Dazed and confused by software assets

Licencing issues are still causing companies confusion and poor purchasing decisions, says Ronnie Ray

IT managers are faced with a number of tough decisions, but none is as important as ensuring the organisation’s software licencing model reflects their companies' growing IT needs while also reducing costs.

Vendors understand that good licencing structures need to set fair initial value and align well with how realised benefits might grow over time, with expanded use across a larger part of the organisation or process, while providing regular income for the channel.

Consequently, software licencing has seen many variations and been injected with a good dose of creativity. If this is done well, the vendor, channel and customer all win.

The challenge in software licencing is to identify what will capture increasing value derived from use of the software.

However, software vendors have often used creative licencing models that direct the conversation to their advantage. This has caused confusion for end users.

The channel, therefore, needs to help end users understand the software licencing models that vendors offer. VARs must cut through the jargon and communicate the real scope of the licence.

Network monitoring is one example of a market using a variety of licencing structures that typically centre on the type and volume of monitoring supported at a particular level.

Additionally, for more complex enterprise solutions, the number of users with administration or viewing rights to the software also becomes a factor.

The simplest and most direct form of network monitoring software licencing is tied to the number of devices managed.

Devices vary greatly in capability and cost (for example, compare an eight-port wireless router against a 1024-port switch) and are more easily tracked and planned as an individual asset.

Tiered pricing and licencing that vary by the size of the device (small, medium, or large, as defined by the vendor) are often used to create balance. However, this increases the complexity of management.

The greatest complexity occurs when licencing combines usage and scale parameters. Element-based licensing, as it is called, can account for a combination of the number of nodes, network interfaces, logical and physical disk volumes, type and count of CPUs, traffic volumes and the number of monitors, among other things.

Typically, licences are also node-locked to a particular server, which by itself sets a limit on usage capacity that is harder to understand by end users.

End users -- and even the channel -- can be confused by the multiplicity of variables in element licencing. This can result in short-term under-budgeting and over-spending in the long haul, causing customer resentment towards the supplying reseller.

There is an opportunity for resellers to engage with their customer base, to educate them on the licencing models of their chosen vendors. This ensures that the customer gets the best value from their technology investment.

Getting stuck with a complex licencing model puts future budgets under pressure because the cost of expanding licencing grows much faster than the monitoring value from which it is derived.

Switching to a new vendor is difficult because of the ancillary costs of retraining staff, redoing integration points within operational workflows, compliance requirements of the availability of historical data and, often, just the weight of owning up to having made a mistake in the first place.

While the mutual goal should be to harmonise cost and value, research and diligence go a long way to ensuring these come to fruition.

Ronnie Ray is vice president of marketing and product management in the network management division at Ipswitch