Licensed to Kill?
The battle is on
Software is one of the largest line items in IT budgets. Industry estimates put it at over 20% of
total spend, and approximately 35% of that spend is on infrastructure software - including
databases, application servers and other middleware. Yet the increase in IT purchasing and
high level of M&A activity in recent years has left many organisations with surplus and
duplicated infrastructure software and other data centre resources.
The battle between vendors and customers is officially on. And as customers continue to
embrace new technologies like grid, virtualisation and multi-core processors that let them do
more with fewer licenses, vendors are responding to this revenue threat with new licensing
schemes. While the calculations these vendors use may be complex, the answer for
customers is simple: enterprises must find new ways to effectively gauge software use – and
they need to do it in a climate where widely reported cuts to IT spending are looming.
To win the battle and reduce IT costs, companies need to identify and eliminate unused
software licences in the data centre. Most companies could quickly reduce software
maintenance costs by around 5% percent simply by identifying surplus licenses and
eliminating extraneous product instances. Unsurprisingly, license management and
optimisation are becoming much more attractive to IT executives as a means to lower overall
software spend and reduce compliance risks.
Avoiding the audit – or at least preparing for it
Software license audits are on the rise, with many conducted internally for compliance
purposes. But as the economy slows, vendor audits can grow, as salespeople attempt to
squeeze more from their existing customer base. One way to do that is to force a systems
analysis in environments without good software asset management processes in place.
A good license optimisation strategy can help companies elude potentially costly and
embarrassing audits by helping them meet four key criteria:
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Meter: accurately count the number of deployed licenses to reconcile against
license entitlement
Right-size: continuously reduce the number of licenses deployed
Standardise: diminish software version and vendor inconsistencies
Monitor: actively police non-approved software to enable fast remediation.
Under-licensing often results in significant unbudgeted spend – particularly in cases where
the vendor has the right to charge current list price to make up the licensing gap.
Unauthorised use is a key contributor to under-licensing – at least half of the tips that the
Federation Against Software Theft (FAST) receives are related to under-licensing in
businesses. However, policing unauthorised software use is particularly difficult when
customers are struggling to simply count their authorised software.
While the majority of software in our data centres is hard at work, a significant proportion is
heavily underused - or worse, not used at all. Industry analysts estimate that 20% of overall IT
software costs can be attributed to “shelfware,” and about 4% of infrastructure software in
Global 2000 enterprises remains unused. Further, between 2.5-5% of servers running in the
data centre could be removed with no impact on the business - and every one of those
servers consumes licenses that could be harvested.
IT often treats all business services as equal in terms of the SLA they provide, yet for some
business services, this is the ultimate overkill. Non-critical services represent a huge
opportunity to consolidate infrastructure software. Example: multiple databases can run
within a single instance of an Oracle DBMS. The typical utilisation of a server running an
Oracle database is 20% – but this could be driven to 80% without a performance hit. So
companies have a huge potential for license reduction – if they could identify databases for all
non-critical services (such as those in development environments).
Controlling zombie servers
Virtualisation technologies hold great promise for data centre efficiency, and are often
perceived by the business as ‘free.’ Yet each virtual server pays the usual software tax.
Without good virtual server management, software licensing costs can soar. And while the
lifecycle of a physical server is more than three years, the lifecycle of a virtual server is highly
compressed, sometimes to within a single day. This means virtual machines are often
introduced without following standard build procedures, so licenses are not recorded –
introducing the serious risk of under-licensing.
Too often virtual servers that have served their temporary purpose are never
decommissioned, leaving unused licenses in play. As the majority of infrastructure software is
licensed based on hardware metrics (such as number of servers, CPUs, or CPU cores
deployed) it’s crucial that enterprises have a method to accurately evaluate this metric against
each software product. While many firms use asset management tools to track their software
licenses, update processes are often manual and much software is installed out of process
(and therefore never recorded). As a result, data quality in these systems is typically very low
– anything from 45-80% accurate for software instances and far wide of the 10% error rate
generally permitted within license agreements.
