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Software Spend

The BREXIT Effect

Have you considered what the potential effects on your software licensing costs could be following the UK’s decision to leave the EU?

This blog looks at some of the key considerations you need to take into account following this historic decision.

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SAM Market Trends

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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.

Oracle ULAs – the facts!

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Oracle Unlimited Licence Agreements (ULAs) – the facts!

The Oracle ULA is generally offered to larger customers as a convenient option to purchase unlimited licences, for a pre-defined list of products and for a limited term. Licence fees are paid up-front, along with the first year of technical support, with the cost often amounting to millions of pounds.

So what are the advantages and disadvantages of this type of deal and how can you ensure that you are making the right decision before choosing to sign a ULA?
ITAMS’ Senior Licensing Consultant Anemaria provides an informative overview
of the Oracle ULA.

“First of all, let me summarise the characteristics of this type of contract. In simple terms, an Oracle Unlimited Licence Agreement (ULA) is a contract that gives you the right to use an unlimited quantity of a pre-defined list of products but for a limited period of time, usually 3 years.

Another characteristic of the deal is that, at the end of the term, you decide whether to follow Oracle’s certification process and waive your right to deploy an unlimited number of licenses or to continue with the arrangement and renew the deal.

The two big advantages of the ULA are cost savings and simplicity. Cost savings can be realised if you anticipate a future growth in usage during the contractual term. If so, then a ULA deal will be a good choice.

In addition to this, if you are looking for a single deal for different categories of Oracle products bundled together, or if you prefer simplified support management (of previous Oracle agreements), then a ULA deal will also prove to be a good choice.

However, you will need to be aware of some risks you may be exposed to if you opt for a ULA.

A common problem that customers face during the ULA’s contractual term is that they have made a wrong estimation of their future deployment and that the financial investment in the ULA was not a cost-effective choice.

If you are a large organisation this could be the right option. However, if you are about to enter into a period of mergers, acquisitions or divestments, this can be a very complex situation to manage under a ULA. Furthermore, if the expected growth in usage is not realised, you will most definitely over-pay for the licences your organisation actually uses during the term.

Even if the usage declines during the ULA, you will still be required to pay the same amount of maintenance that was in effect at the beginning of the deal, otherwise you are a non-compliant customer.

Another area of risk comes at the time of exiting the ULA. You must provide Oracle with accurate information about your current deployment to certify the number of licences installed and running at the contractual end date and to sign the Certification letter.

At this moment, the Oracle licence management consultants or the account manager will contact you with lots of technical questions about the actual deployment of the ULA programmes, wanting to ensure that you are not presenting an over-declaration of usage and at the same time, wanting to identify any future upsell opportunities. So, always keep in mind that the over-declaration or the over-deployment of your software is a non-compliance situation.

Declaring a high number of licences in use at the end of the deal, will always raise a question mark. In addition to this, if you are not ready to respond and to defend your certification, you will be very exposed to the risk of being audited.

The ULA deal is a suitable option for larger customers, and so the complexity of the system environment will also be discussed. For this reason, best practice requires that if you have already entered into this type of agreement, please ensure you have the processes and tools in place to accurately manage your Oracle deployment.

To conclude, it is best to manage your ULA in time and before Oracle comes knocking on your door to mitigate any potential risks!”

For more information please contact ITAMS or request to download Anemaria’s webinar on, “Oracle Unlimited Licence Agreements (ULAs) – Benefit or Risk?”

To support or not to support!

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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!

Our advice?

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!

Are you spending too much on software?

Organisations must focus more on managing their top vendors to reduce spend on software. In a recent enterprise licence management engagement (80k seats), ITAMS was able to attribute approximately 40% of its client’s total annual software spend of £165m, to their top 12 vendors. With 70% of their budget spent on support and maintenance and 30% on new licences there is a large opportunity to make substantial savings.

Do you know what percentage your budget is attributed to your top vendors?