Reunion Special: Licensing With The Frenemy

A recent conversation with IBM software executives sheds more light on the topic of software audits. Responding to a blog post we published a few months ago, IBM recognized some of the challenges inherent in an IBM software audit.  They proclaimed that getting through an audit, addressing these challenges, and moving towards license optimization is cemented in Software Asset Management (SAM) best practices. IBM also told us that the causes of client exposures fall into one of three categories:

  • Customers' indifference to their responsibility in an IBM software agreement. Few companies fall under this category, as most decide to be held accountable for their compliance.
  • Loss of deployment control. Complicated licensing structures and poor SAM practices characterize this category. While IBM licenses inherently are complicated, clients add to the complexity when they deviate from the standard contract in an effort to add flexible terms. A common example of a poor SAM practice that contributes to IBM software exposure is the lack of communication between those that procure the licenses/negotiate entitlements and those that deploy licenses.
  • Over-deployment due to non-malicious gross error. While companies may not maliciously over-deploy IBM software in their environments, some innocently deploy them by accident. A common example includes the case of the "golden CD" where software from a CD is mistakenly replicated across the vast server landscape. Additionally, some companies misinterpret their entitlements. An example of this includes deploying licenses based on a misunderstanding of their terms and conditions.
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Turning Threat Into Opportunity: Dell Acquires Wyse

This morning, I participated in an analyst conference call to discuss Dell’s intent to acquire Wyse with Dell President Jeff Clarke, Dell Senior Vice President Dave Johnson, and Wyse President and CEO Tarkan Maner.

According to Dell, the acquisition will help Dell extend its virtualization solutions and create more integrated enterprise solutions from traditional IT hosting to the cloud.

This can potentially be a smart deal for Dell:

  1. Channel partners have experienced healthy growth in this space. Based on conversations with prominent resellers in Q4 2011, many are experiencing explosive growth in client virtualization inquiries and thin client sales. One systems integrator we spoke to has experienced a 40% annual increase in the number of VDI inquiries, while another reseller experienced a 55% YoY increase in thin client sales. 
  2. Dell is now better positioned to address the full range of enterprise mobility projects that are expected to come. Virtualization and consumerization is very much a reality. In terms of hardware and software, Forrester data suggests that over half of companies surveyed are looking to support tablets and smartphones in the enterprise in the near future. Client virtualization software allows these devices (and thin clients) to connect to their enterprise data and applications. 
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Now That We Have Tablets And Smartphones Here, How Do We Get Our Apps and Enterprise Data On Them?

According to Forrester surveys, 27% of companies support the iPad today, while another 31% plan to support it in the future. As organizations begin to support connected smart devices such as iPads and smartphones, they also want to connect them to their enterprise data and applications. Companies are turning to desktop virtualization (DV) as a solution to make that happen. DV is a consideration because:

  1. It facilitates employee access to enterprise data and applications from any platform-neutral device.
  2. Certain solutions allow you to convert your existing laptops/desktops into thin clients, enabling you to lengthen the life cycles of the equipment.
  3. Patch management and updates are controlled more effectively, potentially lowering internal management costs.
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Mo' Data, Mo' Problems

Big data is a big topic these days, with companies aggregating consumer data and contracting with third-party marketers to mine it.  However, an unforeseen problem arises around unclear data ownership. This is a problem because companies are packaging your data and selling it.

Take the following case — a client was looking to have a marketing company take its point-of-sale (POS) data to prepare email campaigns. Upon closer review of the contracts, data ownership was ambiguously defined and nested in three separate areas: the Master Services Agreement (MSA), SOW, and an addendum. When you trace the definition through the various documents, the only thing made clear on data ownership was that the campaigns resulting from the ETL (extract, transform, load) process were owned by the client. What about the POS data that was sent over to the marketing services company? 

In a conversation with a data expert at a retail-focused marketing services company, they package your POS information and sell it to other buyers, thus creating an additional revenue stream. Disturbingly, clients are unaware this is happening and don't share in any of the profits.

