Software license costs account for a significant portion of the typical IT budget—as much as 30 percent—and they represent a substantial cost for today’s enterprise. It’s up to IT procurement teams to keep these costs in check while meeting the current and future software and infrastructure needs of the enterprise without overbuying or under buying licenses.

Software procurement, sourcing and vendor management have always presented a challenge for businesses. Complex software license agreements and license models make buying and managing software difficult.  Software audits have been a growing trend that is highly disruptive to the business and often results in large, unbudgeted expenses. Virtualisation, cloud and shadow IT amplify these challenges.

The Impact Of Virtualisation

Many IT organisations are increasing the use of virtualisation in their datacentres. Public, private and hybrid clouds leverage virtualisation technology to enable the compute elasticity that is one of the major benefits of the cloud approach. However, virtualisation complicates software procurement and license management because of the highly dynamic nature of the virtual datacenter and the complexity of virtual use rights for software.

Virtual machines (VMs) are rapidly spun up and down in response to fluctuations in demand, and they are moved from one physical host to another across datacentres and even continents for load balancing and maintenance operations. Each of these VMs will often have a unique set of software installed, with many different combinations of operating systems, databases, middleware and other applications.

The procurement team has to ensure that the right software is available with the appropriate licenses for every software component running across a variety of server hardware types in the virtualised datacenter. That includes software running on VMs, and virtualisation software running on physical hosts. Determining the licensing requirements in this complex and highly dynamic environment can be a pain, yet most companies rely on cumbersome spreadsheets to tackle this task.

The Impact Of SaaS & Other Cloud Services

Many software publishers are pushing customers to move to newer product lineups delivered via Software as a Service (SaaS), like Microsoft Office 365, the cloud version of Microsoft’s wildly successful office suite. But the migration to the cloud is not limited to tools for end users. Well known enterprise application building blocks such as Oracle Database, Microsoft SQL Server and IBM WebSphere are also available in cloud versions – and the list is growing quickly.

A mix of independent software vendors (ISVs) offer Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) in the public cloud, which let you to bring nearly any piece of software into the cloud – whether your licensing agreement allows it or not…

The advantages of moving to subscription-based cloud services include a shift from capital expenditures to pay-as-you-go operating expenditures, no vendor lock-in, and easier maintenance for hardware and software updates. In response, many enterprises are clinging to hybrid environments that combine datacenter, private cloud and public cloud. These hybrid environments result in a complicated mix of vendors, purchase agreements and licensing rules that procurement teams have to navigate and help manage.

Many believe that the cloud eliminates the need for solid organisational control of software licenses. It actually places the onus even more squarely on enterprises to carefully manage the software lifecycle. With cloud and subscription licenses, the pendulum swings from a state where enterprises are at risk of underbuying software to a state where they are at a much higher risk of overbuying software. Overbuying is all but a certainty if the software supply chain is not well managed…

Lurking In The Shadows Of IT

There is an additional wrinkle introduced by cloud services.  Because it’s so easy to purchase cloud services, business units and employees in many enterprises are going around IT and procurement to obtain the services they want directly from cloud providers.  This Shadow IT phenomenon means cloud accounts are scattered throughout an enterprise, and may not be well managed from a corporate perspective.

Shadow IT is outside the governance and control of IT, and exposes the enterprise to budgetary risk, as the proliferation of cloud accounts and cloud instances is not well managed.  These costs can quickly spiral out of control…

Addressing Virtualisation, Cloud & Shadow IT

IT and procurement teams can optimise software spend by tackling the challenges presented by virtualisation, the cloud and shadow IT.  But no fear! Following is a good starting point to address each threat.

To optimise license purchases for physical and virtual infrastructure, enterprises can:

  • Determine where software is running and what physical and virtual processing resources the software consumes – including VMs, hosts and other supporting infrastructure.

To manage cloud services usage and spend, enterprises can:

  • Aggregate data from multiple Amazon Web Services accounts for enhanced visibility and control of costs.
  • Optimise costs and utilisation by comparing usage of the different types and levels of software available to what’s really needed.

To improve software governance and eliminate shadow IT, enterprises can:

  • Utilise an enterprise app store to provide self-service access to authorised applications, streamlining service delivery.

As enterprises move into virtualisation and cloud services, the already difficult task of optimising software and services procurement becomes even more challenging. To optimise software and cloud services spend in this increasingly complex environment, the procurement team needs broad and deep visibility into the enterprise software environment, its vendors and users.

The right Software License Optimisation solution can provide that visibility and maximise the value of enterprise software and cloud services to the business. The outcome is lower software and cloud services costs and that go straight to the bottom line. You can’t much better than that!