Phase 3 i where you start collecting proof of purchase documents for software entitlements (owned software) and reconciliation and license optimization.

Now when things get to be real fun.

Over the years most companies have done a horrible job of controlling the acquisition of software. This is especially true in fast growing or start-up companies. Controlling software purchases simply does not occur to them until, often times, it is too late and they end up paying large fines to software publishers or software publisher associations such as the Business Software Alliance (BSA) or Software & Information Industry Association (SIIA.)

That’s the bad news: the good news is that as you complete this process you will finally be able to show some kind of ROI for your efforts. All the work we’ve done in Phases 1 and 2 consisted of spending funds and time with absolutely no return until now. As you move through this phase you should be able to show some savings in maintenance renewal fees as well as establish a “software pool” of available software that will save funds by using licenses from the pool instead of simply purchasing new.

It is my experience, after more than 15 years of working in SAM, that most companies overbuy software. In fact, although I cannot prove this statistically, I believe companies overbuy much more than is reflected by the software in their environment that they did not purchase or at least cannot fine the purchase documents.

The reason we do this process as Phase 3 is that the information learned in Phases 1 and 2 will direct our efforts. In addition one of the challenges is to match the purchase information to the installed inventory. Using information from Phase 2 will assist you here. You can start this phase at any time after you begin Phase 2. I suggest you start collecting the purchase information one publisher at a time. Obviously, as you proceed you’ll find purchase evidence for multiple publishers on the same document (invoice, PO, etc.). Set up a vanilla folder for each publisher and make sufficient copies of the documents to include one in each folder for each publisher.

From the information learned in Phase 2 select those publishers with either the most installs in your environment or those with very expensive applications, such as AutoCAD or other vertical market programs. We do this for two reasons. 1. Available savings will be greatest for these programs and; 2. finding the purchase information should be easier. As you collect the information either enter the information into your SAM program, CMDB or Repository. If you don’t have that application yet, enter the information into a spreadsheet or database.

Keep in mind that tracking software entitlements is often complicated. Some licenses allow for installation of previous and or future versions of applications. Some contracts allow for unlimited installations and others restrict use to a specific number of simultaneous users (concurrent license). If you can I strongly suggest you use a program specifically designed to track software entitlements. Be careful, there are many programs and services available that are less than ideal for this. Some require you to manually enter all the data, some do nothing to help you match your installed data to licenses and other pitfalls. THIS IS COMPLICATED work, if you feel overwhelmed get the help you need. You can refer to our SAMresources.com web site for additional resources to help you.

Purchase documents are documents that show your companies “Proof of Purchase” of software licenses. I’m assuming here that your company is not embroiled in an enforcement audit. Proof of Purchase documents for that kind of legal action are NOT the same as you should use for your internal purposes. For internal use the following should constitute sufficient evidence for ownership of software. I’ve listed these items in order of reliability In other words item number 1 is the most reliable document while item 3 is the least reliable.

  1. Paid vendor invoices with sufficient descriptions, serial numbers, quantities that show that you actually wrote a check for the software license(s).
  2. Third party records. If you purchase some or all of your software from the same distribution company they should be able to provide you with an accurate report of software license(s).
  3. Original media, which consists of the original CD/DVD disks, licensing documents, original manuals (probably a very old program), certificates of authenticity, etc. Once you’ve collected these items you should create a secure “Software Library” to store the items. I suggest you create a file pocket for each publisher and folders within that pocket for each program. Depending on the publisher you may want to go further and designate a complete file drawer to a major publisher in your environment. Make sure that you have the ability to lock this file cabinet (room) and control access.

(The first two are far and away the most reliable sources for Proof of Purchase information.)

If you company is like most others the sources of this information will be spread all over your company. You’ll find purchase information in invoices from software distributors, software publishers (direct purchases), on employee expense reports, on company credit card records and the list goes on. Proceed with your work diligently but keep in mind the objective is to show significant ROI for your efforts. Given that how long should you take to find the purchase documents for a program costing $24.95? How long for a program costing $49,995? If you just had an “ah ha” moment, you’ll do well.
Keep in mind that it may be more cost effective to just purchase new licenses of some programs, instead of spending hours and hours poring over travel expense reports, accounting records, file drawers and storage areas trying to locate the proof of purchase for an inexpensive program.
You will also find purchases of license for more software than is currently installed. These license become your “license pool” available for deployment to new requirements.

The next process in this phase is comparing the installed software to your entitlements.

Now you can take control of payment of the maintenance for these applications. Reconciling maintenance invoices to installed data is perhaps one of the “lowest hanging fruits” that will show a return to your company for your efforts.

The last process in this phase is to determine what type of license is best for each program you have. Would a per server license be more cost effective than a per seat license. All the major publisher have programs suited for different environments. Microsoft has a myriad of programs available from “Select Agreements” to “Master Agreements” for entire companies. If you don’t have a lot of experience here I suggest you get help and get it early in your process. Every few years you will be renegotiating your licenses. Significant savings are available by choosing the right license for your needs. Again, you can refer to our SAMresources.com web site for additional resources to help you.
Some of you will wonder: What about all the software installed that is not represented in the ARP data analyzed in Phase 2? In Phases 4 and 5 we will discuss those problems and how to resolve them.