Tips for Optimizing Software License Contracts

Licensing and vendor management can be a very complex task, especially when dealing with multiple providers for multiple services in changing markets, such as cloud and mobility. It’s critical for organizations to develop improved strategies for both license and vendor management, and to truly understand the many implications involved in a licensing agreement.

Martin Prendergast, CEO and co-founder of Concorde, explained: “There has often been a misconception that software asset management is simply about having the deep-seated knowledge about the quantity of licenses within the enterprise. However, over the years this has changed immensely with cloud computing and mobility, and it’s becoming increasingly important to know how to work with vendors closely, and not to overlook important complexities when interpreting and managing software contracts.”

He continued: “Large vendors such as IBM and Oracle, which have been on the acquisition trail in recent years, supply invaluable technology to huge numbers of global organizations to manage critical aspects of their business. But because of this, licensing is often complex, and many end user licensing teams are ill equipped to understand which products are aligned with existing technology, and which are not. It’s time to get ahead of the game, get expert help, and plan the IT estate structure for the future in order to retain control over planned and unplanned change in software licensing.”

In this slideshow, Prendergast has identified tips to help organizations optimize their software license contracts.

License and Vendor Management

Click through for tips on optimizing software license contracts, as identified by Martin Prendergast, CEO and co-founder of Concorde.

Existing Relationships

Don’t discount your existing vendor relationships.

When you’re working with a specific account manager, make sure that you leverage your relationships; it can prove to be a lot more useful to you than you think when it comes to an audit. Although IBM, Oracle and a number of other vendors use third-party auditors, which will work independently from your usual account manager, your relationship can be key when it comes to negotiating license pricing. If the compliance team reveals a financially penalizing license position, keeping you as a customer can be a lot more important than charging you for back maintenance, so make sure that you are forming close relationships built on trust.

Evaluate Options

Evaluate your product substitution options.

A number of large software vendors have implemented the ability for an organization to “substitute” products for another of the same financial value. While this can provide a flexible option when it comes to planning and business transformation, make sure you check which products can actually be substituted. This information is usually available in the subsection of agreements so make sure you are aware of what you can and can’t substitute upfront.

A Clear Understanding

Have complete clarity on software and service special option agreements.

While customer specific agreements can offer an unlimited range of license options for enterprises that can be catered to the individual needs of the organization, they must be handled with care. Making sure that you have a clear mutual understanding with your vendor on any phrasing that could be deemed ambiguous can resolve issues that could possibly emerge further on.

Sub-Capacity Licensing

Be aware of the granular detail of sub-capacity licensing.

For example, even though they are not permitted according to IBM standard licensing, there are sometimes deals made for sub-capacity licensing if a customer has requested it specifically. In this instance, it is important to make sure that the IBM License Metric Tool is also implemented so that when it comes to audit, it is easier to outline how many IBM products are implemented and on how many servers. With any tool other than ILMT, there is a risk that IBM will have less of a picture and if you can’t present them with the information they require from ILMT, you could risk being charged as if you need a full-capacity license.