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Microsoft Licensing: The Data, The Report and The Reality

"There are significant opportunities for cost optimization which can be realised, through imaginative use of cloud/virtualization technologies"

This is the second part of a two part discussion on SAM reports – and specifically on how actions suggested by a report  (for example, from a license compliance tool) may differ greatly from the actual actions taken.

In the first article I spoke about WHY and HOW a business only managed to save $800,000 despite having the opportunity to save $2,500,000.

In this article I’ll talk about a customer engagement where it was clear the company had €850,000 MORE licenses than software deployed – but decided to purchase an additional €1,000,000 of licenses.

Scenario Two – Microsoft Licensing

The situation:

Customer network has over 25,000 desktops and 2,000 servers running Windows. The company has been very active in M&A over the past 5 years. They were acquired and then divested, they have acquired several other companies themselves. Integration work is on-going and outside of core functions (for example email or ERP) visibility of actual deployment was limited.

  • A shared services IT business unit controls the procurement, deployment and management of software and hardware for the organization as a whole.
    • Chargeback is in place to “bill” the other business units appropriately
    • Microsoft were due to perform a license audit in 6 months time – the company decided they wanted an accurate picture of their deployment to establish their position ASAP.
    • Approximately 30% of the 2,000 servers are virtualized on VMware, with some clustering.

The report:

The customer engaged the services of a partner to gain visibility of all software deployed across the 25,000 desktops. The partner also provided the customer with a full understanding of their server estate, including the physical to virtual server mapping and details of MS SQL deployment, etc.

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The report indicated that the customer had excess licenses for Microsoft products totalling €850,000. The core cause of the excess was an on transformation and rationalization program which ran as companies were acquired and as services moved from silos into shared services where economies of scale were easier to achieve.

This made it clear that the customer was in a good position for the audit – and in fact had a “stock” of €850,000 – they could reduce their license counts at the next Enterprise Agreement renewal.

The reality:

The customer was delighted – they had a solid position of fact on which to negotiate their EA renewal and nothing to fear from their upcoming license review. The partner assumed the customer would reduce their spend – in fact they bought just over an additional €1,000,000 worth of licenses for Core CAL, Windows Server and MS SQL Server.

The reason they did that was that the company was expanding its operations – building out more offices and factories. By the way – this was just last year, it isn’t ALL doom and gloom out there 🙂

Without the understanding of position, they customer would likely have spent more money. The visibility of position, combined with a strong shared services center meant that the company could structure their software position in the best possible way for the next three years.

The conclusion:

Please consider this scenario in juxtaposition with scenario one –where despite having $2,500,000 of possible savings, organizational structure, project bound budgets and (basically) in-fighting prevented the organization from realizing $1,800,000 of the possible savings.

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As with many other business areas, practitioners repeatedly say that proper Software Asset Management requires people, processes and tools all working in alignment.

Most thought leaders in the IT industry have been arguing for 10 years that shared services organizations are the way to go when considering proper management of your overall IT estate. These articles illustrate why.

Some organizations achieve full or partial shared services by outsourcing what was internal, silo bound IT, more and more organizations are looking to “the cloud” – an epitome of shared services – as a way forwards.

Large organizations with strong internal IT functions need to wholeheartedly embrace shared services, across as many areas as possible  so that costs can be optimized appropriated – especially within Software Asset Management. Shared services are often massively virtualized – this is the “Private Cloud” – when integrated with IaaS offerings, these become “Hybrid Cloud” structures.

There are significant opportunities for cost optimization which can be realised, through imaginative use of cloud/virtualization technologies, software allocation analysis, etc. – especially with “Enterprise software”  – which are only possible if the IT function has full and accurate visibility of what runs where, have expert knowledge regarding vendor specific license terms and are empowered to “shuffle” servers, databases, etc. into their optimal configuration.

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About Jason Keogh

Jason is the CTO and founder of iQuate. Jason is responsible for iQuate’s product vision and is well regarded as an expert in the spheres of IT discovery, inventory and SAM. Jason speaks at several industry conferences each year. In 2012 Jason joined the ISO/IEC 19770 working group with a goal of ensuring its work reflects, and is relevant to, enterprise cloud based computing.

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