Understanding Software Asset Management Core Concepts: Entitlement, Consumption, and Lifecycle

Ryan Krueger:

And the goal of any SAM program, we’re trying to get as close to real time reporting as possible. Now sometimes that’s incredibly difficult to do, and sometimes things are tracked in Excel, right? In a spreadsheet. But the goal is that we can produce reporting that’s actually actionable and intelligent for informed business decisions.

Intro:

The following is an excerpt from an Anglepoint webinar. To watch the entire webinar, please visit anglepoint. com slash webinar. You’re listening to the ITAM Executive, a podcast for ITAM leaders and practitioners. Make sure to hit subscribe in your favorite podcast player and give us a rating. In each episode, we invite seasoned leaders to share their tips on how to define your strategy, promote the value of ITAM in your organization, and align your program with the latest IT trends and industry standards.

Let’s get started.

Ryan Krueger:

Welcome to our Software Asset Management 101 Lightning Course. My name is Ryan Krueger. And I’m Chris Nielsen. And Chris and I are both directors here at Anglepoint, helping organizations build and create sustainable software asset management programs. Really, over the course of this series, we hope to do a little bit of a broader and a deeper dive into key software asset management topics.

So, we’re going to be reviewing a few of them. We’re going to go into a couple of key concepts around software entitlement and software discovery and inventory. After we discuss those, we’re going to review software license management and why that’s an important piece of SAM.

Then after that, we’ll be discussing the software asset lifecycle.

Chris Nielsen:

So, with that we’re going to be talking about software entitlement, the asset part of software. Understanding what we own. So, what is software entitlement? Software entitlement refers to the rights and permissions that go along with the software, with the individual organization’s ability to use a specific software product.

And the application is typically governed by terms and conditions that are found within a software license agreement. And software entitlements have many different attributes, often many more than are shown on a PO or an invoice. And this is what makes it difficult because you have to know those to be able to understand what you actually own.

A couple of the attributes that come down to making a software entitlement is what kind of license is it? Is it a subscription? Is it a perpetual use license? Is it maintenance? Is it based on the number of users that are using the software? Is it based on the number of users that are using it at one time? Is it based on the number of processors? All of these different metrics identify how software is measured and how it can be used.

Ryan Krueger:

There’s hundreds of metrics that exist in the world of software.

Chris Nielsen:

And the software publisher can change how the software license is often measured, sometimes on a year-to-year basis.

Also, there’s use rights, and this kind of governs how the software can be used. Can it be used on a production server? Can it only be used on a non-production server? Is it tied to a certain computer? Or a certain office, or a certain location? All of these aspects identify exactly how that asset can be used, and if you don’t use it in that way, you could be breaking a contractual agreement.

So, with that, we’ll go to how are these software entitlements measured?

Ryan Krueger:

Yeah, so when we think about software entitlement, it’s where we start oftentimes, right? Because the software entitlement is that input into effective software asset management and governance. So, software licensing agreements, as Chris mentioned, have vital components that dictate how we can use the publisher’s software, right?

So, let’s look at just a few of them. There’s a whole lot more than just this, right? But we want to touch on a couple. So we may be contractually restricted or obligated to only use software in a specific location or geography, right? We can only use it in a certain country? Is it something where we can only use domestic?

The geographic scope is oftentimes something that you may see. Also, just how much of it did we purchase, right? The quantity itself, right? Do we purchase one or hundreds or thousands?

Chris Nielsen:

Well, then how, if it is by process, how is the processor defined? It might be different per each cell.

Ryan Krueger:

So, looking at the license metrics, Chris mentioned a few of those, right?

Is it per device? Is it per user? Is it per named user? Where can only John Doe use it? Or can anybody use it? Chris also mentioned another one. It can, do we only have a certain number of people that can use it at one given time? Is it per core? Is it per processor? There’s so many different metrics.

And it’s important that we understand what those metrics are. So that we can accurately count our software entitlements that we own and count how much we’re using. It’s also something that we should keep in mind when we think about contractual agreements, is the audit rights that are associated. Sometimes software publishers extract revenue from their customers by doing or conducting software audits.

There may be situations in place where the publisher does not have the right to audit, but regardless of whether they can or cannot, it’s important that we understand what the scope of those audit rights are. We also want to understand things such as downgrade rights.

So, if we purchase the newest version of something, can we as an organization deploy an older version? Also, we care about what versions or what additions. of the software we are entitled to use, right? Publishers are making constant updates and constant changes to their software, releasing new versions and new additions.

And we need to know at what version or what edition we are entitled to use. We also may care about. environment use rights. So, this could be something where our development environment or disaster recovery or test environment may differ than our production environment or perhaps a pre-production environment.

So, it’s important that we as a company are aware of all of the different pieces that go into software entitlement. Now, when we start saying it’s important that we gather that software entitlement, right? We have to gather; we have to know what we use. Oftentimes organizations will think that we’re just going to run a report from our procurement system and call it a day, right? We’re just going to get all that raw purchasing transaction data. When in reality, that’s not the case. So instead of that, organizations may say Well, yeah, that’s fine. We’re going to pull all of our raw transaction data from our procurement systems.