Getting to one version of the truth
To reap the benefits of license optimisation, companies need total transparency of their IT
environments – the hardware, operating systems and software and the dependencies to their
business applications or services. They specifically need:
 An accurate software inventory at any point in time, including versions and editions
 A complete view of what is being used versus what is installed
 A complete view of what is installed versus what is licensed
 Details of the hardware platforms supporting the software – including processor types
and core counts
 A mapping of software to business applications.
 A view of idle systems (assets with no observed dependencies over time).
This data will allow customers to accurately meter their infrastructure software and identify
optimisation opportunities. They can then easily remove unused software, consolidate
underused software, shrink the number of vendors providing the same functionality and
reduce the number of versions of any one product.
Managing license compliance risk
Auditing is clearly a painful task for both the vendor and the customer. Deploying tools and
processes that generate provable data to meter software use can prevent the need for
vendors to audit at all. What’s needed is a tool that will provide an accurate view of which
software is actually being used on a daily basis, which business applications use which
software instances, and - where the software is protected by license key – the entitlement.
Where infrastructure software is licensed based on hardware metrics (58%), this information
reconciled with the entitlement provides the basis for effective software license compliance.
Armed with this data, procurement departments can go into annual license negotiations with
the facts they need to optimise pricing. This holistic view of enterprise-wide software use is
particularly helpful for organisations trying to move to centralised purchasing and license
management.
Reducing deployed licenses
With a clear view of which business applications use which software instances, companies
can employ several license reduction strategies, including:
 Hardware refresh – understanding where software instances are located on outdated hardware with high utilisation provides the opportunity to refresh the
hardware platform with a higher performing option. This prevents the deployment
of another license on an additional hardware platform to meet the required load
 Software instance consolidation – seeing where underutilised software
supports non-mission critical business applications makes it possible to
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consolidate the underutilised software instances, especially for DEV/UAT
systems where performance is less critical. This reduces overall license count
License harvesting – software instances that have no dependencies on them
over time indicates that they are unused. A view of these instances provides a
strong candidate list for license harvesting – where the software is removed and
the license redeployed elsewhere or used to reduce the overall software bill
Server decommissioning – forcing server decommissioning– either physical
servers that should have been removed from the data centre but are still running,
or forgotten virtual servers that are no longer needed - enables infrastructure
software, operating system and virtual machine license harvesting. .
Follow the money
Deciding where to start a license optimisation project can be daunting, based on the huge
number of infrastructure products in most data centres. Companies can achieve quick (and
big) wins by focusing on a small number of vendor products that are 1) widely deployed, and
2) constitute a large proportion of IT spend.
The lion’s share of enterprise software spend is spread between a handful of vendors.
Looking at just the infrastructure software portion of that spend, the two biggest components
are database management systems and application servers, representing just over 50% of
total infrastructure software spend. So it would make sense that firms focus initial license
optimisation projects on database and application server software from the big vendors. As an
example, one of our global investment bank customers was audited by a well-known
database firm. Their estimate on license usage turned out to be off by 100%. Luckily, they
were able to get accurate figures by auditing their infrastructure before those negotiations.
The foundation of IT management
Good software asset management is a necessary part of driving down the costs of delivering
efficient IT services to the business. The foundation of software asset management is an
understanding of what is actually being used in the environment. By leveraging tools that
provide deep visibility into the deployment of these and other infrastructure software products
out-of-the-box, firms can easily and quickly run a single, high value software audit themselves
to generate immediate value – and arm themselves with the information they would need for
an actual vendor audit.
Mapping the IT infrastructure will let firms optimise their existing IT assets and highlight
additional hardware and software inefficiencies to generate rapid cost savings. As a result
they can reduce ongoing investment in non-critical systems - and free up available funds that
can be funnelled to IT systems and processes that better support core business activities. In
the medium term, there is nearly a 100% chance that your enterprise will be audited by a
vendor. Wouldn’t you rather be ready?