4. What is Analytics? American companies spend $160 billion on software annually and another $100 billion on maintenance. It’s no secret that companies overspend by nearly 30% on license agreements and maintenance. Scott RosenbergCEO – Miro Consulting 8 Secrets to Software Licensing Management Savings What is Analytics Advantage? A program to reduce costs by eliminating guesswork and waste in software licensing. A fact-based analysis that aligns Microsoft licensing with business, technology and fiscal goals What are Microsoft Licensing “Options”? To us, a licensing “option” revolves around 4 key questions: What technologies are important to you? When will you deploy those technologies? How closely does your upgrade trajectory synchronize with Microsoft’s product release cycles? Is your technology strategy supported by your financial and risk-management objectives? 4
10. Analysis – Scenario Methodology We apply a consistent methodology across all scenarios, analyzing three major factors: Gross Cost Impact (GCI). GCI shows the hard-dollar costs over 3/6/9 years. Net Agreement Value takes other factors into account that will either lower or raise the GCI. These may include Software Assurance Benefits, additive technology costs, or technology displacement savings. Benefits and risks describes the benefits and risks that each scenario poses. 10
11. Analysis - Year-by-Year Cost Comparisons All assumptions documented True Apples-to-Apples cost comparisons Based on client usage of Microsoft technology 11
12. Analysis - Cash Flow Expectations Expected cash flow is a mission-critical consideration 12
13. Risk – What the numbers don’t tell you Risk Scoring Formula Risk = (Client rating x Softmart score) + Asset Management Modifier Captures essence of risk without over-complication (6 categories) Ensures fair scoring based on client input Open system with all variables displayed 14
Key Points: The Softmart approach is 3-pronged: Discover, Optimize, Control Discover – Analytics Engagement helps client choose appropriate licensing investment approach Optimize – Softmart has services that help clients manage to the choice they have made Control – Softmart has services designed to help client know when changes need to be made to strategyNotes:We take a comprehensive approach to assisting our clients in managing their Microsoft Investments. We have a 3-pronged approach. Through our Analytics Engagement, our team will work with you to Discover the Licensing Investment Strategy that best matches your Microsoft software usage patterns. After the Analytics Engagement is complete, our team will assist you in Optimizing not only your chosen license strategy, but we also provide tools that will help you manage the daily workflow that supports your effort to achieve the highest value from your licensing investments. And finally, the Softmart team takes a serious approach tomonitoring the impact of your strategic choices and industry trends on your business. This Quality Assurance focus is vital in assisting you to realize the long term value of your technology investments.Let’s take a brief look at how this approach can benefit your organization.
Key Points: Cost reduction Fact-based (transparent math) analysis focused on the client, NOT Microsoft licensing options “Licensing Options” involves a consideration of: technology used, timing of deployments, synchronization with MS releases, client’s financial & risk concernsNotes:Our Analytics Advantage Program is afact-based analysis that aligns Microsoft licensing with your business, technology and fiscal goals. Our starting point is not a recitation of the various features & benefits of the available Microsoft Licensing programs. Instead, we focus all of our energy on understanding your particular environment, independent of Softmart’s or Microsoft’s interest in your organization’s investment in technology. In order to explore the appropriateness of any licensing option for you, our team must understand what technologies are important to you and when will you deploy those technologies. With that information we explore how closely your upgrade trajectories, or cycles, synchronize with Microsoft’s software release cycles. Finally, we take a deep-dive into your company’s financial & risk-management objectives. Armed with this understanding of your company, we are then ready to sit down with you to brainstorm the licensing scenarios that will make the most sense to your company.Let’s take a brief look the outcomes of this type of licensing analysis.
Key Points: Each option measured on basis of cost AND risk Allows you to compare options in a clear, objective method Provides a plan for managing cost & risk once the choice is madeNotes:The end-game, goal of Analytics is to produce a mathematically sound visualization of your licensing options. We will measure each licensing option based on it’s relative cost AND on it’s level of inherent compliance risk & administrative burden. Knowing the bottom-line cost AND cash flow patterns associated with each option allows you to plan effectively. In addition, the identification of risk factors empowers you to manage toward maximizing the value of and mitigating the risk of your chosen licensing investment strategy. Regardless of the choice you make, Softmart will provide you with tools to help manage your investment.
Key Points: Organized, fact-based approach Minimal time investment required by client We play either a “behind-the-scenes” or an up-front role in negotiationsNotes:The Analytics process unfolds in 4 easy steps. This entire process typically requires less than 5 hours of time commitment on your part. In the first step, we utilize your license history and other internal documentation to establish an inventory of your current Microsoft investment. In step 2, we review these technologies with you in order to understand the strategic importance they play and the frequency with which you upgrade those technologies. During this phase we establish your upgrade trajectories and the level to which you synchronize with Microsoft product release cycles. In step 3, we take what we know about your deployment patterns and your financial goals & constraints and begin to lay out and analyze various investment scenarios. Once you have narrowed down the top options under consideration, we will support you in your negotiations with Microsoft—playing either a visible or “behind-the-scenes” role.
Key Points: Inventory of current and planned software technology Accurate cost projections Entitlement migration support Technology Importance RatingNotes:We begin the Analytics process by creating an inventory of your current licensing investments. This inventory not only provides us with a picture of your current technologies, but it also documents any planned technology adoptions. In addition to providing cost projections, understanding both existing and planned deployments allows us to help you plan for the impact that entitlement changes will have on your future strategy. We will also estimate the current market value of your software investments and analyze the importance that each technology plays in your environment. During this process we work with you to make sure that we have an accurate picture of what you own and use. This inventory provides the basis from which we will be able to launch the licensing analysis.
