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Image: What is Software License Optimization?

Software License Optimization (SLO) is a term used to describe a range of capabilities that complement traditional IT Asset Management and that provide organizations with the ability to maximize use of their procured software licenses while minimizing spend associated with those licenses.  Those organizations remain in compliance with their software license agreements, while avoiding over buying of software.

Some important characteristics of Software License Optimization are that it is:

  • Relatively New – Software License Optimization is a term that has been introduced and used by the IT analyst community only in the last 3-4 years.  It is utilized by them to describe a market that formed around a handful of vendors shortly before that time.
  • Dynamic – Software License Optimization includes not only the ability to determine an optimized license position for any and all vendors across the software estate at a given point in time, but also on a continuous basis.  Moving from a static to a continuous license optimization process is one indication that the organization has moved up the Software License Optimization maturity model.
  • Datacenter inclusive – Software License Optimization handles server software licenses as well as desktop and other client software licenses.  Whether dealing with datacenter or desktop licenses, it is also important to note that both traditional/simple license models (e.g., counting installations) and modern/complex license models (e.g., IBM PVU, SAP Named User, virtualized resource availability, and usage-based models) are handled.
  • Spend Management Focused – Software License Optimization addresses not only the need to understand and maintain software license compliance, efficiently addressing or eliminating software audits, but also enables organizations to understand and optimize the spending that takes place on software licenses and associated maintenance plans. An optimized license position is one that fully leverages license entitlements, such as vendor-specific product use rights to minimize license consumption. Detailed application usage data collection and analysis can also be used to optimize licenses to reduce spend, as in the case for SAP named user licenses.
  • Forward looking – Software License Optimization analyzes past and current use of software licenses, but also provides trend analysis and reporting for budgeting and “what-if” analyses to assess the financial impact of changes to the IT environment and compare different options available.

Some early and relevant analyst data on Software License Optimization is below.

From IDC in 2010 (describing an early adopter of Software License Optimization capabilities):

“Before Flexera, the concept of “license optimization” did not exist…

“The way the company would manage licenses for SAP, as an example, is that every two years the company would spend three to four months collecting data on SAP licenses deployed on a base of 140,000 global users. An analysis would take place, and then the company would agree with SAP on what the license count and types should be.”   

 – IDC, Information Is Power: How a Global Consumer Goods Manufacturer Is Using Software Usage Data to Optimize Its License Spend, April 2010

From Forrester in 2011 (defining Software License Optimization in the market):

“Forrester has seen a few visionary enterprises, helped by innovative product and service providers, implement a more proactive, farther-reaching approach that we call SLO. Not only does SLO minimize the risk of unexpected costs caused by software audits, but it cuts total spend by enabling reharvesting and eliminating wasteful buying of licenses that won’t be fully used.”

 – Forrester, Introducing Software License Optimization, September 2011

From Gartner in 2013 (Software License Optimization first added to their IT Operations Hype Cycle):

  • “Definition: Correlating software license entitlement with installed software is not an easy task. To address this market niche, vendors specializing in software license optimization are providing a level of detail about product use rights, vendor stock-keeping units (SKUs) and contract terms to determine license position. Because some of these complex licenses are based on the platform, such as cores, processors and virtualization policies, it is necessary to know hardware attributes. Software license optimization tools are a supplement to an IT asset management (ITAM) program.
  • Position and Adoption Speed Justification: The software license optimization vendors that specialize in license management are beginning to make inroads into large organizations that may have implemented ITAM programs, but they are still not getting the data they need to ensure compliance. This level of detailed data is often not found in an ITAM repository. As a result, these organizations are looking to a limited group of specialty vendors to assist with license optimization and entitlement management, especially with complex server-based license types that are not easily counted, such as IBM, Oracle, Symantec and SAP….”

– Gartner, Hype Cycle for IT Operations Management, July 2013

More recently, Gartner published this report: How to Assess a Software License Optimization and Entitlement Tool. The full report includes Gartner’s recommended selection criteria for Software License Optimization tools. Among the criteria is having an enterprise app store that is integrated with your software license management solution.

For an example of the return on investment that can be achieved with Software License Optimization, read this customer case study: Major Global Financial Services Company. Their projected savings over 5 years will result in an ROI of more than 1400%.