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Maximise Software Cost Savings By Applying Product Use Rights (Part 1/5)

product-use-rightsThis article series has been contributed by John Emmitt at ManageSoft.

Software Asset Management (SAM) is a complex process that enables organizations to gain control of their software estate from both a license compliance and financial standpoint. 

But, where do these cost savings come from? Reharvesting unused licenses and recycling licenses from retired hardware are techniques that yield significant savings. Another approach that is often overlooked is the application of product use rights (PUR) to reduce initial license purchase, true-up and renewal costs.

Part 1 – License Agreements and Types

In many organizations, SAM represents one of the few remaining ways that substantial IT savings can be realized. McKinsey and Sand-Hill Group estimate that 30% or more of IT budgets are consumed by software license and maintenance costs. By optimizing the SAM process, organizations can maximize software utilization, reduce the risk of non-compliance (audits, fees, penalties), and reduce overall IT costs by as much as 5 to 10% per year.

The commonly accepted view of SAM holds that organizations must define their application requirements (what applications, versions and editions should be purchased), centralize purchasing, collect inventory of what software is installed, compare installations to number of purchased licenses, and finally, collect application usage data to track what’s really being used. Granted, these are necessary and important steps, and many organizations have only partially implemented the necessary IT asset management processes. Furthermore, many SAM tools fall far short of the mark, in delivering the automation required to streamline these processes. A new generation of SAM tool that incorporates the proper understanding and application of PURs has arrived that enables organizations to take this critical next step in the SAM optimization process.

Product use rights define where you can install the software (laptop, desktop, home computer, virtual machines, etc.), how it can be used, and whether you can freely upgrade or downgrade between versions; they define how licenses can be consumed. You cannot determine an optimized vendor license position, without taking PURs into account. PURs give the organization benefits that are frequently untapped. If properly applied, product use rights can significantly increase IT savings.

License agreements & license types

John Emmitt, ManageSoft

John Emmitt, ManageSoft

Product use rights are specified in the license agreement that accompany the software. Many organizations purchase software under volume agreements such as Microsoft Enterprise Agreements (EA) and Select Agreements. Volume agreements provide a way for organizations to get a discount on their software purchases. Software may also be purchased as full packaged product (FPP), meaning off the shelf in the shrink-wrapped box. And some software, for example the computer operating system, may be purchased as part of the bundle that comes with the hardware (an OEM license). Each type of license agreement (volume, FPP, OEM, etc.) provides different product use rights. Another factor that must be considered is the vendor’s maintenance plan—for example, Microsoft offers Software Assurance (SA), which is a standard part of EA, but is optional for Select agreements. PURs change depending on whether SA is in effect.

There are many license types that can come into play—device, named user, processor-based, site licenses, and more. The license type can also dramatically alter the consumption of licenses. For example, a user license will count consumptions differently than a device license. In a development environment, a developer could have 5 machines all running Visual Studio. If Visual Studio use is based on a device license, the developer would consume ‘5’ (expensive) licenses. However if the developer has an MSDN (Microsoft Developer Network) license that applies to Visual Studio, then it becomes a user-based license and the consumption would be reduced to only ‘1’. Hence, organizations need to understand and optimize with respect to their license agreements and license types.

Read Part Two – Common Product Use Rights

About Martin Thompson

Martin is owner and founder of The ITAM Review, an online resource for worldwide ITAM professionals. The ITAM Review is best known for its weekly newsletter of all the latest industry updates, LISA training platform, Excellence Awards and conferences in UK, USA and Australia.

Martin is also the founder of ITAM Forum, a not-for-profit trade body for the ITAM industry created to raise the profile of the profession and bring an organisational certification to market. On a voluntary basis Martin is a contributor to ISO WG21 which develops the ITAM International Standard ISO/IEC 19770.

He is also the author of the book "Practical ITAM - The essential guide for IT Asset Managers", a book that describes how to get started and make a difference in the field of IT Asset Management. In addition, Martin developed the PITAM training course and certification.

Prior to founding the ITAM Review in 2008 Martin worked for Centennial Software (Ivanti), Silicon Graphics, CA Technologies and Computer 2000 (Tech Data).

When not working, Martin likes to Ski, Hike, Motorbike and spend time with his young family.

Connect with Martin on LinkedIn.

One Comment

  1. Charlie Webster says:

    Not that I have a preference towards using Ms as a example. But the Nuances of trying to understand Publisher

    agreements and volume based agreements should not be exclusively geared towards the license Use right but also whether the purchase or

    utilization of the software is ever realized.
    In todays world is it neccessary for everyone to be prescribed the same package? PUR’s

    are a framework that creates understanding in the selection process. the actuall utilization of whether the software is used in a

    productive sense needs to be valued into the decision process as well.. Who gets what would be as critical .. Classifying your employees

    in what they should be entitled to would or could be part of the factoring involved. Ms although one of the classic examples of trying

    to understand their volumous License rights are too excessive and not neccessarily different then other license types negoiated in other

    License agreements. So outside of the Publisher agreements the real focus is simular but governed under your license grants incorporated

    in your contracts ..

    As many have seen over the years the desktop MS beast is just a fragment of the over all picture. In these

    different world s the classfying of the software into specific business areas is equally important in understanding vendor licensing

    schemes. Although MS understanding is at best a cottage industry of ever changing terms and nuances and different minefields they lay ,

    each new license revision under Ms or any other vendor creates another selling opportunity for the vendor. Bundling of product variations

    or versions and movement to unbundle or add additional funtionality remains the constant battle over time . Would it not be wonderfull if

    they stood still long enough to to get everyone to the same understanding or level to embrace.. But then we might not need to continue to


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