Here's what to do to mitigate the issue:

  1. Ask the company if it is packaging up your data and selling it. If it is, is there an opportunity for your company to collaborate? What's your company's internal position on this? Identifying intent and understanding your options will help you define the data protection or partnership language you want to think about before contract negotiations begin.
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Cisco and Citrix: Enhancing the Value of Desktop Virtualization

Cisco announced today a five-year strategic alliance with Citrix in the desktop virtualization space.  As a first outcome of their new alliance, Cisco WAAS will be optimized for Citrix XenDesktop.  It’s designed to improve the end-user experience such that it has “LAN-like” performance.  This translates into the capability of a more rich Unified Communication experience—HD quality video, faster print jobs, and improved app performance.  Rather than buying several products to get this done, this is nicely packaged as one solution for virtual and physical desktops.

What does this mean for Sourcing and Vendor Management (SVM) professionals and what can you do? 

1.       If your organization isn’t looking at this, it will be forced to within your next refresh cycle.  While Desktop Virtualization has been around for years, it’s more recently been attracting enterprise customers at a very robust growth rate.  Most resellers I’ve spoken to enjoy double digit semi-annual growth rates as high as 40% in inquiries and many of them include desktop virtualization on tablets.  At this stage, most companies are still in education mode, but adoption appears to be steadily increasing.  If you’re not working on it right now, spend the time to get educated on the various flavors and the elements of the project that lead to savings for your organization.  ROI will vary from company to company due to the varying desktop environments.

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Apple's New Leadership and the Enterprise PC Market

No other name in technology carries as much reverence as Steve Jobs. His departure as CEO of Apple combined with HP investigating a spin-off of their PC division has a lot of companies wondering what changes are in store. A few points:

1. In the face of the major market shifts, a strong case can be made for multi-sourcing your enterprise PCs. Recent events highlight the risks that enterprises face -- risk that will be more apparent in 1-2 years. Apple’s product roadmaps have already been planned for the next 15-18 months (depending on the product line), so I don’t expect to see any significant downside for Apple until this current roadmap is past. But when Apple's current roadmap is refined under new leadership, we’ll start to see the effects on Apple’s enterprise strategy. In addition to this news, more certainty exists with HP's spinoff of their PC division, and Dell will show their hand in how they plan to move forward in the face of these developments. The landscape in 2-3 years will be drastically different.  Diversifying your PC suppliers via multi-sourcing can help mitigate that risk.

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Identifying Risks and Opportunities as HP Investigates Spin-offs and Acquisitions

Speculation in the marketplace suggests HP will spin-off their PC business and seek to acquire software company, Autonomy.  As with any major technology acquisition, SVM professionals need to be vigilant in identifying new risks.  Here are some of the things to consider as this continues to develop: 

  1. If you’re in the midst of crafting a PC Refresh RFP, ask how contracts will be maintained going forward in the RFP. The spin-off brings new risk to your HP contracts.  Though no official news release indicate how contracts will be handled, your HP Big Deal letter and enterprise purchasing contracts may or may not remain the same.    You may also want to understand how spare parts will be made available for your HP devices, post-spin-off—will that be through HP?  The new spin off?  I would recommend you also understand any changes to warranties and after-point-of-sale services through the RFP process. 
  2. If you’re a current (or soon-to-be) Autonomy customer, get your licenses in check.  From an audit perspective, ensure you’re in compliance with your licenses before HP targets you.  Though HP may not be as proactive in auditing its customers compared to others, new acquisitions make it more likely for them to take advantage of implementing new licensing schemes—challenging your existing license ownership.
  3. Reach out to your resellers for discounted HP WebOS tablets.  HP will discontinue its TouchPad operations.  Beware--don’t expect that they’ll be able to service them (or provide any OS updates) if you have any issues.

Licensing With The Frenemy -- Exploring An IBM Software Audit

I’m conducting research for our sourcing clients about the right approach to take in IBM software audits. In combing through Forrester’s IBM software sourcing inquiries, I’ve found that most sourcing professionals don't realize they have a licensing problem until it's too late — and they’re struggling to get quick information and guidance. 

