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Image: Why a SKU is important to Software Asset Management

Background of the SKU

Most folks are familiar with bar codes. Every time we go to the grocery store and check out, the cashier scans our groceries one at a time and the register automatically knows what we purchased, how much it is, and they probably even trigger when they need to reorder that item. Part of that bar code is the SKU (Stock Keeping Unit), which is a uniform method of tracking products sold. As the name implies, the SKU is intended to help producers track inventory in stock, but it can also be used by resellers, and even the people who purchase the item to keep track of what they’ve purchased. So a box of 50 yellow widgets would have one SKU because it can be sold as a box, while one blue widget might have a separate but related SKU because it can be stocked and sold individually as well.

Stock-Keeping Unit (SKU)

An identification code for a product (or service) that captures all the important aspects of the product and differentiates it from others that the vendor may supply.

Normally abbreviated to SKU, this identification code may originate from any point in the supply chain where stock needs to be kept, or stored: for example, it may be created by the original manufacturer, by a wholesaler, or by a reseller/retailer. For computer software, the practice is generally well established for using the SKU provided by the publisher. However, SKUs need to be considered carefully, since a distributor or reseller may extend the original SKU with a prefix or suffix to assist their own operations. For example, a publisher may decide on the SKU BH-1883. A wholesaler may distinguish distribution intended for Europe with a suffix like BH-1883-EU, and a reseller may add a prefix to help manage their sources, giving AP-BH-1883-EU. Since all these variations may identify an identical product, you need to consider SKU values carefully.

IT Asset Management has a SKU library, updated frequently, with SKUs provided by publishers, distributors, and resellers and mapped to individual software applications (and sometimes to other details such as the purchase program or maintenance sold inclusively with the software). If you find a SKU that is not recognized by the system, you may wish to notify Flexera of the complete SKU and product details to enhance automated processing.

SKUs for Software

Software is similar to any product that uses SKUs. You can buy one copy, or multiple copies.  Some software can be purchased with a software license for a specific number of machines, while other times you would purchase the same software to be licensed for a specific number of users. Each of these is a unique instance that needs to be tracked separately. It’s because of the uniformity and broad use of SKUs that it’s imperative that any software asset management (SAM) tool include capabilities to track software by SKUs.

Most publishers reference their software using a SKU. This SKU is usually attached to every purchase order line to clearly identify which software or package is purchased by a customer. Even if there are very small differences between two software titles sold by a publisher/reseller, such as, the publisher program or in the maintenance, they usually carry two different SKUs.

For instance here are two SKUs:

SKU: 810-03324;
Publisher= Microsoft, Product = Microsoft SQL Server 2005 Enterprise Edition Win-64Bit 1 Processor German 2 Years Software Assurance OPEN C

SKU: 810-03537;
Publisher= Microsoft, Product = Microsoft SQL Server 2005 Enterprise Edition Win-64Bit 1 Processor German 2 Years Software Assurance OPEN NL

When you import PO information into a software asset management solution, one of the biggest challenges is to normalize the PO data and understand which applications they are related to. Most of the time (not always), purchasing departments tend to write a short description manually when issuing a purchase order that is never the same across two identical POs. They also attach the exact SKU related to the purchase.

Using the SKU data will help a SAM solution to automatically:

  • Normalize and translate incoming PO data
  • Understand what applications, license metrics, and basic maintenance terms that are included in the purchase
  • Generate new licenses or attach new PO line to existing licenses
  • Understand how the software was purchased and as a result know what additional use rights came with the license

SKU Data Management

Next generation software asset management solutions include a SKU database based on information available from software publishers and years of experience.  The SKU database should be maintained and updated regularly by the vendor. A good SKU database will have at least 100,000 entries. Each SKU entry should have the following information:

  • SKU number
  • Manufacturer
  • Description
  • Family
  • Level (Select & Open licenses)
  • Group (Microsoft contract: Box, select, open)
  • Language
  • Type
  • Version
  • Metric
  • Usage Right
  • Pool
  • Point
  • Maintenance Type
  • Maintenance Duration

To take full advantage of the SKUs, a link must exist between SKUs and application recognition library entries.

Using SKUs in the context of SAM

SKUs are used within the context of software asset management (SAM) / IT asset management (ITAM) during a post PO import process. POs are imported into the system using a financial importer or are manually created.

If a new license is created from the PO using the SKU:

  • The license type should be suggested/used accordingly to SKU definition
  • SKU normalized data — description, publisher, version – should be used
  • PO should be tied to the software license and licensing info (quantity) reported in the license
  • Application(s) from the application recognition library should be attached to the software license. The next inventory import should then use this software license and tie computers/users to it
  • Any additional use rights such as the right to upgrade or downgrade should be applied to the license

Existing candidate licenses for POs containing SKU are the same license with the same SKU in the database. The benefit is to avoid redundant data entry by the end user. If a SKU is unknown or the link cannot be found automatically, the first time the SKU appears, the end user will manually select the existing license. Once the system has “learned” about this SKU, the second time the same SKU is used in a PO, the link will be suggested by the system.

What you can do today

To take advantage of managing licenses and purchases using SKUs, a good first step is to check with your purchasing department to see if indeed they do record the SKU for each and every software purchase. If this is the case, then you are half way on your way to automating the linking between purchases and software licenses. If not, you might ask them to start.  The second step is to assure your software asset management tool can process the SKU data from your purchases.

As applications have increasingly become strategic to the business, many companies are awakening to the reality that they don’t have a strategic solution to manage application usage.  For years, companies have relied on software asset management systems to manage these assets.  Yet, while such SAM systems were designed for and excel at counting what you have, today’s imperative is to ensure the business is in continuous software compliance and to optimize software license spend.  To do so requires a next generation software asset management solution capable of software license optimization (SLO).  Such solutions take advantage of the capabilities we’ve described to help you regain control of your software licenses, delivering continuous compliance, maximized value and optimized usage across your entire software estate.

To learn more about software license optimization with Flexera One ITAM, please reach out to our experts.

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