Organizations head into contracts with software vendors for various reasons. For many, it’s because it often appears to be a better commercial option to go into a subscription payment agreement rather than a pay as you go. Similarly, when an organization is unsure of both the number and quantity of products they will initially need, it’s safer to purchase a portfolio of software and true up at a later date – although this can often lead to overspend and products left on the shelf. Managing software contracts is often a manual task, so can be complex and time consuming, especially if you are using a spreadsheet to stay on top of them.
Software contract management is a fundamental part of completing the reconciliation phase of calculating an Effective License Position (ELP); and should incorporated as a priority item within your SAM program. Whether you take on the challenge yourself or you outsource your software asset management, ensure your contracts are part of your SAM routine so changes and amendments are updated and reflected within your software inventory as you never know when an audit might sneak up on you.
The manual work – spreadsheets
Spreadsheets are brilliant way to manage and track contracts as a tactical step. They are flexible, adaptable and helpful in creating formulas for matching data through different pages, but unfortunately there is a lot of manual work involved in setting them up. When adding contracts into a spreadsheet you will need to account for a lot of information – even if it’s just the essential information. You’re likely dealing with a high number of fields, which can get pretty complicated pretty quickly. To simplify things, the key points to stay on top of are:
- Software vendor
- Start date
- End date
- How many users/devices are covered by the contract
- Level of support you receive (user or technical)
These details will need updating as changes take place within your business – new starters, migrating to new software, renewing existing software, etc. We recommend you include software usage as one of the fields, that way when the contract does come around for renewal, you have an understanding of how the products are being utilized.
Lastly, you will need to plan for the expiration dates of all licenses. This will involve checking in with your spreadsheet regularly, or perhaps diarizing the expected renewal dates. Be mindful that either method could prove problematic for the organization if you aren’t in the office to check a spreadsheet, or when your diary automatically alerts you to an expired license.
How can software asset management help?
Implementing a SAM solution will take away the manual aspect of staying on top of your asset contracts. Most SAM tools and services have a feature that clearly displays the current contracts your organization is tied into, when the renewal date is, and how much is being spent – ensuring you’re ready for renewal negotiations.
By utilizing your SAM process, you can establish what software is being consumed across your network. Using this information you can be on the front foot when embarking into contract negotiations. As an example; if you can see that software hasn’t been used within a 90 day period, you are more than likely able to remove it from the new contract agreement or re-harvest the license – both activities mean that you’ll avoid unnecessary spend and optimize your current investment
Work as a team
A lack of communication can often mean that costs increase when it comes to contract negotiations. If a Procurement Manager purchases a 12 month contract with a vendor, they have little or no way of knowing what is actually being used across the organization. Opening communication channels and single portals will allow IT Managers, SAM Managers and Procurement Managers to liaise freely over which assets are necessary when it comes to renewals.
Implementing a contract renewal process as part of your SAM program will encourage consistency in governance across the organization and ensure all renewals are managed to maximize the return on investment.