Be warned: cloud, virtual apps can magnify the cost of wasted software licenses

Sprawl makes end-of-year true-up a budget-busting experience, not just a headache

Cloud computing and virtualization are supposed to save a lot of money for large companies, but they could add a big multiplier to the painful little bump of cost many IT shops have to swallow toward the end of the fiscal years. The combination of virtualization, sprawl and lax license counts can hide a lot more waste in license costs than was possible with traditional systems.

For big companies, the end-of-year true-up of licensing costs is an annual ordeal, according to Chris Holland, VP of Cloud Services at security company SafeNet, as quoted in CIOUpdate.

That's when IT execs have to go through departmental staff lists, implementation records, asset-management records and whatever other imprecise mechanisms they have to count the number of end users they have and how many licenses for what types of technology they're using.

License costs, except for the unlimited, high-cost Enterprise eat-all-you-want variety, are hard to figure at the beginning of the year, expensive to resolve only at the end of the year, and too much of a pain for most companies to do quarterly.

Most companies start by assuming everyone who has something needs it and will continue to need it next year. They also assume headcount has stayed approximately the same in each department this year and will next year too.

Neither is a safe assumption. The economy makes headcount-prediction tricky, at best. Changes in seniority, workflow and differences in the technical proficiency of individual workers makes predicting who will actually need a license for a particular application tricky as well.

In some departments, everyone with a title below a certain level needs access to a data-entry, sales or other application that automates the department's primary function.

In others only the most tech-savvy half of the group will use the app at all. The department might also be split into those who do the number crunching and those who digest it into something else, in which case each half would need a different set of apps.

Virtualization and cloud computing makes the confusion worse.

Because it's easy to spin up another virtual machine when some department's work spikes and it needs and extra server, extras that are often forgotten about when the spike is over, there are a lot of zombie servers out there, eating up hardware resources and licenses for software no one is using.

Apps running in virtual machines are easier to track than those running in the cloud, if only because virtual infrastructures are almost entirely internal; the cloud is often external. It's harder to run asset-management apps on VMs owned by another department on an IAAS IT may have hired, but didn't negotiate specific permissions for asset- and license management.

CIOUpdate cites an IDC study from 2010 showing between 25 percent and 75 percent of licenses for enterprise applications are either unused or underused by someone who has a full-time license but only needs it occasionally.

U.S. businesses waste more than $12.3 billion per year just in maintenance costs for applications no one ever uses, according to an April study by asset-management vendor 1E Software.

I had my problems with the methodology, even after interviewing the 1E folks about how they went about it.

The problem itself is real enough, though. The confusion was inherent in the question: how do you get realistic, detailed information from IT people about how much of their licensing money is going to waste because neither they nor the user have noticed a particular license isn't being used enough to justify the cost.

What do you do? According to CIOUpdate's Pam Baker, try these steps:

  • Forget discounts when you count the licenses you need; tacking on extras to qualify will cost more, not less.
  • Look into enterprise licenses; they're expensive, but so is all that asset management
  • Find vendors that install apps to enforce their own licensing limits; it's intrusive but saves you the trouble.
  • Update the rules you use to decide who gets a license for what; workflows change a lot faster than guidelines on the tools those workers should get, which is a good part of the reason end users think IT doesn't know what they do for a living.
  • Virtualize apps, operating systems or anything else with either high license costs or high variability in the number of users who want it. Stream the software so you know how much you're using and only give it to the people that need it, when they need it.
  • Depending on how many apps and how many workers are in the gray area between those who absolutely need something and those who could use it once in a while, trimming licensing waste there could pay the cost of virtualizing the apps in the first place.

Read more of Kevin Fogarty's CoreIT blog and follow the latest IT news at ITworld. Follow Kevin on Twitter at @KevinFogarty. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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