Here's a strategy for CIO's that need to find additional budget for IT innovation– enter the Warren Buffett – Quicken Loans Billion Dollar Bracket Challenge. The lucky winner would receive a cool $1 billion dollars for picking the winner of every game in the men's NCAA basketball tournament– the so called "perfect bracket". Unfortunately, the odds of doing this are apparently about 1 in 9 quintillion (9,000,000,000,000,000,000), according to this article in the Washinton Post— that's if you are just guessing at all 63 games. If you "know something about college basketball," you can improve your odds to about 1 in 128 billion. To put that slightly into perspective, the odds of winning the Powerball jackpot are about 1 in 175 million.
So your odds of winning the billion are almost 1000 times less than hitting the lottery (which means that buying a lottery ticket is a much better strategy here). Not only that, but the Billion Dollar Challenge is "only" open to the first 15 million people who enter, and you may have already missed the boat on that. The contest opened today.
What to do then, if you are most likely not going to win that billion dollars and your company needs money for IT innovation? One place to look is in your software investment. As noted by Randy Littleson in his recent blog– Savings from Software License Optimization Can Fund Strategic IT Projects, software can represent 30% or more of your total IT budget. And Software License Optimization can help you realize 5 to 30% savings on your software spend.
How can these savings be achieved? And, what are the odds of achieving significant savings?
There are basically two broad strategies for Software License Optimization:
- Leverage Product Use Rights— The first strategy is to fully leverage your software license entitlements provided by the vendor's license agreements. These entitlements are called product use rights and include: upgrade, downgrade, second use, virtual use, roaming use, and disaster recovery/failover rights. The objective here is to ensure that the enterprise is taking maximum advantage of these product use rights to reduce the number of licenses you actually consume.
For example, the ‘right of second use’ means that a single license covers two installations of the application—a desktop and a laptop with the same "owner". Other product use rights such as virtual use, DR/failover, and multiple installations (on the same device) rights provide the same type of benefit—the consumption of fewer licenses than the number of software installations. The ratio is typically at least 2:1– you can have 2 or more installations and only need one license. That ratio makes a big difference in your software spend.
- Track and Analyze Usage— There are two types of usage-based license optimization. The first is to track and analyze detailed usage data for specific types of license models. A good example of this is the optimization of SAP named user licenses; there are many different user license types at widely different price points (such as Developer, Professional User and Limited Professional User). The goal here is to determine the optimal named user license type that meets the needs of the user at the lowest license cost.
The second type involves tracking basic usage of software (usually desktop applications) to determine if there are users that have not used the application for some period of time. The objective is to maximize license utilization by ensuring that all licenses owned are being used productively, before buying any new licenses. Software License Optimization automates the process of reclaiming unused and underused licenses and making them available to other users (this is sometimes called license reharvesting).
Both of these strategies can result in significant savings; a number of large enterprises that we have worked with have saved tens of millions of dollars on just a handful of key software vendors (Microsoft, Adobe, IBM, Oracle and SAP, for example). What are the odds? Way better than 1 in 9 quintillion! And this is open to every organization that buys software.
To learn more about Software License Optimization, please read our white paper: What Does it Take to Achieve Software License Optimization?