And then we’ll, all we’ll do is simply supplement that from getting reports from the software publishers or perhaps their software resellers that we buy software from. And then that equals what we’re entitled to use. And Chris, it’s not like that.

Chris Nielsen:

It’s not. It gets more complicated.

Ryan Krueger:

Us as an organization, right? We may have gone through various merger and acquisition activity over the years. And it’s important that we understand that each separate entity that was also acquired by our organization, they also probably purchased software in the past. And we need to be aware of an account. For that software to understand that if we as a parent company are entitled to use it or not.

Chris Nielsen:

And they might have bought it in a different metric or different agreement or a different way.

Ryan Krueger:

So, then you say well, okay we need to gather that data from the software publisher, but guess what? There’s a whole lot of software publishers, right? There’s thousands of them So we need to understand where it is what publishers software we have and then we also need to understand if we purchase that exact Same software that the publisher sells perhaps we bought it directly We also need to understand if we work through one of our resellers to purchase that software So, again, we’re complicating things a little bit here.

Lastly, we may have individual business units that purchase their own software. Now, that could be approved or unapproved through the normal channels of things, but business units may have localized or decentralized purchasing, or it may be entirely centralized, but regardless, we need to know if that’s occurred.

And then to complicate things, we now have cloud, right? In the cloud marketplaces, we can also purchase software or subscriptions. Not only cloud, but we also have SaaS subscriptions, right? The Salesforces of the world and others where perhaps we purchase directly or indirectly. But regardless, it’s important that we know of that purchasing so that we can account for it when we look at our SAM program and know where we should prioritize.

It is a complicated process, it can be done, but it’s important that we look at all the components, that we look at merger and acquisition activity, we look at purchases that are made directly from the publisher, that we look at, purchases that have been made through resellers through cloud marketplaces we need to look at purchase that have been done at a local level or a decentralized level as well as a centralized.

So anyway, it’s important that we understand what software entitlement is and that we account for it in our software asset management program. Now we want to talk about figuring out what it is we’re actually using, right?

So, you may hear various words that refer to license consumption. But license consumption is what we would like to think of as the umbrella term. In some of these other inputs or ways in which you may hear as license consumption being referred could be installations, deployments, allocations, provisioned users, and many other terms.

But, broadly speaking, license consumption refers to the deployment or assignment of our software within the organization. And it involves tracking and monitoring the software licenses through the discovery and inventory processes to ensure that we’re in compliance with our terms and conditions, right?

So, the primary goal of license consumption management is to ensure that an organization doesn’t exceed the number of licenses that they purchased. And it sounds obvious, right? But when you start talking or to scale with hundreds or thousands or even tens or hundreds of thousands of employees all using a similar type of software or software where there’s duplicative technologies, it really is important that we understand how much we’re using of something.

Chris Nielsen:

Yeah. Yeah. So. What we do here in discovery is typically done through a tool, and there’s two different kinds, whether it’s agent based or agentless. And these tools are designed to spider the network and check anything with an IP address, scan servers, scan workstations, scan network equipment, and understand different attributes about those devices.

Is it a server? Is it a Windows server? Is it a Red Hat server? And once it knows more information about the server, it can kind of knock on the door and then understand what kind of software is installed on that server. And then take an inventory of what is installed. I think of it as like a neighborhood where you have streets and houses.

The houses represent different computers, different servers. And you knock on the door of the house, and somebody answers the door and tells you who lives in that house. How many kids you have.

Ryan Krueger:

How many houses are you knocking on? That’s right.

Chris Nielsen:

How many pets are in that house, right? And all the different kinds of things that go on in that house.

And sometimes you knock on the door in a discovery tool, and nobody answers. And that’s where you don’t get complete and accurate data, and that is constantly a struggle is understanding how accurate, how complete is your discovery. If it’s low, then you can’t trust the data that you have to make sure, I know what I’m consuming from a license perspective.

So, we want to strive to have 95 plus percent of our environment scannable and discoverable through our tooling. And then once we have that data and we’ve pulled back software information, a lot of it is not relevant or not important. If you ever go to your add or remove programs in your computer, there’s probably 150 things listed in that list.

Of which, there’s only a handful that probably require some type of license. In the inventory, we want to be able to sort through that noise and understand exactly what is licensable or what is needing to be tracked from a license consumption standpoint, uh, and above and beyond that, we also need to have the ability to recognize that software and understand through certain patterns or certain fingerprints, what these evidence or what these files that we’re scanning make up. Does it make up Microsoft Visio? Does it make up Microsoft Visio Professional? All of these different things.

And so we now established what we own through Software Entitlement, and we’ve talked about what we’re using or consuming in our environment. Now we’re going to marry it together in the critical process of software license management.

We wanted to break through a couple of the steps that are necessary to identify and delineate exactly how you can do that. March through a process of understanding your effective license position. So first you obviously want to do some contract discovery and gather all the relevant contract documents necessary to establish complete accurate license entitlement and usage rights and glean from those documents an entitlement position, a list of everything that you own and how many licenses.

