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I OIL AND GAS I TECHNOLOGY I This article identifies the benefits of software usage metering and optimization, based on first-hand experienceCost savings opportunities from working with companiesresulting from proactively implementing processes and systemsmanaging IT software assets for cost optimization and asset efficiency.By : Eistein Fosli, Founder, Open iT Inc.S oftware is arguably the most our organization? This article will identify the valuable IT asset in which com Such lack of management is benefits of software usage metering panies invest; yet these impor- partly due to technical or organiza- and optimization, based on first-handtant tools remain a relatively tional complexity and a dismal track experience from working with com-unmanaged resource for most ma- record of consulting projects trying panies implementing processes andjor corporations. to address IT asset management. systems for cost optimization and Today, software applications are However, the volatility of oil and gas asset efficiency. At Open iT, we haveused to run our companies, connect prices during the last years has led been in the business of buildingwith our customers, generate new to an increased awareness and focus tools and services for IT Asset Man-business, differentiate us from our on the surplus cost of unmanaged IT agement and Software Asset Man-competitors and even invent our assets, as well as improved techni- agement since 1999. After a decadeproducts. Almost every major com- cal solutions to manage such assets. of work with E&P organizations glo-pany runs general business applica- Companies wanting a more respon- bally, we have found:tions, specialized or scientific applica- sive IT management, and reductions 1) The more expensive the softwaretions and extensive systems tools in the total cost of ownership, can applications are, combined withthat operate in the background to implement technical solutions to the level of dependency on thesemake the company perform. Soft- achieve this. applications for profit growth, theware is no longer an op- more likely companiestional asset, yet few com- “We are seeing increased opportunities to are to value solutionspanies manage their soft-ware portfolios with an work with clients who appreciate the that can help them with cost optimization, assetenterprise or long-term competitive advantage they gain by and user efficiency.view of the investment. 2) By tracking software Software is often managing costs while protecting their long- purchased against whatunmanaged in the sense term investment in critical IT assets” is actually used, and ap-that there is little knowl- plying this information inedge about who is using contract negotiationswhich applications with key vendors, com-when, for what purpose, panies have cut the costas well as how the fre- of software ownershipquency of use compares by at least 25%.to the number of soft- 3) An overview showingware licenses pur- how extensively certainchased. The relevant IT applications are usedmanagement questions throughout the organiza-remain: Are we utilizing tion is valuable informa-our most expensive IT tion for the applicationasset efficiently? And High-end applications can be some of the most expensive IT assets of an enterprise. support team, for direct-have we aligned our Companies can realize savings almost immediately by aligning their software ing efforts of user train-licensing of software purchases and maintenance agreements with the usage pattern of such assets and ing and support. If appli-assets with the goals of take the best decisions to improve user efficiencies. cations or features are DEW JOURNAL November 2009 67
According to one of the company’s Global Application Portfolio Managers,“Data collected by Open iT tools are being used to communicate with oursoftware vendors and to create flexible licensing contracts that reflect the reallicense needs of the company.” He explained that, “We have been able torecover the cost of the tools immediately by identifying licenses no longerneeded from a vendor whose contract was up for renegotiation. Even beforethe first year was over we had a 10 fold return on investment.” not fully used, there may be with both Schlumberger and software licenses. Since the avail- cause for more user training and Halliburton (Landmark), two soft- ability of software licenses is so support to fully realize the poten- ware vendors for the oil and gas critical to most exploration and tial of the application. Alterna- E&P market. As customers in- production activity, many end- tively, the application may not be creasingly demanded flexible users access software licenses in relevant and could be retired. This license agreements, these part- the morning, just in case they is the type of decision made best ners saw the value of a partner need it throughout the day. Users when based on real asset usage offering tracking usage of their that “stake-out” their licenses are data. tools, and chose Open iT to de- expensive for the company. With4) Software usage metering en- liver this capability. End-users can limited administrative and man- hances the IT team’s ability to now follow the full life cycle of agement resources, it is costly to participate in corporate compli- applications – from the uptake of follow up and correct this behavior ance. Compliance requirements new technology to the retirement in an manual way. A best practice are on the rise, forcing companies of old versions and features. In- in this area is to harvest inactive to keep track of contracts, data sights into the usage of applica- licenses automatically: inactive and other corporate assets and tions and features, while helpful software licenses are automati- processes. Software