ELP stands for Effective Licence Position and is related to a specific software vendor or product.
The basic premise for forming an ELP involves comparing your entitlements (what software you have purchased and are allowed to use and the way in which you are allowed to use it), with your deployments (how it is actually installed on your estate and how it is being used).
Firstly, you will need a full inventory of your software assets; the licences you have purchased and the maintenance you are now paying for. For this you will need to see signed contract agreements and/or purchase orders. You will need to understand the metrics used for licence entitlement such as, by processor, employee or named user etc.
Secondly, you will need to use tools to find out how many copies of the product have been deployed, to what environments, how many are being used, where they are located, what the specification of the hardware is and a number of other factors. The complexity of the demand data to capture will be based upon the metrics the licences are based upon. If no discovery/investigative tools are available here, then the data will need to be captured manually.
Thirdly, both sets of data will need to be compared to allow your organisation to see where it may be over- or under-licensed; presenting opportunities for improvements in licence compliance.
For complex products there needs to be a high degree of product knowledge to undertake this. To ensure you are compliant and can fend off an audit, the ELP must be created in such a way that the data collected can be presented to a vendor to support your position.
Being able to create an ELP is fundamental to keeping on top of your product compliance for audit defence and to support ongoing SAM activities such as optimisation and cost control.
For further information on ELPs and how to create them please Contact ITAMS.
Have you considered what the potential effects on your software licensing costs could be following the UK’s decision to leave the EU?
Our latest blog looks at some of the key considerations you need to take into account following this historic decision.
Organisations moving towards a more virtualised environment have a number of decisions to make.
There are several ways to purchase Adobe products via a Volume type agreement and it is important to know your options and the key differences before a purchase is made.
Microsoft is turning Windows Server 2016 into a cloud optimised server and System Center 2016 into management of traditional datacenter management and cloud environments. As a result, significant licensing changes are expected.
SAM Market Trends – are you caught in the wave?
ITAMS’ specialist licensing consultants Monica & Adriana share some insight into how the Software Asset Management (SAM) market is changing, what this means to SAM providers and why end-users should not steer too far from the main principles of SAM.
“Having worked for several years in Oracle and now within ITAMS’ Oracle team, we are now in a great position to share a few thoughts with you, based on our experience working with both vendors and clients alike.
Without a doubt, the core strategy of a large software publisher is focused on revenue and not on achieving compliance for its end-users. In a large organisation, the need for a SAM process exists but the allocation of dedicated resources is not always covered. For this specific reason, SAM providers have emerged on the market and are here to help. However, things are not as simple as you might imagine.
Changes in the SAM industry have meant that organisations have started to spend a lot of money moving to new licensing models (that are vendor driven), and that are fast becoming “flavour of the month”. For example, let’s take the Cloud licensing model, which is suitable for a fully integrated service or when replacing an existing on premises software solution. The downside to moving to this type of licensing model is that if you‘re already tied into a licence term, you may need to re-invest in new licences.
Managing Software Assets has developed from a tactical fix into a strategic imperative. Even though IT budgets have remained flat, software spend continues to grow in terms of its percentage share of the overall IT budget.
SAM represents a business practice that involves managing and optimising the purchase, deployment, maintenance, utilisation, and disposal of software assets within an organisation. Furthermore, it enables an organisation to better understand the hierarchical ranking of software products from a vendor management perspective, as well as help it to make targeted software investments to support its strategic objectives. This being said the goals of SAM are to optimise IT costs, limit operational, financial, and legal risk related to the ownership and use of software.
So what should you do?
Firstly, you need to understand your software estate. So, what software licenses do you have, are they being fully utilised and are there any licences that are not being used and is there any software that is required?
In other words you need to be pretty sure about your organisation’s licensing position and especially with those vendors that consume the majority of your software licensing budget. There’s always going to be inconsistencies unless you keep an eagle eye on your estate. Once thing’s for sure though, with compliance comes responsibility. This being said, assess your current and future needs and act accordingly.
