be automatically updated with fresh usage data on a weekly or monthly basis. Each stakeholder can have their own set up canned reports that help them do their job better.
  • I can also look into more details about the activity level of an application: Look at active vs. inactive usage. How often do my users log into this application but not actually use it to produce any work and just have it sitting idle on their machine? Are there any savings that we can look at here? Should we set some standards that the application should be freed up and the license given back to the pool if there have been two hours of inactivity? Or would we only take manual actions against our users such as calling them up to ask if they need the license?
  • 10/17/12 Open iT, Inc. ©2006. All rights Reserved. I can zoom in for further details about who the users are that have used this application – how much active vs. inactive time have they spent in this application?
  • Step 3: Communicate and Optimize: After I have spent time looking at and analyzing my key reports, I will most probably come up with some good ideas for savings and find ways to improve user or asset efficiency. Before I make any decisions, I will put the data in front of my stakeholders! Long meetings might not be needed; I have the documentation I need to discuss the suggested actions. But I want to have the buy-in from my stakeholders. The trend reports and the drill-down reports give me a great advantage for fruitful discussions over the challenges that I am facing and the actions that I think are needed to optimize. No battles; the discussion is based on facts so it is easier for all parties to discuss and reach common goals.
  • It is critical to get IT and business on the same page to obtain cost optimization. Usage data can help you get there. This is not a one-time job; it is an ongoing process. Create this level of trust and confidence.
  • Why is buy-in and common view so important? There are perceptions out there that we should deal with… E.g. : Business thinks that IT only cares about cutting costs, not listening to user needs. They basically don’t care whether you have a limited budget: they proclaim their right to have the tools they need. Period. The response to this from IT should be: “Yes, I am with you. I will try to cut where it does not hurt, based on usage data. And with every dollar that I free up and that I can add to my budget, I will invest it back into tools and services that I see you are using and will benefit you.” A second perception might be: “IT does not have the ability to act quickly when the need is there.” Again, usage data can help you get the proposal and documentation done quickly when shortages or bottlenecks arise so you can impress them with quick action. Frank and open feedback is good; it is the basis for all improvements. It is also fun when you can act on this feedback and improve communication and response. Again, usage data will help you respond quicker. Strategic Imperative: IT procurement must overcome the perception by IT users of being an impediment to IT procurement by demonstrating value, being professional, being competent and understanding the needs of users.
  • What are our recommendations for moving forward: Harvest low-hanging fruit! This is always important – even more important now in the economic climate that we are currently in. There is fruit to be had out there – go and get it. Where do I look? Not just by focusing on cutting costs. That brings you back to the old picture of the ”tug of war”. You want to focus on IT Optimization. How can you do that? By tracking usage and by evaluating how you use your resources every single day or week… Step 1: Track as much as possible - Don’t expect to optimize what you are not metering. Step 2 and 3: Analyze, communicate and then Optimize. Harvest the ROI – reinvest. You will find candidates for savings or improvements in user or asset efficiency everywhere: – Don’t renew software that you are not using or underutilizing... Make sure all your leased software is needed Redeploy assets that you intend to keep but which would benefit another user or user-group better – these could be automated by setting up specific rules for high-priority users for each asset, etc. Track usage by user, user-group, location – make sure that you spend your support and training dollars where they have the greatest effect – also supporting all the silent users out there Find bottlenecks – lower operating costs Get the reports you need – faster – don’t waste time on manual administration or report gathering – you can get direct access to the data you need – make sure you spend some time defining what kind of usage data would be powerful to get – every week, month etc. And last, but not least: Do not risk non-compliance.
  • I am happy to spend the last few minutes on Newfield: Newfield has used some of these technologies, strategies and processes that I have discussed with you today. This is the shortlist of benefits that Newfield has experienced this last year: Costs were cut where doing so did not hurt users No more denials Find and fix false denials Focused training where it has greatest effect Communicate with certainty with upper management, users and vendors Instead of me going into the details on how he did this, Jim Day, Geoscience Systems Manager at Newfield, is kind enough to answer any questions you have on how he did this. You might want to ask him about roadblocks along the way, or any other challenges he had. You might also want to ask him how he will take this further, and if there have been any personal benefits, in addition to company benefits. Did it make his job easier and smoother; could he sleep better at night? Newfield purchased a metering and optimization tool from Open iT in 2005. The tool has enabled Jim to work more proactively and strategically with both users and vendors within the budgets that he has been given from upper management.
