This article discusses the benefits of proactively managing software assets through software usage metering and optimization. It provides examples from the author's experience of companies implementing these processes and realizing significant cost savings from more efficient software licensing and usage. Proper software asset management allows for cost reductions of 25% or more by aligning purchases with actual usage and identifying unused licenses. It also improves user efficiency and supports regulatory compliance.

2. I OIL AND GAS I TECHNOLOGY I This article identifies
the benefits of
software usage
metering and
optimization, based on
first-hand experience
Cost savings opportunities from working with
companies
resulting from proactively implementing
processes and systems
managing 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-hand
tant 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 and
jor 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 have
used to run our companies, connect prices during the last years has led been in the business of building
with 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 decade
products. 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 software
tions and extensive systems tools in the total cost of ownership, can applications are, combined with
that operate in the background to implement technical solutions to the level of dependency on these
make the company perform. Soft- achieve this. applications for profit growth, the
ware is no longer an op- more likely companies
tional asset, yet few com- “We are seeing increased opportunities to are to value solutions
panies manage their soft-
ware portfolios with an
work with clients who appreciate the that can help them with
cost optimization, asset
enterprise 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 what
unmanaged in the sense term investment in critical IT assets” is actually used, and ap-
that there is little knowl- plying this information in
edge about who is using contract negotiations
which applications with key vendors, com-
when, for what purpose, panies have cut the cost
as well as how the fre- of software ownership
quency of use compares by at least 25%.
to the number of soft- 3) An overview showing
ware licenses pur- how extensively certain
chased. The relevant IT applications are used
management questions throughout the organiza-
remain: Are we utilizing tion is valuable informa-
our most expensive IT tion for the application
asset 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

3. According to one of the company’s Global Application Portfolio Managers,
“Data collected by Open iT tools are being used to communicate with our
software vendors and to create flexible licensing contracts that reflect the real
license needs of the company.” He explained that, “We have been able to
recover the cost of the tools immediately by identifying licenses no longer
needed from a vendor whose contract was up for renegotiation. Even before
the 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. With
4) 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 certain
5) 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 Warning
68 DEW JOURNAL November 2009

4. 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 processes
portunities to work with clients who are being used to communicate with and solutions, with the risk of not
appreciate the competitive advan- our software vendors and to create being able to carry through with
tage they gain by managing costs flexible licensing contracts that re- such a grand change of focus, many
while 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, core
sider the case of one major oil com- of the tools immediately by identify- applications first. This will give an
pany, having about 35,000 employ- ing licenses no longer needed from immediate ROI – as well as give the
ees 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 as
most expensive asset overall, com- year was over we had a 10 fold re- Open iT. dewjournal.com
pared to rigs and refineries, it is a turn on investment.” ABOUT THE AUTHOR
large 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