In a world in which SaaS (Software as a Service) and Cloud based software/licensing models are growing, one may be tempted to think that it could be the end of SAM as we know it. However, in our opinion, it’s the contrary. SAM will continue to prove its value as there are multiple reasons for investing in SAM services, in particular the necessity to manage user accounts, data and subscriptions.
Despite the fact that for many organisations the concept of “software asset management” (SAM) has largely been driven by the pressures of software license compliance, it is now widely agreed that SAM has become a vital business practice. Tracking software using excel spreadsheets is no longer the norm, with a significant number of growing companies now using key technologies to help them not only discover IT and software assets but also to track and manage assets over their lifetime.
Coming back to SaaS and Cloud licensing models, organisations must be aware of potential non-compliance situations arising from for example, accessing software from territories that are not included in the license rights, sharing user accounts or providing access to third parties and contractors to whom such access is prohibited.
To conclude, the best option for organisations at the moment is to explore what SAM services are out there. Initiate contact with a SAM provider, set a realistic yet effective and achievable framework of activity, taking into consideration the unique constraints of your organisation, existing tools and capabilities. Ensure you select an impartial partner, most probably one that does not resell software nor where interests blend. But, before you engage with a SAM partner, stop and ask yourself what does prevail, your requirements or those of your potential partner?”
For more information please contact ITAMS.
ITAMS’ Oracle licensing team provide an overview on Pool of Funds agreements.
For several years, Oracle has had an active policy to increase the number of Unlimited Licence Agreements (ULAs) signed with customers globally. This type of agreement is not something new, as some of the companies Oracle acquired previously have also used it.
For example, BEA Systems, (before its acquisition), used to offer their customers the possibility to buy licences using AYCE (All You Can Eat) agreements, these were replaced by Oracle ULAs, and PPBD (Prepaid Burn Down) agreements which are now, more or less, Oracle Pool of Funds (PoF).
Oracle decided to diminish the risk of letting customers choose the licences they wanted to use from the software listed in their ULA agreements, re-introducing the so called PoF agreements.
During the past year, the number of PoFs have increased and now, more and more ULA agreements take the shape of a PoF agreement.
So what exactly are Pool of Funds?
The Oracle PoF is a special type of licence agreement. In return for paying an upfront licence fee, end users get the right to deploy a mix of a pre-defined software against a fixed price, for a limited amount of time, until they reach the invested amount. If we refer to the initial agreements (ULAs) from which PoFs are derived, the conclusion is that Oracle dropped the option to select unlimited quantities (which is applicable only for ULAs) for the PoF agreements. This means that they can now, better handle any customers that are using large amounts of software, eliminating the risk of them using more software than what was initially paid for.
Customers must be re-assured that almost all the terms of a PoF deal are negotiable. The larger the company, the higher the discounts they will receive. Nothing is fixed, so more products can be included in the deal and the usage area can be expanded from a certain country to worldwide coverage. There are a lot of factors to take into consideration for this type of deal and they depend on the specific needs of the end-users.
Besides the licence fee, a customer must also pay for annual technical support based on the full PoF credit during each year of the PoF period and beyond. In addition, the PoF ordering document will specify a “Total Support Stream,” which the customer must maintain throughout the PoF period in order to keep the right to burn down the PoF credit until it is exhausted or the PoF period expires. Any failure to maintain the Total Support Stream will result in an early termination of the PoF period, and the customer must immediately declare licences in accordance with the contract conditions.
The Total Support Stream will include:
- Existing licences for the software programs that are included in the PoF agreement.
- All support for new licences included in the PoF agreement.
- Licences for the software programs that are included in the PoF owned by companies that are acquired by the end-user during the PoF agreement period.
- New licences for the software programs as included in the agreement, and as acquired against a price hold, after the signature date of the PoF agreement.
Usually, customers that have an active Pool of Funds agreement are contractually requested to provide periodical usage reports which are called “Licence Declaration Reports” (the standard term is every 6 months but this may vary from customer to customer). In this way Oracle is using the information from the report and updating their repository with the quantities provided.