Key Points: Client’s Adoption patterns analyzed on each MS technology Financial roadmap options are determined All scenarios to be analyzed are based on client’s deployment plansNotes:At its core, the Analytics method seeks to understand the upgrade trajectory of each Microsoft technology in your environment. In addition, we seek to ascertain the level of synchronization between your upgrade cycles and the MS product release cycles. Once these patterns have been identified, we lay out the financial roadmap necessary to meet your software licensing investment priorities. It is at this point that we then begin to run our “what-if” scenarios in which we analyze various models for investment management over time. For example, are you going to manage cost by annualizing across multiple years and cycles? Or, are you going to invest solely at the time of deployment? Or, are you going to utilize a strategy that combines these two approaches to cash flow management?
Key Points: We have the ability to measure past agreement performance We assess the value gap between SA investment and licenses deployed This analysis can also be conducted as a forecastNotes:In some cases, our clients request an analysis of their Past Agreement Performance. In this type of analysis, we are analyzing the delta between the investment in Software Assurance and the value attained by actual deployment of software covered under maintenance. This analysis yields a value gap (or surplus) that indicates the effectiveness of a chosen license investment strategy on individual technologies or on the entire Microsoft inventory. This analysis can also be projected into the future in order to determine the point at which your investments in Software Assurance will begin to yield a value surplus.
Key Points: Analytics is written in the language of the CFO. We analyze both the Gross Cost-Impact and the Net Agreement Value of each option We do not bake in soft dollar costs into our comparisonsNotes:The methods we use to analyze your software assets and the language we use to express the results are equally important. It has always been our goal to conduct our analysis in a way that will withstand the scrutiny of the CFO. Therefore, our starting point is always a comparison of the options using the bottom-line, Gross Cost-Impact (GCI) approach. When speaking the language of the CFO, we do not bake in any soft dollar cost avoidance or software assurance valuation. We do believe, however, that a consideration of Net Agreement Value is a vital part of any prudent decision process. So, we will calculate the value of SA, additive technology costs and technology displacement savings, to name a few. These net values should be considered as part of the equation. It is our belief, however, that a client’s upgrade trajectories and level of synchronization with Microsoft release cycles must be the primary consideration when assessing the value of a licensing strategy. Net value considerations are important, but usually comprise a relatively small percentage value of the total cost of the Microsoft investment. We just want to make sure that we are clear which language we are speaking (GCI or Net Value) when discussing the benefits and risks of a licensing option.
Key Points: All assumptions documented Gross Cost Impact v. Net Value considerations Short & Long term analysis of costsNotes:Once we have determined your usage patterns, we begin to analyze various licensing scenarios. The scenarios analyzed are determined by the technology and business goals that you have identified during the consultation. We document all assumptions that are made during the analysis. For example, if a particular scenario assumes the deployment of the latest version of Office in 2011, then we will document that fact during the process. This then becomes the basis from which to manage the deployment schedule in order to retain the business case of the choice made. We are also very careful not to confuse bottom line, gross cost impact with a discussion of net value. Initially, we show the direct cost outlays and savings on each option---without baking in soft dollar cost avoidance or software assurance benefit valuation. As you begin to narrow down your choices, we will then take these net value factors into account as you attempt to gain a true assessment of the value of one option over another. We project these cost comparisons out over 6-9 years in order to take into account the need to manage both short and long term cash flow ojectives.
Key Points: Cash flow is mission-critical Planned investments must be mapped to a coherent deployment plan Illustration of both Short & Long term cost impactsNotes:Expressing the cash flow patterns of each licensing option is a valuable decision support tool. This cash flow graph clearly illustrates the difference between cash management utilizing software maintenance v. cash management based on acquisition of perpetual licenses without maintenance. The graph also allows us to see how the combination of these strategies will affect the cash flow of your organization during upcoming planned deployments and migrations. We believe that this type of analysis plays a fundamental role in strategic planning. This analysis also will provide you visibility into the per-desktop cost implications of various strategies.
Key Points: Simple & Informative Risk Assessment Model Consideration of top 6 risk factors covering compliance, budget/logistics and technology Softmart risk assessment is weighted by internal client conditionsNotes:An analysis of your Microsoft licensing options would not be complete without a consideration of risk. We have kept our risk assessment model simple yet informative. Drawing on 50+ years of experience, the Analytics Team has identified the top six risk factors across three categories: Compliance, Budget & Logistics, and Technology & Benefits. We begin by assessing each option and rating it as high, medium or low risk on these key factors. We then weight the score by the importance that you place on that risk factor and by the quality & strength of your software asset management procedures. This method gives us a simple and clear way to assess the relative risk of each option. It also provides us with the basis from which to help you plan to strategically mitigate the various risks associated with the licensing option you choose.
Key Points: Scenario for each option under serious consideration Details costs, net value off-sets, risks and benefits Illustrates the connection between client’s investment plans with their deployment plansNotes:We will create a scorecard for each of the top options under consideration. This scorecard details out the costs for the next two 3-yr cycles. It also details out any net value calculations that might impact the client’s decision. We do also indicate the risk rating and include a narrative discussion of both the benefits and risks of the option. Most importantly, however, we detail the various technologies that will be deployed in each of the next 3 years of the proposed agreement. In fact, we are tying the licensing investment strategy directly to the client’s planned deployment strategy. This connection is designed to help our clients’ realize that solid planning and execution will directly impact the business case and ultimate value of the licensing option they choose.
