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Shelves in the clouds

Who reviews your software licensing and cloud charges?

In those dark days of yesteryear when the telephone was the bulk of business technology spending lots of small firms made a good living doing phone bill analysis for large companies. They usually worked for a percentage of the savings discovered while helping to identify under used or even imaginary lines, phone sets and services.

Fast forward 30 years and companies were having a similar problem with software licensing. Actually what people labeled shelfware was a way more difficult problem to manage since there were many, many vendors and no comprehensive invoice to analyse. A recent IDC report (reference) had user organizations reporting that 21% of their enterprise software spending was wasted on unused licences or added-cost features. Management and control of this kind of thing is still rare at all but the largest and most administratively controlled of companies. User demands for usage pricing has helped, but not with vendors who are strong enough to resist.

By 2012 were hearing (reference) that one of the benefits of the cloud was the disappearance of shelfware since you could buy exactly what you wanted for exactly as long as you needed. Bet you can see this one coming!

Gigaom has been vigorous in warning everyone about an accumulation of unused instances and services in the cloud. Their first article in August of last year highlighted how vendor pricing that requires larger and longer commitments in exchange for big discounts is one source of the problem. There are also fewer controls on instance creation then there were on software purchasing. Even though they can be released when no longer needed, that frequently doesn’t happen. A final cause is lack of nuanced understanding of cloud services. Many managers see cloud resources as analogs to physical servers, an approach that inevitably drives up costs.

Of course, the real point here is about management. Whether we’re talking about phones, software licenses or cloud instances, assets need to be reviewed and managed. Good tools are available as well as companies that can do the management for you

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