An important fact is that, at the end of the contractual period, any unused licence credit will NOT be reimbursed; however, if at any time throughout the contractual period a client’s deployment worth exceeds the initial net credit, a new payment is due.
Furthermore, having a Pool of Funds deal doesn’t mean that Oracle will not conduct an audit during the term of the agreement in order to validate that the declared software listed in the Licence Declaration Report is complete and accurate. That is why our recommendation to customers that own PoF agreements is, to keep track of all licence records internally and if possible, use relevant SAM tools and support services that will ease their efforts.
ITAMS’ Licensing Analyst Sergiu provides an insight into the Oracle Licence Inventory.
The Oracle audit process represents a series of steps. The basis for this is Oracle’s so called “Licence Inventory”, although other software vendors may refer to it as ‘licence repository’/ ‘entitlement’, etc.
The Oracle licence inventory report is an excel spreadsheet summarising the licence products purchased by a particular customer and also a comprehensive overall picture of the historical support and licences.
How is this report used?
The report is used by Oracle Licence Management Services (LMS) consultants as a primary verification tool against which the original contracts are checked, in order for them to build a clear, simple and complete software repository. Later on, this will act as a guide for Oracle field consultants when managing their clients’ software accounts.
Grouped in several tabs, the information is based on the contract migrations report data and product migration rules. As a customer, special attention should be paid to your reference information, such as the correct spelling of names and ensuring that the address you have registered is the correct one. Also, pay particular attention to the status of your licences (if they are active or inactive) and the licence metric name of each licenced product.
Can the customer obtain this information from Oracle?
In 90% of cases, the customer will receive a “customer facing document”, where details about Oracle’s licencing audit report can be found. Included is a licence table (a simplified format of the licence inventory), nonstandard clauses (found in the original contracts), definitions of the licence metrics that the customer is licensed on (taken either from the original contract or from Oracle’s price lists) and finally, the minimum number of users /devices required for every software product (so these can be correctly licenced).
As Oracle consultants build the customer repository using different systems, sometimes the information lacks accuracy, so the customer should pay extra attention to ensure that the details contained in the inventory are correct.
For the customer, the most sensitive information to check is related to:
- Product name
- Licence Level
- Licence Term
- Support status
- Licence ownership
- Duplicate products.
For a customer to have a clear licencing position, they should ensure they have:
- A tool that is capable of tracking all software licences currently in use.
- Identified all the deployed licences across the organisation’s network. (Oracle uses measurement scripts which may be provided (but not in all cases). Customers must ensure that they know what the outputs are and that an expert is working on that.)
- Built and maintained a report with detailed information on licence use. In other words, keep track of licence use internally.
- Started comparing entitlement and deployment on a regular basis in order to have a strong compliance position.
After all the above are taken in consideration, the customer should have a clear view of whether they are under-licensed and need to acquire extra licences or whether they are over-licenced and need to uninstall licences.
Managing software assets can feel like an endless maze if you don’t know how to approach licensing information. Remember creating an efficient SAM process takes a lot of time and needs dedicated resources.
ITAMS’ Lead Consultant Monica explains why it is important to properly coordinate your internal resources and licensing knowledge for any forthcoming software re-negotiations.
“With licensing, as you will already know, things are never black nor white. So before signing a deal with a software vendor, ensure that you are aware of the key relations between your organisation’s internal departments and that the right environment exists to help manage the complex world of software licensing and usage. This is half the battle and definitely a large step in the right direction.
So what does this mean? Allocating the right resources to, and coordinating the collaboration between the different departments in your organisation such as IT Licence Operations, IT Procurement and the Legal department is of uttermost importance. However, if you are a small company, you need not worry about this too much, so long as you have a process for tracking the purchase and use of licences from requisition to disposal.
If you think and act smart, you will soon realise that if you have the right tools, knowledge and a clearly defined processes in place, entering into software negotiations and facing off an audit doesn’t need to be a stressful experience.
The above situation applies to all vendors. If we look more closely at Oracle, there are 2 possible scenarios when buying and managing your software.
