Some of you may recognize the guy at the front as Fireman Sam, the eponymous "hero next door" of the BBC children’s program set in the fictional Welsh town of Pontypandy. What does he have to do with software licensing?
Yesterday I spoke about software licensing trends to a group of customers, prospects, and partners of licensing optimization vendor Flexera. One of my key messages was that software asset managers (SAMs) must move on from reactive firefighting via fire prevention (both of which I call "Fireman SAM") to a more proactive management of license needs (which I call "license optimization"). Fireman Sam uses traditional asset inventory and hard disk discovery tools to try to measure software usage, compare it with license entitlement, and rectify any shortfalls. Fireman Sam’s arch enemy is License Audit Bill.
In contrast, a more mature process adds analysis of what licenses you really need to the data on usage and ownership. This information enables software sourcing managers to cut expenditure on excess licenses and over-specified versions. For example, Flexera’s product for SAP enables customers to put users in the right categories, thereby minimizing the purchase of more expensive "full user" licenses.
Best Software License Management Considers Three Questions
Analysts suffer get the benefit of dozens of briefings per year from hopeful vendors trying to convince us that they are the next big thing. Here’s a typical example of marketing-speak messaging that is an amalgam of all the mistakes that will ensure a vendor goes on our "not with a barge pole" list.
“Exvezium is a leading provider of Purchasing and Supply Optimization (PSO) solutions, focused on the automotive, retail, financial services, and government sectors. Customers such as Mutt Publishing, Shania Entertainment, and the Steiner Wig Corporation have chosen Exvezium for its very unique requisition automation, online tendering and award optimization capabilities. Leading analyst firm Milometer classed Exvezium as a Strong Challenger in its Sourcery Square 2009 evaluation.
"The four best practices for implementing PSO are getting executive buy-in, choosing a configurable solution, supporting constraint-based awarding, and maximizing event activity," said CEO, President and Founder Mark Ettingbabble. "Exvezium supports these through our combination of cutting-edge technology and best-in-class services."
What’s wrong with this? Here are my dirty dozen analyst pet hates:
Vendor managers in companies with Oracle applications may have heard a lot of talk about its next-generation applications over the last five years. Well, the news from Oracle’s customer event in San Francisco is that Fusion is almost here. Oracle is extensively demonstrating the product here at the event, early adopter customers are already in the implementation process, and Oracle intends to generally release it in the first quarter of next year.
Oracle hasn’t announced final pricing yet, but Steve Miranda, SVP of Oracle Application Development, confirmed that customers on maintenance will get a 1:1 exchange when they swap the product they own now for the Fusion equivalent. That is good news, although to be fair, my Oracle contacts had indicated this, off the record, all along.
The packaging into SKUs will mimic that of the current product set, to make the swap easier. I.e., the price list for HR will look like the PeopleSoft price list, CRM like Siebel, and so on. That makes some sense, but I wish Oracle had taken the opportunity to simplify the pricing so that there are fewer SKUs. For instance, Siebel's price list is over 20 pages long, and there's no clear link between the the items in the price list and the functionality you want to use. As a result, some customers buy modules by mistake, while others fail to buy ones they really need. Hopefully Fusion will provide a clearer audit trail between functionality and SKU.
Enterprises are increasingly turning toward cloud deployment models (including SaaS, PaaS, IaaS, etc.), attracted by promises of fast deployment, lower upfront costs, and greater elasticity in pricing and consumption models. This trend has been further fueled by resource constraints (capital and people); cloud solution maturity (sophisticated functionality, customization, and integration); and “empowered” workers (seeking DIY technologies to drive business results). However, the growing use of cloud technologies creates new challenges and questions in areas like TCO, security, support, and vendor management.
Enter cloud sourcing. Cloud sourcing typically refers to a model where third parties play a broker and consulting role in helping firms leverage the cloud strategically across business applications.
Cloud sourcing provides alternatives to traditional outsourcing, packaged application implementation, and application development. Cloud sourcing spans applications, utilities, and services. Cloud sourcing strategies include both the use of cloud applications such as salesforce.com and Workday to deliver business applications as well as the sourcing of complete managed processes via cloud applications plus associated services, such as offerings from Capgemini and Wipro.
Forrester will be part of an upcoming panel at Global Sourcing Forum in New York City on October 13 that discusses key elements of and considerations for cloud sourcing, including:
• How strategic sourcing decisions can include cloud-based solutions.
• What SaaS, Paas, IaaS, and BPO mean in the cloud context.
• Practical lessons and best practices for adopting cloud solutions.
• Challenges with cloud sourcing and how to overcome them.
• Emerging providers and solutions for cloud sourcing.
Today, Forrester and Harvard Business Review Press released the print version of Empowered, a book by Forrester veterans Josh Bernoff and Ted Schadler. This book is a quick and worthwhile read for just about anyone who wants to consider the changing role of technology in the workplace. After several reads of this book, I have found that in addition to a lot of great statistics, quotes, and case studies, there is a valuable message for how companies MUST change their philosophy and approach toward new technologies in order to stay innovative.
