Dear SAM, been a while since I wrote…
Software is or should be, a cost of doing business for any business requiring software consumption. It is much like a hammer for a carpenter, or screwdriver for an electrician. So it really should break down to needed or not, or?
In my experience, things are a bit more complicated. Even though business knows a piece of software is needed, procurement has a point of view, finance has a point of view, sourcing has a point of view, and of course, SAM teams have a point of view. My point of view however doesn’t differ much from a business point of view.
-Is licensing acceptable?
-Is technology implementable (as infrastructure is configured)?
-Can it be automated as requested?
–If not, is there an option close enough to automation?
-Are there better options from licensing and cost perspective, allowing for more flexibility?
Once these are mostly answered with a “yes” it’s just a question for meeting all requirements, and push for purchasing, packaging, implementation, metering, and of course future “harvesting” / automate requesting.
With tools to monitor concurrent licenses, potential allocation based on actual usage is fairly easy, I’m sure we can all agree.
The real challenge is not even perpetual licenses, but rather subscriptions.
There are many different kinds of subscriptions. In general, challenge is in an inability to track usage in the cloud or on “other devices”, while there’s the possibility to perform functions outside of the metered environment.
It makes harvesting close to impossible, as there’s no absolute data regarding usage, while the vendor has not provided many tools (if any) to see how it is used, what is being used, when it has been used the last time, how often it is being used, etc…
The alternative is making usage outside of the environment impossible, however, this restricts human creativity, which makes the innovation suffer.
So if I have “100 available”, yet potentially 350 users for it, it really comes down to purchasing as close to critical mass as possible.
And so, we are balancing overbuying with cost avoidance, and the question is: who’s paying for what? Starting with, do we need this software?
In the end, it is a balance between availability, utilization, and cost of ownership.
- Cost of solution per user and time unit
- Cost of solution in total
- Cost of what we came to call PONC (Price of nonconformance)
x = number of users
y=number of hours per month
m=number of months (project duration)
p=cost of FTE hour
e=efficiency coefficient user for the “back charge” calculation The formula then would be: X*Y*M*P*E=PONC which is equivalent to the cost of time lost due to lack of productivity at total fallout of ability to use this particular solution, meaning not having “this” software.
If PONC is > investment cost, it’s a no-brainer…
That’s one way to motivate investment…