  • For more information, there are various web-sites that you can go to – one of them is
  • Thank you for your attention. I will give the floor to Jim Day.
  • Cost Optimization Programs in Software Asset Management

    1. 1. Cost Optimization Programs in Software Asset Management 2009 DIGITAL ENERGY Signe M. Stenseth, VP,
    2. 2. Agenda• Value Proposition: – Open the door to cost optimization!• Three Key Steps: 1. Capture Usage 360 2. Analyze – put usage data to work for you! 3. Communicate and Optimize• Realize ROI: Reinvest - Make a difference! Open iT, Inc. All rights reserved. 2
    3. 3. Cost Optimization – more than Cutting Costs
    4. 4. Traditional Way of Cutting Costs Open iT, Inc. All rights reserved. 4
    5. 5. Caught in the SqueezeFaster, Better, More New Technologies Serv ice Q a nge ualit Ch y Reduced Costs Constrained Budgets
    6. 6. Key to IT Optimization• Standardize the justification process for new IT investments – Base it on measurable IT usage data – Document how assets have been used over time – Document shortages• Do not let politics be the enemy of a sound investment decision Open iT, Inc. All rights reserved. 6
    7. 7. Step 1: Capture Usage 360 Knowing what you have - and how it is used
    8. 8. Software Usage Metering• Software Inventory – as a baseline• Usage Tracking 360 – track usage for all applications: • local and server-based applications • applications run in a bowser • applications served by Citrix, WS Terminal Servers• Track active vs. passive usage• Track by feature, group them into ”products”• Track by user, user-group or global usage• Look at trends in usage over time and compare Open iT, Inc. All rights reserved. 8
    9. 9. Too complicated? Open iT, Inc. All rights reserved. 9
    10. 10. Market Research Facts”...Quick Paybackwith Minimal Effort afterImplementation””Enterprises that Implement Software UsageCapabilities will Achieve Savings of 5-25% in theFirst Year.” Gartner, Inc. “Cost Cutting by Effectively Using Existing Software” by Patricia Adams, Feb. 7, 2008
    11. 11. Step 2: Analyze Usage 360Put the Usage Data to work for you!
    12. 12. Slice and Dice - Prepare for Multiple Views • Multiple views provide critical insight: – By business unit/ location – By application/ application suites – By users/User-group – By fixed vs. variable costs – By vendor – By project
    13. 13. Usage Trends – Pick your View Open iT, Inc. All rights reserved. 13
    14. 14. Add more Details: Total vs. Inactive Usage Open iT, Inc. All rights reserved. 14
    15. 15. Zoom in to see how and why... Open iT, Inc. All rights reserved. 15
    16. 16. Step 3: Communicate and Optimize
    17. 17. Strive for a Common View• IT and business must be on the same page• Sizing and support level decisions – must be supported by usage data: – How – Who – What – When – Where• Ongoing analysis of value and costs
    18. 18. Deal with negative perceptions! Business Perceptions Response from ITIT only cares about cutting Cut where it does not hurt –costs, not listening to user free up budget for newneeds products or services that have greater value to usersTheir processes and timelines Act quickly when shortagesdrive us crazy… are documented
    19. 19. Recommendations• Harvest low-hanging fruit! – Step 1-3: Usage Tracking 360, Analyze, Communicate, Optimize: • Reduce software spending on underutlized SW • Standardize on versions and tools • Eliminate lease penalties • Redeploym assets effectively • Spend support where it has greatest effect • Lower operating costs • Lower administration and reporting costs • Mitigate license compliance risk Open iT, Inc. All rights reserved. 19
    20. 20. Cost Optimization in Newfield• Costs cut where doing so did not hurt users• No more denials• Find and fix false denials• Focused training where it has greatest effect• Communicate with certainty with upper management, users and vendors Open iT, Inc. All rights reserved. 20
    21. 21. More information• Success Stories• Software Usage Metering• Free Online Demo• Evaluations in your environment Open iT, Inc. All rights reserved. 21
    22. 22. Thank you!Signe Marie Stenseth,