ARTICLE: Profit Motives in Software Asset Management

7 Comments

1. 

   Jacobo Senior says:

   February 16, 2010 at 8:54 pm /

   Great article and idea. However, Partner (and highlighting that the term is aimed to show win-win relationship with

   the customer and not with the vendor) would need to be customer centric organization so that it is able to set arms-length distance with

   vendors and avoid end of Q and FY pressures.

   Some questions come to mind:
   1. Should Hybrid model Partner / Reseller receive or

   nor rebates from vendor?
   2. What percentage of savings should the Hybrid Partner receive?
   3.Can someone excel being a one-stop shop

   or would it be better to develop competing or overlapping joint ventures – that will enable the partner to better serve the customer

   according to their requirements and needs? Or would it be better that Partner could serve as Project Manager on behalf of the customer

   for those third party solutions and ensure successfully implemented projects?

   But I envision that this model makes sense for the

   customer and for the partner. Could it be coined SW Partner 2.0?

2. 

   Allan Mejer says:

   February 6, 2009 at 11:05 am /

   The idea of profit-sharing or risk-sharing is an interesting concept,

   and I’ve been involved in it a year back, but the potential problem is the lenght of the contracts:

   What constitutes a reduction

   in spending? A license not utilized/unused?

   And would a need of licenses be an expense (as the costumer will have to purchase

   these) or a saving (as they can purchase to contract prices instead of an audit, where the costumer would pay list price and a penalty at

   that)

   Next is the discussion of compliance-responsibility: In the end, no reseller can legally take upon them the costumers

   responsibility towards being compliant.

   What we can do, is set up an SLA to ensure, that if certain costumer criterias are met,

   the costumer will be compliant.

   Amongst the issues are:
   Do the reseller have carte-blanche to purchase any needed licenses?

   What if the costumer alters it setup (as in move to virtualized servers on a serverfarm), will this change the license-need outside

   reseller reach (F.I. if the application is licensed per processor and moves from 1-proc server to 24-proc server-farm, what happens

   then).

   So I’m not trying to shoot the idea down, we at PC-WARE are very open to such ideas, but it will take a lot of work before

   everybody is happy 😉

3. 

   Martin Thompson says:

   February 11, 2009 at 8:57 pm /

   Hi Allan, thanks for your feedback.

   A reduction in spending would be anything that means the client is getting more bang for their buck.

   New licenses would

   constitute additional investment but if a partner was able to provide a license from a stockpile, perhaps from efficient management of

   software and save the client the cost of a license – he should be rewarded for doing so.

   You are absolutely right – you cannot

   outsource responsibility for software licensing – but you can penalise the partner who is supposed to be managing them for you.

   I

   would welcome any additional information you may have regarding your SLA or experience in this area.

   ~ Martin

4. 

   Sandi Conrad says:

   February 18, 2009 at 7:50 pm /

   Excellent article Martin! As a hybrid service provider myself, I think

   you’ve done a good job of highlighting the issues a client might have when working with business partners with too narrow a focus. I

   find that because I am working with licensing as a reseller, I have more insight as a SAM provider and have access to resources not

   normally available to someone who is not a business partner with the major vendors.

   I do work with my SAM clients independently

   though. I do not force my clients to choose between me and their existing reseller. I provide them with neutral third party information

   and encourage them to maintain their relationships if they are working, and their reseller fits in with their SAM requirements.

5. 

   Andrew Harcourt says:

   February 27, 2009 at 10:34 am /

   Martin a very good

   article. Speaking as the owner of a consultancy that, whilst not delivering SAM on a day to day basis, but assists large corporates to

   find the right SAM solution. Your final approach ‘A Suggested New Hybrid Model’ is our preferred option and has been for some time.

   Putting aside issues of discovery, as when dealing with large, culturally, technically & geographically diverse corporates a single

   tool is never able to deliver a consolidated (mainframe, midrange, distributed, Citrix, virtual) view. Discovery in these organisations

   is about finding the right ensemble and feeding those inputs into a single data repository, enabling enterprise strategists to access the

   data and use it to shape IT strategy. However, this is about commercials….

   My experience has proven that the raw ‘Software Licence

   Reseller’ model makes the delivery of long term P&L SAM savings very difficult at a large corporate. As you mention these are most

   often cost plus models with a usually microscopic percentage of margin. It is from this margin that the reseller ATTEMPTS to make the

   money to run the service. It will only deliver P&L savings for the client organisation IF they have previously been victims of a high

   margin deal and delivers no motivation for the reseller to licence or procure efficiently.

   Jumping forward from the worst of

   models to ‘The New Hybrid’ model where the entire SAM piece is looked at holistically. What we have seen, is that this model allows for

   an organisation to have not only their SAM (including volume procurement) service run @ nil cost to their bottom line but it also allows

   for a cost plus ZERO model to operate on most spend, whilst ensuring a FIXED level of resource works at delivering all the savings

   associated with a world class SAM service: support reductions, licence re-harvesting, spend consolidation, application rationalisation

   etc

   There is no denying that this model is significantly harder to deploy than the ‘Software Licence Reseller’ model. However it

   is not only the option that is likely to deliver the largest year on year P&L benefits, but it is the only option where the SAM /

   procurement service can be delivered at nil direct cost to the client. That said there is no avoiding a detailed due diligence

   procurement process, with a clearly defined set of requirements developed in partnership with all areas of the client organisation to

   ensure that the partner and toolset chosen truly meet their needs.

6. 

   Martin Thompson says:

   February 16, 2010 at 9:26 pm /

   Partner 2.0, I like it! Thanks

   Jacobo

7. 

   Cynthia Farren says:

   June 3, 2010 at 8:31 pm /

   Some great discussion but I think there are two additional items to be

   added to your descriptions above:

   1) Frequently your “Independent SAM Consultants” aren’t…most resellers have agreements with

   services companies that are capable of influencing deals. These payments are frequently unknown to the customer who has already paid the

   consultant their services fee and who (through their ongoing purchases with the reseller) are also now providing ongoing “kickback”

   payments. A truly independent consulting firm (such as we are) will be upfront with the client about these agreements and use them to

   benefit the customer (for example, we use these payments to reduce the costs of our services to our clients and provide ongoing

   statements of the amounts involved).

   2) While a really good reseller will accurately advise a customer on licensing strategy they

   will never do so in such a way that might tick off the publisher…the publisher is truly their first customer.

   My standard

   recommendation is…know what’s in it for everyone involved…ask the question “How will you benefit from my business?”