Optimising your SaaS Software Investment

Governance Home IT Asset Management Management Original Content Software

by | May 13, 2016

Vincent Smyth Flexera SoftwareBy Vincent Smyth, General Manager EMEA, Flexera Software

The continuing trend towards Software as a Service (SaaS) and subscription licensing has transformed the way enterprises value their software assets, and the way in which software vendors make money from them.  Indeed, while SaaS software  has many merits there are also as many challenges associated with not only managing, but optimising SaaS-based software investments.

SaaS products are usually sold on a subscription basis.  These products come with a level of flexibility that allows organisations to expand the use of a product according to its needs during the term of a subscription, which is often around one to three years.  Decreasing the number of subscribed licences is usually permitted during the course of the subscription, as is increasing.  However businesses can only gain a real value from this if they can closely monitor use so that all licences purchased are actually being used.

Many organisations however fail to adequately monitor their SaaS product use, which can often result in over-licensed situations where software is being paid for but not fully used. Many incorrectly believe that issues of shelfware (buying too much software) and non-compliant software use (and the resulting software audit penalties) disappear by moving to a subscription model.  But this is simply not the case.  If software is licensed under a subscription model, organisations must still understand and keep track of the licence metric, which could be a named user or some usage based metric like CPU seconds or number of transactions processed.  Organisations fundamentally still need processes and tools in place to keep track of installations and/or usage and compare that to their licence entitlements to understand whether they are under, over or ‘just right’ in terms of licensing.

Understanding Software Asset Management & Licence Optimisation best practice

Applying Software Asset management and Licence Optimisation to traditional on-premise software often results in as much as 25% cost savings.  To understand why this is the case – we’ll focus on the traditional enterprise desktop application.  These products are usually sold using perpetual software licenses that employ a per-device or per-user licensing metric whereby each installation or end user needs to be licensed.

There are two distinct areas of potential waste that Software License Optimisation can resolve for desktop applications. First, organisations can be out of compliance with their software license agreements because they are using more licenses than they’ve purchased.  Secondly, they may not be using all of the licenses they’ve purchased, or they may not be leveraging all of their rights to the software – meaning the licenses are being under-utilised and therefore waste is still occurring.  Software Asset management/License Optimisation solves these problems at every level to minimize all instances of waste.  For instance, inventory tools can assess software usage, enabling organisations to make sure actual software use is aligned with the number of licenses purchased. If there are unused licenses (i.e. unused copies of the software allocated to end users or devices), organisations can reclaim licenses that are not actually being used, instead of having to purchase more software.

License optimisation goes further, not only helping ensure all licenses are in use but also ensuring that license entitlements are fully leveraged.  A Software License Optimisation solution does this by aligning “product use rights” – specific rules in the contract that dictate the ways in which customers are entitled to use the product (i.e. such as the right of second use, downgrade and upgrade rights, multiple installation rights on the same device, etc.) with how the product is actually being used.  If all the rights are not being leveraged – an organisation may be able to avoid purchasing additional software until all the entitlements have been applied and consumed.

So how can we apply these Software Licence Optimisation best practice principles to SaaS?

With SaaS, compliance is generally ensured by the SaaS provider.  Enforcement mechanisms, such as active accounts having access to the SaaS applications are controlled by the provider or software vendor, and used as the basis for monthly invoices.  However, not monitoring usage within an organisation can result in lack of ‘optimisation’.  Optimisation techniques used for on-premise software can and should be performed on SaaS software to monitor usage and ensure that an organisation’s subscribed licences match the use of the product.

Monitoring SaaS product usage is more challenging than traditional desktop software, however.  For instance, on-premises software products are locally installed on devices and can be monitored through an “agent” that can run on the local device. This agent tracks when the executable file corresponding to the product is running or not. Advanced monitoring techniques can also be applied, such as tracking if the window hosting the application is the active (front) window.  Other techniques can be used for optimisation purposes, such as monitoring keystrokes and mouse clicks, which are good indicators of whether the software is being used.

Similar techniques can be applied to optimising SaaS applications.  Internet browsers and URLs corresponding to each SaaS product can be monitored – though doing so is more complex. For instance, different browsers might be used to access the SaaS product, each requiring a specific plug-in to track the end user activity.  In addition, URLs need to be matched against a valid SaaS product.

Furthermore, another limitation of using an agent to monitor SaaS product usage activity is that agents only provide a partial picture.  Because web applications can be used from any device – not just corporate owned devices. The increased use of personal devices for business purposes—via Bring Your Own Device (BYOD) may prevent an accurate monitoring of SaaS product usage because they are beyond the reach of the agent.

An alternative solution is to rely on usage data, when available, furnished by SaaS providers. This is difficult to do manually, however, because the data must be gathered from across different SaaS products and folded into a single enterprise report –a single “pane of glass.”  This is challenging because each provider has its own user interface or API to expose this data. Manually accessing each provider’s data on a monthly basis, and reconciling it with the business rules and users would be prohibitively time consuming. A Software Asset Management solution capable of monitoring SaaS applications would be needed to automate these tasks.

Common definition of the ‘truth’ will exist with Software Asset Management/Licence Optimisation

Ultimately, both software vendors and enterprises benefit from more sophisticated Software License Optimisation tools that accommodate SaaS-based and subscription models.  This technology ensures a common definition of the “truth” and a mechanism for reporting on usage that both enterprises and vendors can agree upon.  It helps ensure compliance and eliminate shelfware – so that maximum benefit is being received by the customer and appropriate compensation paid to the software vendor.  Finally, these tools ensure better planning and analysis so that enterprises have a more confident picture of the software they need – and negotiations for the optimum rate plans can proceed based on better data.

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