Some of the problems are vendor-driven:  Market expectations keep the IBM Software Group on a high growth trajectory, and license audits contribute to their objectives. Others are client-driven: IBM's clients should expect audits that reconcile license discrepancies but then struggle to leverage resources to remain compliant. Regardless of the underlying reasons, these audits often end up in the same place — clients who are drowning in contract administration and compliance costs and frustrated with their IBM relationship.

As part of my research on the auditing process, I’ve been interviewing some former IBM sales reps, and I’m seeing a few trends. Some of my preliminary findings indicate: 

  1. Sales teams often don’t have control over who’s audited  . . . We spoke with one former IBM sales rep who noted that sales reps don’t have much control over auditing activity. He told us the audit department creates an audit letter and a spreadsheet of clients, pushes that to the sales team, and asks them to find the audit targets. This rep indicated that the auditing team asks sales to continue to call into this exec until they agreed to the audit, at which time it’s handed back to the audit team. So your rep may not be deeply connected to the process behind your audit. 
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Key Questions To Ask: HP’s New Converged Infrastructure Solutions

Today HP announced its new Converged Infrastructure solutions. The solutions include four offerings which are designed to help the enterprise IT organization with a one-stop shop for cloud and data storage solutions.

This move by HP offers a fix to the problem many IT organizations are facing: options abound in the marketplace for data center hosting/management, on-demand bursting capabilities, and cloud solutions. It can be confusing. HP packages these offerings up nicely to offer an end-to-end solution with a common management platform. HP's consulting services complements this and can even offer an upgrade path to move to a private/public/hybrid cloud.  I believe the new Converged Infrastructure solution should help cut down on managing multiple vendors and move to a more consolidated and integrated approach, with faster deployment times. 

However, the picture is not that simple as many complications arise around contractual performance metrics and SLAs. If the main idea of these offerings is speed-to-market, I'd specifically look into the following SLA considerations as you're preparing your business case and/or negotiations:

  1. What are your scaling requirements? Some of the HP offerings include the bursting of on-site resources.  If required, what would you need them to do and how quickly?  What would the consequences be if they weren't able to hit those targets?
  2. What are your security and contingency plan requirements? I would argue that SLAs in the cloud will differ based on your industry. If you're a healthcare provider building a cloud solution, your requirements may involve storing data in a private cloud due to HIPAA requirements. If you're a government organization, your requirements may involve certain data residing in a certain country.
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What Would You Sacrifice For An iPad?

I missed my chance today to save a young teenager from making a regretful decision.  A boy in China sold his kidney in order to buy an iPad. I’ve been researching how companies can lower their tablet investments and source tablets more effectively. The report will be published shortly, but sadly not in time to give me a shot at preventing him from this reckless act. As you can see, all of this excitement surrounding tablets is enabling people to make ill-fated decisions with damaging consequences. In fact, several of my sourcing and vendor management clients tell me stories of their executives pushing through tablet purchases without really thinking through whether they’re getting the best price or service.

Though this teenager bought his, presumably, through a consumer sales channel, large enterprises have other options, such as working with VARs. In my research I found that OEMs reward successful VARs with rebates and incentives for hitting specific PC and tablet sales quotas. Even Apple Channel Managers target specific strategic accounts in key industries and create special programs for VARs to help accelerate OS adoption, all in an effort to strengthen Apple’s tenuous grip in the tablet business market.  In my paper, I go into more detail about the advantages of the channel and present other sourcing alternatives.

Your situation may not be as tragic.  However, you need to ensure that you help you steer corporate leaders away from getting lost in the excitement of this emerging trend, focus on the bottom line, and avoid a bleak prognosis. In my report I’ll share some insights I’ve learned from other SVM professionals, but I’d also love to hear any stories you have about having done an enterprise deal for tablets. 

Assuming you didn’t have to give up body parts, what did you do to get a good deal?