Microsoft licensing: A special report
Last of three parts.
Microsoft's switch to an annuity licensing program more than a year ago coincided with -- and contributed to -- some fundamental changes in the way IT departments purchase software.
For one thing, the software industry is moving toward packaged products, and now there are employees within an organization whose sole job is to manage software licensing, said Julie Giera, vice president and research fellow at Forrester Research, a Cambridge, Mass., consulting firm.
"Until the past few years, [many people in charge of software licensing] worked in the purchasing department," Giera said. "That's bad because purchasing was meant for pencils, not software, and purchasing people almost always go for the cheapest price."
Furthermore, with software becoming so complex, there is also an evolution of tools created to track these applications and their licenses. "Tools are showing up now because the [Business Software Alliance] is out there threatening audits, and if you don't know what you have it could cost you millions of dollars," Giera said.
Not only are vendors producing more asset and license management tools, the major systems management platform vendors, such as IBM's Tivoli unit and Computer Associates, are extending their software to do a similar job.
Post dedicated to IT assets created
"We also drove toward centralized purchasing of our larger contracts, including IBM Lotus, Novell Inc., Microsoft and Dell," he said. "Today, close to 100% of desktop, Intel server licensing, asset management for the United States goes through this one person."
Rob Kuron, who tracks licenses at Reader's Digest, added that IT managers realized the company could be vulnerable to audits and possibly could have been overbuying licenses. The combined risk was enough to make it a priority for Reader's Digest, he said in an e-mail.
"With Select 6.0 [one of Microsoft's licensing options], any company who hasn't done this will either be under-licensed or will waste money on over-licensing or buying Software Assurance on software they will never upgrade," Kuron said.
"Now, you not only have to know what you own, but you have to also figure in what software you own with Software Assurance and what software you own without [Software Assurance]," Kuron said. "You also have to put a plan in place for upgrade frequency, so you can buy Software Assurance intelligently."
Making licenses more accessible
Of course, license maintenance agreements were around before Microsoft's Software Assurance came into being, and companies like Krispy Kreme Doughnut Corp. were accustomed to similar programs with other vendors. The company decided to buy Software Assurance for its servers, not its desktops, because it's not clear whether the company is ready to leverage the XML functions that are the main attraction of Office 2003.
What has changed at Krispy Kreme is the fact that licensing is no longer an esoteric subject that is owned by one individual. The fact that license agreements and purchasing history can be viewed online, at Microsoft and on other sites, means more IT professionals can keep apprised of license agreements on the company servers.
"It offers us more opportunity to spread the woe of licensing," said Frank Hood, vice president of operations at Krispy Kreme, which is based in Winston-Salem, N.C.
Whichever way the IT shop chooses, Giera said, an enterprise that keeps close track of its licenses can save money in several ways. For starters, efficient record-keeping can help save money if there is an audit. She said shops that keep such information centrally located can save up to 20% in support costs because it saves time when it comes to diagnosing problems.
She also estimates that the cost of any project involving a desktop or server software can be reduced by 11%. And errors in production that cause a server to lose availability are cut by 30%.
"In these economic times, the value of [keeping better inventory] is pretty clear, and it's not lost on the vendors out there selling this stuff," she said.
FOR MORE INFORMATION:
Special Report, Part 1: Licensing 6.0 and Software Assurance: Who should renew?
Special Report, Part 2: MS licensing message slowly getting through