The first one may be that you are stuck in standard contractual terminology. For example, using a decentralised purchasing model or having your price holds attached to the ordering documents. This will translate in, what I like to call “licensing chaos”. People will not read the contracts correctly, will misuse licences and will find that they are breaching standard licensing agreements, purely by not being organised internally, nor being able to track usage properly to ensure that compliance is met.
The second is where you prepare in advance to sign a licensing agreement. In this situation, you will have a non-standard contract and a centralised purchasing model. By properly coordinating your internal resources and licensing knowledge, you will be on the safe side, especially if you have a strong legal representative in your company to deal with any software re-negotiations.
My advice to you is, to get the right resources and expertise in place and prepare for your software negotiation thoroughly by:
– understanding what your existing and planned and software usage is,
– having a consolidated master agreement to govern all purchases and
– standardising the terms of your agreement before signing the deal.
If you need help, then you will be pleased to know that there is plenty out there, however you will need to know where to look! For more advice and help, please do get in touch!”
To support or not to support! That is the question…. if you want to save money!
ITAMS’ Lead Consultant Monica warns Oracle users to ensure they check which licences and licence sets are covered in their Oracle Licence and Services Agreements (OLSA) to avoid unforeseen technical support costs.
Acquiring a licence from Oracle goes hand in hand with purchasing support. Cost wise, this is also where Oracle gets most of its revenue, through support renewals. Most customers do not pay careful attention to this but they should. I am not talking about numbers but about market trends. The best example that comes to mind is Enterprise Manager 12c Cloud Control which is free of charge as long as you purchase any licence or support contract. You get something free if you purchase support! This is what we need to keep in mind!
You, as their customer, wanting to keep track with the latest technologies and managing your complex IT environment, definitely need software updates, product patches and the capability to migrate and upgrade your licences. At what costs? Usually the support cost represents 22% of your licence fee. However, depending on what you have negotiated, this may vary.
In case you purchase support, where do you have to pay maximum attention? Well, when you sign your Oracle Licence and Services Agreement (OLSA), under the Technical Support clause, you come across the following, “If you decide to purchase technical support for any licence within a licence set, you are required to purchase technical support at the same level for all licences within that licence set.”
How do you know what this Licence Set is, so you can watch out for it? According to Oracle’s Software Technical Support Policies, it consists of all the licences of a program, including any options or self-service module; all of the licences of a program that share the same source code.
For Crystal Ball programs, the same licences of a program contained on a single order and for Oracle Java Embedded Binary programs, all the distributed units of each unique Java application product licenced pursuant to the Java BLRA agreement between you and Oracle. So you see, it is rather easy for you to purchase licences contained in a licence set and you do not even know about this. Even Oracle, through its Software Investment Guide (SIG), stipulates that you, the end user, has to allocate someone who will be responsible for understanding and managing the agreements you sign.
The Licence Set definition is closely tied to the MSL (Matching Service Level) concept which says that you cannot support a subset of licences within a licence set and that it must be reduced by terminating the unsupported ones. Here you have to carefully calculate the most cost effective solution for you! Shall I get support or not?
This brings me to my next gotcha on my list! That would be represented by a single word: REINSTATEMENT! If you did not initially acquire support for a licence, you have to know that this will for sure alter your planned budget. The conditions are detailed in the Oracle Software Technical Support Policies document and what you need to remember is that this reinstatement fee is 150% of the last annual technical support fee (if you had acquired support in the past), or 150% of the net technical support fee (if you never had it). Together with these pro-rated reinstatement fees you will also have to pay for the lapsed support period AND potential renewal adjustments. Again, carefully plan your needs!
To avoid high unplanned costs, the need for a centralised purchasing model is felt acutely. Many customers need a framework agreement which will incorporate all legal provisions, applicable to all entities in the group, a contract which will clearly highlight your future rights and obligations with Oracle. This being said, remember what a licence set is, most probably you already have it, and, before committing to support, make sure you know this is a long term relationship, similar to marriage if you ask me, a relationship which demands from you time, money and understanding!