Once you have that, then you want to go out and do discovery. And understand your deployments, understand what you’re consuming and produce a consumption position of exactly what you’re consuming and how it’s measured. And then you marry those two together of what you’re owning and what you’re consuming in what we call an ELP or an effective license position.

And that’s the nuts and bolts that show I own five, I’m using four, I have one on the shelf, I’m great. Or I’m using 10 and I only own 8, I need to go buy 2 more or stop using 2, and that analysis. And after you have that kind of deep report, what is often useful is to produce a risk and opportunity assessment, a high-level document perhaps for leadership that says, hey, so what? Why does this matter? And explain next steps.

Ryan Krueger:

And it’s important that we also keep in mind here that there are solutions, there are, there’s tools or technology that can help us in that discovery process, that can help us in entitlement reconciliation process. Automate some of those steps.

They automate a lot of the manual work, right? And the goal of any SAM program, we’re trying to get as close to real time reporting as possible. Now sometimes that’s incredibly difficult to do, and sometimes things are tracked in Excel, right? In a spreadsheet. But the goal is that we can produce reporting that’s actually actionable and intelligent for informed business decisions.

So up to this point, we’ve talked more about software entitlement, software discovery. How do we marry those two worlds together with software license management?

Now we want to take a step back and look at software from a cradle to grave perspective and really how it fits into other incredibly important business processes within an organization. Our first step in this process is software request. Software request phase is typically the initial step in the software asset life cycle.

During this phase, stakeholders or end users have identified a need for software, and then they go through that request process. Ideally, organizations have a means to make this process easy for their end users, including using self-service portals where they can browse a software catalog that’s been curated with standardized software, and then request that software now there could be non-standard software as well that can also be requested.

Some reasons for non-standard software could be because the software exceeds a certain dollar amount or we already have a certain similar technology within our organization, or there’s also risk of purchasing that software. Generally, what we would recommend here is that the Asset Acquisition Committee consists of a cross functional group of IT leaders and they can evaluate those requests.

But when the requests come in, the next phase is that we need to approve or deny that software, right? And once a software’s request has been submitted, it’s important that we have timely and transparent workflows that can automate a lot of that approval process. Now, there are, of course, non-standard or non-automated processes that may exist, but when there are requests that need to be approved by actual people and that are not automated, it’s important that whether they be budget holders, they may be department heads, they could be IT line managers or anyone else that has a relevant stake in ensuring that software can or cannot be used.

They’re going to assess that software request and then evaluate factors that they may have like budget constraints, alignment with organizational goals. There could be security considerations and other licensing requirements. Now, ideally software asset management may be an input right into that software approval process because we’re going to check if a software license actually needs to be purchased or if we already have it.

And that’s where we see it in that software procurement phase, right? This is the next phase of the software asset life cycle. So, after software has been requested, after it’s been approved, the procurement phase will begin. And this is really where we are going to perhaps be selecting a suitable vendor or a supplier or one that we’ve already vetted for making that software purchase and then negotiating terms of that purchase.

An entitlement check can be conducted to see if the organization has an existing supply of licenses, but if a purchase needs to be made, then we’ll go about those activities of obtaining quotes or negotiating pricing or negotiating various terms. Once that procurement process is complete, the organization acquires that software and then will prepare ultimately for its deployment or usage.

Chris Nielsen:

That’s right. And sometimes there is no procurement if we already have the license on the shelf. But that’s part of that process to determine, do I need to buy this or do we already own it? And we can just deploy. And so, after we have gone through that procurement decision, that’s where we assign the license.

We assign it to the person or the department or the device that will then ultimately pay for that license or be responsible, especially if you have a chargeback model in your organization where then you can go through and see exactly Who has been assigned a license and is ultimately responsible for paying for it through the coming years.

And then once that license is assigned, and a cost center is recorded you actually deploy that software. Whether we need to install it on a server or allocate a user in a portal or Console and get that person or that department the software they need so they can start using it and getting value out of it.

So, all of these steps that we’ve talked about, we want to minimize the time to value, right? So, they can get the software as quickly and as efficiently as possible. Therefore, they would be less likely to go around any software asset management process that’s in place if they can get their software in a quick manner.

And after that software is installed, that’s where the meat of our work lies and that is managing that asset or that deployment through its life, monitoring it, and understanding where it’s installed. Does it move if it’s assigned to a user, did that user leave the company?

If they do, what do we do with that? Do we put that license back into the pool that can be given to somebody else? Or perhaps you have software installed on a server and it’s licensed by processor and a couple years go by and that server gets upgraded with more processors that then require more licenses.

So, tracking that asset through its life cycle is key in making sure that you have good governance and good processes in place to make sure that we stay in compliance with our license agreements. And then finally, once the software is no longer have any use or the company decides to move forward perhaps with another software or it’s be determined end of life by the software publisher.

We remove that software, we uninstall it, we dispose of it from the environment and that ends the lifecycle and our responsibility in tracking that software. So, this whole process kind of makes up the software asset lifecycle for any given software product. And so, we’re grateful you’re with us.

If you have any other questions about this life cycle process, please reach out to us on anglepoint. com.

Intro:

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