Traditional licensing contracts are probably the most misunderstood of the agreements. Without complete knowledge of Enterprise Agreements, customers end up paying more at the end of the agreement and in many cases, are forced to renew for another term.
There are several challenges in managing the traditional licenses, which are prompting many organizations to switch to new products and platforms. One of the primary obstacles customers face today is to comprehend intricate and complex licenses and their vague policies. Customers get trapped by the super aggressive audit team of the traditional license provider which compels them to pay millions of dollars in license fees. Their sales team tries to push the customer to sign the contract for various products without providing a true business value other than short-term cost-efficiency.
Another challenge in managing licenses is the scaling of contracts. Customers trying to increase or reduce the licenses end up paying high switching costs. Many customers use various interlocked applications from a single technology provider, which results in a high operational cost. Some traditional technology providers offer a wide range of products in terms of applications, databases, infrastructure, etc., and moving away from one product is a tedious task and very costly without considering the impact on others.
Considerations for Optimizing License Management
Based on the deep expertise in managing various licenses, Brillio recommends its customers to consider the following parameters:
Start Early – If customers are planning to exit the current products, plan the exit strategy well before the termination of the license as it takes an ample amount of time to manage the deployed products. An early transition planning can help in designing a better roadmap by providing a scope of evaluating new alternatives; thereby allowing the client to make an informed decision.
Cloud Deployment – Awareness of all cloud deployment entitlements is essential before renegotiating the agreement. Often, some license providers make it mandatory to use their cloud services along with their products. However, customers may want to look at other cost-effective options which are better suited for their organization. This will help to attain the desired switch over between alternative cloud services.
Virtualization – Virtualization rules of traditional licensing contracts must be taken into consideration before deploying products to virtual hosts, especially around how software deployments are counted. If customers don’t know how licensing software is measured when declared, or if they don’t know whether or not there is wording in the contract specifically referring to such deployments, customers could find themselves in a predicament when license providers request further information on their declaration.
Audits – Going into audits can be avoided by staying on top of what is happening with contracts and being prepared for the agreement negotiations. This will assist in not only saving time, money, and valuable resources, but also help in efficient license management.
Incorrect Usage – Knowledge of who is allowed to use the license is necessary, especially in the case of M&A and divestment. The same goes for understanding the products at a component level. For example, if there have been acquisitions or joint ventures during the license period, which have brought new user groups to the organization, customers should be cognitive of restrictions on all or part usage of products for certain areas of their business.
Contract Limitations – Contracts need to be reviewed for limitations as customers may have different terms for the same product.
Brillio’s Consulting Approach for License Management
Brillio has the expertise to discover and understand the current landscape of the traditional licenses and can help build the strategy for effective management. Brillio also offers end-to-end solutions for License Management starting from discovery to complete migration to new platforms, if needed. The discovery or assessment of current platforms is a crucial step that mainly involves executive direction, the scope of assessment, understanding the complexities involved, and tool selection to create a detailed log of products. Brillio possesses knowledge of multiple license management tools which can be leveraged for the discovery phase. The outputs of this phase can be analyzed by integrating the external tool to Brillio’s in-house framework BrillioOne.ai which offers a wide range of capabilities to manage platforms and keep a track of them. If required, Brillio can strategize and plan the customized migration roadmap for these platforms to alternate solutions depending on the business priorities. Brillio assures its customers an effective solution to manage licenses and products.
I would like to thank Mr. Anoop Kumar, Principal Architect, PPE Professional Services, who has guided me throughout to understand the concepts of License Management and helped me put together the article.
Consultant at the Cloud Engineering Studio of Brillio. A Presales and Business Consultant with 3 years of industry experience in delivering value to clients across the globe. Experienced in handling strategic engagements across Pharma, Telecom, and BFSI industry by bringing both business and technology perspectives.