and IT asset to managers at end-user sites, cally freed up and reclaimed back management provides the basic can also aid the software provider to the license pool to be used by tracking and monitoring of hard- in getting precise customer feed- more active users. The definition ware, applications and services back on products and features of “inactive usage” can be set in- that enable the regulated data to valued most, to funnel this feed- dependently for each application: be audited. Good compliance back back to R&D. for example, it can be no key- programs incorporate metering 7) Another advanced approach to stroke or mouse movements and optimization of IT assets. optimize software licenses is har- within an application for a certain5) A successful Software Asset Man- vesting under-utilized or inactive time period – or the inactivity agement program includes re- pository, inventory and usage metering and can take time to implement, but savings can begin immediately when the customer implements a software usage metering and optimization com- ponent that can be 100% auto- mated. Our experience shows that a company can expect a re- turn on investment within six months of implementing a usage metering system, depending on when contracts are up for nego- tiations.6) Collaboration between an inde- pendent software vendor such as Open iT and the software vendors delivering business and systems applications can also be highly License Optimizer provides a way to revoke inactive shared software licenses, activates programs instrumental in delivering value to by user request for on demand license usage, allows recovery of licenses from unused programs companies that buy software. For and delivers a means of designing optimized license portfolios. example, Open iT is a partner LicenseOptimizer- Suspend and Resume Warning68 DEW JOURNAL November 2009
could be linked to CPU usage - or a diture. Therefore, the asset manage- a number of national and indepen- combination of those values. The ment team decided to use Open iT dent Oil and Gas Companies world- user will get a warning and if the LicenseAnalyzer to automate track- wide, including Pemex, Statoil, Mara- license is freed up and given back ing of software assets, and use data thon Oil, BHP Billiton, Anadarko, to the pool, the user can reclaim collected to charge regions and de- Devon, TNK-BP Nexen, Newfield, El , the license again with one click, partments for the usage of valuable Paso and Plains. They have all en- without losing the work he was application licenses. In addition to joyed cost savings and more user doing when the license was taken meeting regulatory financial report- efficiency from these processes and from him. This gives a high ROI for ing requirements, chargeback cre- have been able to channel savings companies that are running close ates greater awareness of which into discretionary profitable projects to capacity level on their applica- assets are in use and what they cost, that they otherwise would not have tions, or are approaching renewals resulting in conscious planning and had the budget for. of the agreements and can cut fiscal stewardship. In the long run, The focus for IT Asset Manage- back on licenses not in active use. reducing waste delivers significant ment (ITAM) solutions has changed We see a cost improvement of cost savings, especially in such a considerably in the last few years. 10% for companies that imple- large and complex environment. Instead of creating an all-encom- ment this functionality. According to one of the company’s passing IT Asset Management solu- As a solution provider in this Global Application Portfolio Manag- tion that requires the whole IT orga-niche, we are seeing increased op- ers, “Data collected by Open iT tools nization to adopt all ITAM processesportunities to work with clients who are being used to communicate with and solutions, with the risk of notappreciate the competitive advan- our software vendors and to create being able to carry through withtage they gain by managing costs flexible licensing contracts that re- such a grand change of focus, manywhile protecting their long-term flect the real license needs of the companies sees the benefit of ‘har-investment in critical IT assets. company.” He explained that, “We vesting low hanging fruit’ by focus- To illustrate these points, con- have been able to recover the cost ing on heavily used, high-end, coresider the case of one major oil com- of the tools immediately by identify- applications first. This will give anpany, having about 35,000 employ- ing licenses no longer needed from immediate ROI – as well as give theees worldwide and nearly $80 billion a vendor whose contract was up for IT organization experience in work-of assets. While software is not their renegotiation. Even before the first ing with an ITAM solution such asmost expensive asset overall, com- year was over we had a 10 fold re- Open iT. dewjournal.compared to rigs and refineries, it is a turn on investment.” ABOUT THE AUTHORlarge part of the upstream IT expen- Similar processes are in place at Eistein Fosli founded Open iT in 1999 when he saw the need for superior metering tools. That vision grew into what is now an established standard for usage metering, competence planning, and cost allocation management. Eistein has, through his work in Open iT, more than 14 years experience with several fortune 500 companies, including larger Oil and Gas companies, focusing on metering, analyzing and optimizing their use of IT, particularly E&P software. Before joining Open iT, Eistein gained deep IT experience from his work at the University of Oslo and Statoil. Eistein holds a Master of Science degree in Computer Science from the University of Oslo. DEW JOURNAL November 2009 69