Five Reasons the Data Center Needs Software License Optimization (Part 2)

In part one of this series, I suggested that every organization should consider implementing a software license optimization solution in the data center. Here are five reasons your organization needs Software License Optimization:

1 .  Complex License Variations

Software licenses are defined using multiple factors. These factors include the physical server, the number of processors, or the number of users; however, licensing becomes much more complicated if using virtual servers, cluster or fail-over solutions, and storage arrays.

IDC predicts that “Software License Complexity will Indirectly Cost Organizations an Average of 25% of their Software License Budgets in 2016.”  


Software vendors that sell into the data center tend to have many license variations for their product offerings. For example, terminology used in software license contracts will use terms such as Power Value Units (PVU), Resource Value Units (RVU), and Core Factor Table to define their software entitlement.

Complex statements in software license contracts are often confusing for most IT managers, especially when conditions or exceptions are added to the license definitions.

Some software vendors have up to 5,000 active license variations, which leaves many IT managers guessing about how to properly apply the licenses they have purchased.

2.  License vendors make changes which can affect licensing

Software license posture can be compromised when configuration changes or software updates are made to the network.


IT managers that are tasked to manage licenses need to understand how these updates or changes impact current license agreements. This is a lot to ask of someone who does not have licensing experience or expertise.

3.  Technology alone is not able to correctly calculate most server licensing

Software licensing tools provided by a software vendor or a third party are needed to monitor and manage software licenses, however these tools are not sufficient without people who have licensing knowledge and experience. It would be like providing software to model data in a database to someone who does not understand a database.

The complexity of datacenter software licenses requires those that manage the licenses to have a proficient understanding about the licenses and license contracts they are managing.

4.  Market expertise required – Having the right people with the right knowledge

Organizations that try to manage software licenses without hiring the proper expertise are at risk. Unfortunately, too many organizations are willing to take on this risk and as a result, software auditing has become a lucrative and profitable business for many software vendors and their partners.

Software optimization solutions require people with expertise in many areas. For example, Microsoft, IBM, and Oracle have unique licensing models that have many license variations that are often modified or updated.

Software optimization vendors typically employ software license experts that keep up-to-date with changes or updates to software licensing models. These experts can provide valuable insight and recommendations to help their customers stay compliant with their software license agreements.

5.  Software Audit Protection

Software optimization vendors can also assist an organization that is facing a software audit. In fact, some of these vendors will even represent an organization, much like an attorney, and fight on their behalf during an audit. These experts are usually people that have worked as software auditors in the past, so they are familiar with the software audit process.

Another important benefit is that software optimization experts can help organizations that have been hit with fines and penalties after a software audit by negotiating with the auditors on behalf of the organization. These experts are often successful at reducing penalties and fines demanded by the software auditors.


When software auditors are aware that an organization uses IT asset management (ITAM) best practices, they tend to move on to their next victim. In a study, Express Metrics claims: “Respondents whose organizations have implemented IT asset management (ITAM) tools report a 32% lower audit rate within the last two years than organizations with no such tools.”

Organizations that do not partner with software license optimization solutions and experts need to budget for unknown expenses. Why? Because these organizations will probably be out of compliance with software license agreements and as a result, they will pay the price.

-follow me on Twitter @marcelshaw