Anyone within the ITAM or software licensing space are aware that SAM Tools provide a system for the management of software licenses throughout their lifecycle. You can add your license details manually into the SAM Tool from documentation like invoices, license agreements, financial data etc, or you can upload certain licenses directly into the SAM Tool (like Microsoft’s ELA).
That’s fantastic, and a real asset to any SAM function. But what about the contracts, maintenance agreements, software subscriptions, support or even contracts that have licenses attached to them? The answer is to manage them centrally through the SAM Tool, just like you would with software licenses.
The importance of Contract Management
Managing software licenses is one thing, managing contracts is another! A lot of the processes and methods used for managing licenses are transferable, but there are other elements that need to be included. One of the main elements that differ from managing software licenses is the creation and management of contract end dates and assigning a ‘date of action’. SAM Tools can provide a number of different alerts to make users aware that certain contracts are expiring in the next 6, 3 or 1 month which means that SAM or licensing professionals no longer have to rely on putting the dates in their diary.
‘Date of Action’ is a date decided by the organisation as to when they need to start addressing the agreement and gathering the relevant data. For large, enterprise organisations and EA’s this is usually 6 months before the expiry date as that gives organisations enough time to gather data and find out what the requirements are for the software vendor for the future. This also allows the organisation to be proactive and will help towards an increase in maturity of the SAM function.
It is common sense and best practice to manage contracts via a central system; it can be users from multiple locations or departments actually managing the contract, but the storage and data needs to be centralised. This relates to hardware and software vendors and you can attach the contract to certain hardware devices (for warranty information) or licenses/applications (subscription licenses). It provides more clarity and transparency and also helps with the overall management and strategic decision making of the business.
Managing Contracts through SAM Tools
Firstly, in order to manage contracts successfully through SAM Tools, the organisation needs to ensure that they have all relevant or active contracts to hand, or they know where they are stored. This may be a physical copy of software or hardware contract, or an electronic PDF. The physical copy needs to be added manually into the SAM Tool, with a scan of the original document attached to the electronic record.
It may be easier to import electronic documents into the SAM Tool (depending on it’s capabilities) or it may be another manual process. Either way, it is important that all of the information is entered correctly and that as much information is provided as possible. The PDF or electronic contract should then be stored somewhere as part of the disaster recovery process.
Software contracts should be stored for a business agreed time post expiry date, as this is best practice and provides an audit trail. Physical contracts should be stored in a safe and secure location; somewhere that is fire and waterproof. Thankfully, in this day in age software vendors will have an electronic copy of the most recent agreement, but they may not have a copy of older software contracts.
Decentralised Contract Management
Not managing software contracts centrally or via some sort of tool can lead to disaster. It can lead to software audits going badly, over or underspend on software agreements renewals and not having a transparent view of the organisations software assets.
As we have mentioned, there are a number of critical issues with the decentralised management of software contracts:
- Miss key dates
This may mean that an organisation misses the expiry date of a large software agreement thus meaning that any licenses attached to the agreement may no longer be valid. This is a massive risk and could result in large amounts of non-compliancy.
- Miss key pieces of information
If different departments or different locations manage various contracts, then it may be the case that license or software information is missed or not understood, and the wrong software purchased or there being an over-spend or under-spend on software licenses
- Different people/departments managing contracts can result in bad software contracts (from a financial and compliancy perspective)
Can result in the miss-management of software contracts and software licenses.
- Decentralised contract management does not mean the SAM function has full control over software assets
If the SAM function or the procurement function does not have all of the software contracts or have access to the information, then they do not have a transparent view of the software assets that belong to the organisation. This shows that the SAM function does not have full control and are not in the best position to offer relevant data to the business, as they do not have all of the information.
- Missing contracts
Contracts with licenses could be misplaced or go missing if they are not managed correctly. This is a disaster and could result in a large investment in software being wasted.
Managing software contracts centrally through a SAM tool can help eliminate the issues mentioned above and helps mitigate the risks associated with software contract management. They are very sophisticated and SAM Tool vendors have invested a lot of time and money to improve the contract management elements of their solutions.
The Tool Vendors Perspective
‘Larger organizations might have a dedicated contract management system, but this tool does not focus on the same data that is contained in a SAM tool. The contract management system tracks the iterations of the contract as it is negotiated, while a SAM tool is concerned with the final outcome of the contract. Not only can it track key dates with event notification, but it can also track strategy used to negotiate the contract, such as negotiated at vendor year end or discount levels received, service level agreements, trainings days, purchase order number, and other terms and conditions associated with that software purchase.
#6. Maintenance or support might lapse on the software that is not having the contracts managed and the vendor charges a premium to renew it. Any chance of having negotiation leverage could be lost’. Patricia Adams, ITAM Evangelist, LANDESK
‘It’s quite often the case that a number of SAM tools have the foundation requirements to deliver contracts management both for software contracts but also general contracts. Notwithstanding this, it is still quite commonplace today to see clients relying on heavily architected spreadsheets, with no approval workflow or automatic alerting to provide the ‘go to place’ for contract records and management.
Some common functionality found in most decent SAM systems include the basics of contract management. Like any solution; a SAM system’s capabilities may not provide everything required for effective contract management from day one as the requirements of the organisation are likely to evolve once the system sets a new functional baseline. However, they do provide a great starting point for organisation that has no contracts management solution.
SAM professionals should bear in mind that since finance departments control the company’s budget, trying to involve them in the discussions could spread the spend for a solution across multiple departments and get a wider buy in from other business stakeholders. When a multi-department solution is to be considered; stakeholders should ensure that department/legal entity separation is possible for the management of contracts and that appropriate privileges can be given to the right people in the business’. Barry Johnson, brainwaregroup
Want to learn more?
Then please come along to our Tools Day! It is in London in November 2015, so plenty of time to arrange your calendar accordingly. This is your opportunity to grill the leading SAM Tool vendors on how their solution can help your organisation manage software and hardware contracts and how it can be an asset to your organisation.
This event will enable you to make an informed decision when choosing your ITAM tool provider. With presentations delivered by leading ITAM technology vendors, each directly explaining their tool functionality, key differentiators, customer success stories and service; you’ll be provided with an exclusive opportunity to rank, compare and evaluate some of the top tools on the market.
For more information and to register for the event, please click here. We hope to see you there!