As a quick example of how quickly the technology landscape is changing, stop for a moment to consider just how many times in the past few days you have:
Received an invitation to LinkedIn.
Seen a personal acquaintance using Facebook.
“Tweeted” or heard someone comment on “tweeting.”
Checked your mobile phone — or seen a commercial for a cool new mobile app.
Marc Benioff, CEO of salesforce.com, gave a typically energetic performance at London’s Royal Festival Hall yesterday, both in the main-stage keynote and the private lunch for press and analysts. In addition to some humorous digs at Oracle, SAP, and pretty much any company that wants to run its own data center, Benioff described his vision for enterprise applications in the world of social computing, which he calls Cloud 2. Key to this vision is salesforce.com’s own Chatter application, which is . . . er, well actually it's not really clear what it is. Various spokespeople described it as an internal Facebook, a collaboration engine, Twitter but secure, but to me it still seems to be a user interface in search of an application.
The demonstration reminded me forcibly of the scene in Bruce Almighty in which Morgan Freeman lets Jim Carrey hear all the prayers being made at that instant by the citizens of Chicago. The user gets a stream of tweets, discussion threads, notifications, and alerts from feeder applications, messages from colleagues to each other, general questions, etc. My question, which no-one could answer adequately was “how is this different from email?” The features they cite — filtering, highlighting, threading, categorizing, etc. — are all in Outlook if you care to use them.
The main difference, apart from the fashionable user interface with the sender’s photo next to each message, is the switch from emailers deciding who they want to read their message, to readers deciding whose chats they want to see. Benioff’s description of his own Chatter feed puts him as the omniscient Bruce, watching every sales process, customer service problem resolution, product design collaboration, and invoice approval throughout his organization.
I’m in the process of buying a new car, and I’m trying to apply everything I’ve learned from my research into software negotiation towards getting a good deal. I’m noticing many of the irritating behaviors from the dealers’ sales staff that Forrester’s sourcing and vendor management clients encounter regularly from their software reps. Here is my list of the worst ones, but I’d love to hear other people’s suggestions:
Forrester received more than 1,000 inquiries on SaaS and cloud services to date in 2010. With SaaS gaining maturity and even becoming the more common way to deploy software in some categories, firms are increasingly opting for SaaS solutions in place of packaged apps.
With the growing uptake of SaaS, Forrester has seen a change in the nature of questions about SaaS. Firms are not only asking basics around the whens and whys of SaaS but they are also asking more strategic questions around SaaS sourcing and SaaS vendor management, as well as how to set up organizational structure and hire the right skills to succeed with SaaS deployments.
Stay tuned for the full analysis of Forrester's SaaS inquiry data for the first half of 2010, to be published shortly.
Also, for anyone interested in a more in-depth analysis of SaaS and cloud services trends and best practices, we are hosting our first full-day workshop on the topic in Forrester’s Cambridge, Mass., headquarters on September 16. For more details about this event, please click here.
Please share your thoughts and connect with me on Twitter @lizherbert.
We’ve all heard software reps blame “revenue recognition” and “Sarbanes-Oxley” as an excuse for not giving an extra discount or contractual concession. IT sourcing professionals may now hear “GSA Rules” and the “False Claims Act” cited as similar justification: “We didn’t give that concession to the government, so we can’t give it to you.” Could that be the worrying unintended consequence of the Justice Department’s action against Oracle: http:/searchoracle.techtarget.com/news/2240019712/US-government-sues-Oracle-for-tens-of-millions-of-dollars?
I can’t comment on the details of the Oracle case, but I’m sure it is complex and two-sided. For instance, I’ve helped clients negotiate reasonable compromises with Oracle to handle special circumstances that won’t apply to many other organizations. These may have involved an extra discretionary discount, if Oracle didn’t have a programmatic way to handle the exception. I wouldn’t expect to get the same concession or discount for another client to whom those special circumstances didn’t apply. For example, this report describes one issue that is particularly important to public sector agencies, but whose impact varies widely: Do Your Software Contracts Permit External Use?
As many readers know, I have a strong interest in understanding the practical realities of innovation and want to help companies define what that "buzzword" means -- what it is, who manages it, and why it's important (see my just-published report on the ecosystem of innovation services providers).
I believe Sourcing and Vendor Management (SVM) can and should play a critical role in the innovation process. However, my biggest disappointment when I speak to many technology vendors, IT professionals, and business users is when they tell me that they avoid working with SVM when purchasing (or in the cases of vendors, selling) a new technology. Fairly or unfairly, they see SVM's involvement as a bureaucratic stumbling block that will stifle their ability to move quickly or pick the technology vendor they want. For these people, SVM acts as a barrier, not an enabler, of innovation.