Mega Vendors, Cloud, and Audits
Snow Software is a Premier sponsor at Gartner IT Financial, Procurement & Asset Management summit for 2016.
The focus for Monday was on mega vendors, Cloud challenges and, of course, software audits, with a number of experts giving their views and opinions on what best practice Software Asset Management should be. Here are the takeaways from Day One at the Gartner IT Financial, Procurement & Asset Management Summit 2016 in London.
MANAGING THE ‘MEGA VENDORS’
Gayla Sullivan, Managing Vice President of Gartner, raised the importance of effectively managing your mega vendors. Mega vendors include the likes of Microsoft, Oracle, IBM and SAP, also known as ‘Tier One’ vendors and where the majority of an organization’s software budget is spent.
She focused on the fact that Tier One vendors are constantly looking at incentive schemes based on new technologies. This can be a positive element when it comes to the negotiation of your software contracts. You can negotiate a much better price and address potential license shortfalls if you migrate to their new technologies.
An interesting piece of advice from Gartner was to keep an eye out for the latest news, press releases, blogs, and financial reports to understand the strategic direction of the vendor. By doing your research and being proactive in trying to understand what your biggest vendors’ focuses are will help you manage the relationship and also manage your investment in their technologies.
Challenging Relationships
The mega vendors are the most difficult vendors to manage in terms of compliance, negotiation and the general relationship, according to Gartner. During the presentation, Gartner highlighted the fact that the sales representative for the mega vendor has two jobs; tell the prospect about the new technologies, solutions and negotiate a deal, and then go back to the business and highlight why they should give the customer a discount.
If you, the organization, have used effective Software Asset Management and built a solid case for your requirements, then it is easier for the sales representative to go back to the vendor and prove why they should give you the discount you strive for.
The end of a financial quarter is a great time for negotiating a new deal with a mega-vendor as they have revenue targets to hit.
Risks
IBM processor value unit (PVU) licensing was identified as the biggest risk to an organization. During a presentation, Gartner stated that “80-90% of IBM audit calls to Gartner are down to a failure to understand the need for ILMT.” Fortunately, Snow License Manager integrates with ILMT so it helps organizations manage their risks and investments in IBM applications.
Another talking point was SAP HANA. The advice is to negotiate any future HANA deals with SAP as it is a new piece of technology that they are really pushing. Don’t be put off trying to get a discount or a cheaper price, negotiate hard as you (the customer) investing in HANA is in the interests of both yourself and SAP.
Snow is running a webinar on this topic. Snow has always encouraged organizations to negotiate with software vendors. Accurate, reliable Software Asset Management data from Snow License Manager will help put you in prime position to negotiate any software contracts, renewals or even investments in new technologies.
CLOUD
Edward Weinstein, Research Director at Gartner, emphasized the fact that Cloud technology is not going anywhere. In fact, Cloud is in 88% of organizations’ roadmaps for the coming years. If you don’t embrace the Cloud, you will get left behind.
The relationship with the vendor is different with Cloud software. Edward’s point was that, essentially, you are getting what you are given and if it doesn’t work for you then tough – the vendor will not change functionality for a Cloud product for a single user. It’s a shared environment where you need to compensate for all of the other users using the software – with Cloud software you are not an individual.
Agreements and costs can change, so you need to be vigilant when you come to renew your Cloud subscription agreement. Terms and conditions may be different as well the stated costs. However, Edward made the point that the true cost of Cloud subscriptions isn’t always obvious. Hidden fees such as the cost of exporting your own data stored in the Cloud, and a fee for backing up your data using a hosted Cloud provider are costs organizations do not often consider when moving to the Cloud.
Global organizations have also been stung by Cloud providers for things like language packs – again, an additional cost that they did not factor for when agreeing to a move to the Cloud. It is important that organizations know the true cost of the Cloud over the period of their contract or agreement. Ask questions and fully understand your requirements and Cloud plans before entering into an agreement.
Cloud Ownership
With the introduction of Cloud technologies into the Software Asset Management function, there is a gap in Cloud owner and responsibilities within organizations. Before entering into a Cloud agreement, the organization should identify who the owner of the Cloud piece is and the relationship with the vendor.
This person should also be responsible for understanding Cloud contracts. Gartner emphasized the point that you need to know your Cloud contracts inside out so that you know what you are getting into. This is especially important when considering the hidden costs mentioned previously, but also what your rights are if you terminate the agreement or the Cloud provider ceases operations.
A contingency plan should be in place in the event of a worst case scenario to ensure that you protect your organization as best as possible and recoup your sensitive, valuable business data from the Cloud provider. A risk register is an appropriate place for Cloud-based risks, and it is vitally important that you continually monitor said Cloud risks and the performance of your Cloud service provider.
Edward suggests regular performance reviews, and not being afraid to switch if you are not happy with the prices or Cloud services that your organization is being provided.
SOFTWARE AUDITS
It is obvious that software audits will never go away, even with the announcement from Adobe saying that they are halting their audit program. This was evident as we discussed the challenges organizations face with audits. Microsoft and IBM appear to be leading the way in the audit stakes, with customers reporting that requests for a Microsoft engagement and an IBM baseline review being the top two challenges they are currently facing.
Another takeaway is the fact that organizations are starting to use the audit process to migrate to the Cloud. This is down to the fact that software vendors will make their new technologies and license models financially more attractive in the event of a license shortfall. They’re right – this is a great time to move to new technologies and start afresh in the management of your software assets.
68% of vendors have been audited in the last 12 months, with 31% audited once and 37% multiple time. The numbers are high, but how can you prepare for an audit? The advice is to make sure that you take control of the audit and agree on the scope – two pieces of advice we gave in our recent Microsoft Review v Audit blog. Ben Jepson, an analyst at Gartner, highlighted during his presentation that you need to understand the audit process, including key dates, and agree what you’ll be audited on. Do not make any assumptions! Get clear and concise information from the vendor on the requirements of the audit.
Another key piece of advice in terms of audit defense is to ensure that you get all pieces of information from the third party you are using (such as a certified vendor partner or LAR) before they are sent to the auditor. This allows you to perform a sanity check and make sure you fill in any information gaps or rectify any inaccuracies.
The best form of audit defense is a sophisticated Software Asset Management function, so the advice is to be proactive and not reactive to an audit. All in all, it was a fantastic first day at the event with some really interesting topics discussed. Keep an eye on the blog for a roundup of day two, coming shortly.
Snow Software is running a webinar: S/4HANA: There’s never been a better time to negotiate with SAP – Click here to find out more and register