Who do you trust?
By Paul Sheehan, Managing Partner at IT Asset Management Solutions (ITAMS)
Published by The ITAM Review, 6 December 2012
[Editors Note: I’ve known Paul Sheehan for over a decade. He is a forthright, well-respected and experienced SAM practitioner and I’m pleased that I’ve finally convinced him to step out of the shadows to share his experience with the ITAM Review community. In this first article Paul delves into the murky depths of independence and profit motives in the SAM market.]
I read Martin’s recent article on the SAM Services offered by Partners with interest and concur that many Partners seem to be jumping on the Microsoft Review/Audit bandwagon.
Since this article covers independence and integrity in the SAM business – let me be open and crystal clear from the outset. My company makes a profit from helping medium/large companies manage their IT assets. , and after clear requirements analysis this can include the supply of tools. We don’t audit on behalf of vendors, and we don’t sell volume licenses. We’re very proud of what we do and the value we bring to our customers.
As a provider of license management services in Europe since 2002, we have however seen our fair share of companies abusing their position in the SAM market and taking advantage of customers.
My umbrage is not with partners selling services and making money from SAM, as I believe the community provides a very valuable role – my issue is with companies claiming to be operating independently and acting in the best interests of their clients when clearly they are not.
What does “independent” mean?
When choosing SAM services you need to be fully aware of three key market dynamics:
- The money made from the supply of volume software licenses – one of the first deliverables of a successful SAM programme is to provide visibility of your effective license position. This may result in a shortfall, surplus or in our experience a mixture of both. There is a conflict of interest if the partner assessing your license position is also supplying the shortfall. This is not an anti-reseller sentiment but just a commercial fact of life. You don’t want the fox running the hen house. In any other governance-led process in business, especially when significant sums of money are at stake, this would not be allowed.
- The relationships partners have with software publishers – the second commercial market dynamic is the relationship SAM partners have with software publishers. When a partner is working closely with a software publisher such as Microsoft, Adobe or Oracle the partner is often contractually obliged to disclose any findings regarding your license position.
- The relationship partners have with tools providers – recommendations made on tools need to be objective, and made in the best interests of the client, not driven simply by the tools the partner happens to sell (unless of course this is part of a full managed service and irrelevant to the client).
Now let us take a look at the key players in the SAM market in relation to those commercial interests:
- Software Licensing Resellers– companies that supply you with software licensing. Licensing resellers, such as Microsoft Large Account Resellers (LARs) usually have a good knowledgebase of licensing expertise and provide help with day-to-day enquiries around licensing.
- SAM Consultants – Companies that provide advice, technology or services to aid organisations with their governance processes and management of software assets.
- SAM Review / Audit Partner – Companies that audit or ‘review’ organisations on behalf of software publishers
- Tools Vendors or Resellers – organisations that make their money from getting the tool deployed, but who take no responsibility for business outcomes.
As you can see from the image on the left, overlapping offerings create biased commercial interests. In my experience, a partner offering SAM services, working on behalf of publishers and also supplying licensing whilst claiming to be independent is actually often highly compromised. Where there is bias, there is often far more design in the actions of the partner than most users truly understand – a murky underbelly of this industry often cloaked by slick salesmen.
I particularly highlight pitches such as ‘because we audit on behalf of a vendor, we can protect you if you engage with us directly as a consultant’, ‘we will deliver license optimisation services free if you buy your software from us’ or from tools vendors ‘our tool is best’ before they even understand your problems and existing investments, or have ever actually seen the competition.
It is not only the end user who faces this. My consulting firm is regularly placed under pressure by unscrupulous vendors trying to remove us from advisory engagements because they know we will establish the facts regarding comparative functionality fit.
Declaration of Interests
So how do you navigate these issues and assess the commercial integrity of a SAM partner? The answer is rather straightforward – ask your prospective SAM partner to formally declare their interests.
Direct questions to ask:
- Where do you make your money?
- Do you take a gross profit (direct, commission or otherwise) from volume licensing? Will you sign up to this in a contract?
- Do you have a commercial relationship with software publishers? If so what information is disclosed, on what terms and at what time?
- Has your organisation ever reported a current or previous client’s under-compliance to a volume software vendor?
- What is your relationship with tools vendors, and do you make money from them?
- How much ownership of business outcomes for licensing do you take? How?
- What is your company’s split of net income between tools, vendor audit, services and volume license supply?
My intention is not to steer you to choose between one of these types of partners since they all have their values – it is simply to urge you to be fully informed of their true business motives before engaging with them. Unfortunately we are all too familiar with companies that have been sold on a sales pitch by a so-called independent, only to find out they are actually now locked in with a partner they feel uncomfortable with. Don’t be fooled by salesman’s reassurances; seek the facts.
If you would like more information contact us.