Top 10 Reasons Organizations Don’t Manage Their Software Engineering Licenses

Background

Engineering applications are invariably the most expensive software on your workers’ desktops. Compared to a few hundred dollars for a typical office application, engineering software starts at $5K at the low end and can reach as high as $500K a seat. A typical cost of engineering software licenses is $50K per engineer, excluding annual maintenance.

On that basis, if we take for example an organization with 100 engineers using industry-standard engineering software, we are looking at a purchase price of some $5M plus maintenance of $1M every year. Moreover, a company with 100 engineers is a pretty small one! When we are dealing with organizations that employ many thousands of engineers, it becomes big money!

Some engineering software vendors such as DSLS incorporate their own license management software to handle the application checkout process, while others use dedicated third party license managers; among the most common license managers are FLEXlm (Flexera Flexnet Publisher) and Sentinel RMS. Either way, these license managers are designed to serve the software vendor and not the user organization.

Cost to the Engineering Software User Organization

Having a resource that costs such a large sum of money, which is not managed tightly, can result in overspending and wastage of valuable budgets. Going back to our example company with its 100 engineers, $5M purchase costs and $1M annual maintenance fees, if it was discovered that it has licenses that are paid for but not being used, it could save wasted budgets immediately by cancelling the maintenance on unused licenses, freeing budgets without impeding projects in any way. If on the other hand the company is doing well and recruits more engineers, knowing of licenses that are available will allow it to support the growth by first using the licenses available and then purchasing only those they need.

Despite the clear benefits of managing engineering software license inventory well, a variety of reasons are given as to why this doesn’t happen. The list we have compiled below comprises the ten most common reasons we hear from license admins and IT managers.

The Top 10 Reasons Given

“No Budget”

Ironically this is one of the top reasons given by license admins for not doing more to be on top of the corporate licensing strategy. It’s not surprising there’s no budget left when you are paying for resources that are not in use. When you start managing your expensive software assets, you will save money and free up your choked budget!

“We’ve Written our Own Scripts”

This is common claim in many organizations. Sometimes it’s the software manager and in other cases a developer in the IT department that was called on to help with the task. At first sight this might seem to be a solution, but cannot compete with professional software built for the purpose and under continuous development, which gives you the most accurate and updated information available. The ‘home-grown’ solution falls following changes in the engineering software license allocation methods, changes in the licensing model and the fact that often no-one is available any more to maintain the scripts. The result is inaccurate and partial information and dependency on a developer to continuously update the scripts; the “savings” can cost the organization a fortune.

“This Might Reveal Erroneous Purchase Decisions”

Yes, this is possible, even likely, after installing a license monitoring system. Licenses get purchased without any justification while other departments had the same license and they were not being utilized. Sometimes workers have since left and their licenses are no longer used, while new licenses are purchased for new workers. However, the truth is that without software license monitoring tools that can give you the full picture it is almost impossible to be in command. As license admin, the quicker you can re-establish control over the licenses in your organization, the quicker you will have satisfactory answers to management questions and audits, be able to show you now have valuable usage information available that you could not have known before and you won’t have to look over your shoulder and cover up for past mistakes.

“The Software Vendor Provides This”

This is a common misconception. Software vendors build in capabilities to ensure that customers cannot use their software beyond what is in their licensing agreement. These capabilities are primarily focused on controlling whether a license may be ‘pulled’ or not. Vendors don’t have a strong interest in collecting usage statistics for the benefit of their customers. Their core business is in producing engineering software, not license administration, and it stands to reason that helping you to save money on their licensing model is not a top priority for any vendor.

“It’s Small Money Compared to our HR Costs”

This might be correct but it is not a justifiable reason to pass up on knowing how much your software licenses are being used. We have seen for example in energy companies that when oil prices are high, the cost of engineering software is not a primary consideration but with the drop in crude oil market prices, profits are hit and now these companies are managing their huge software assets with a greater sense of urgency. Interestingly in such organizations, when we analyse the license availability we see that even before they cancel unused licenses, they still suffer from license denials due to poor management of the licenses and a lack of control over the software resources. They were therefore losing out not just from spending more than they needed on their engineering software licenses but also from reduced efficiency of their engineering teams.

“If I bring in a License Management System, I’ll Put Myself out of a Job”

Job security is a real concern in the modern work environment but not justified in this case. Being involved in hundreds of such projects over the last few years, we have seen how the person managing the licensing is empowered by having the tools to make accurate decisions about license requirements, based on analytical data, thus contributing to his standing in the organization and gaining him respect. Taking the lead and staying on top of the wave is far better than trying to cover up for past mistakes.  

“No-one Has Complained Yet”

This is an oft-repeated claim, typical of organizations having a cultural preference for the “quiet life” over continuous improvement of operations. However, company cultures change, old managers get replaced by those with a more dynamic approach and the quiet life of the past is no guarantee that an unexpected demand for information about license inventory and license usage will not one day arrive from your boss. “Be prepared’ is an adage that can never harm you and gives you the upper hand if and when needed.

“We Are Considering Switching to a Subscription Model”.

Vendors of engineering software have been active over the past year in trying to convince their customers to move from a floating licensing model to a cloud-based, named or subscription-based licensing model. While the shift from floating to subscription is easy, we have seen in many organizations that it can cost you a lot more over time. The change might be something you will be forced to do in the future but we recommend staying with the floating license model as long as you can and during that time, you can monitor and manage the concurrent licenses, avoid wasting money and get the most out of them through informed management. Furthermore, it will give you the information you need to make the right decision if and when you change the licensing model.

“We don’t have the Manpower to Manage It”.

The fear of not having the human resources to properly manage software licenses is common and is part of a general limitation many organizations place on themselves by looking at the short-term expense without offsetting it against the benefits they will receive in the long term. Administration of your engineering software licenses may require a more intensive effort at the beginning to set up your administrative and reporting procedures but the work required becomes less over time. In our experience, the more time dedicated to this role, the more the organization profits, and proactive management of software for engineering applications always proves to be a positive move, ultimately saving money and removing constraints on engineering projects. Organizations that have difficulty acquiring the budgets for initial HR investment always have the option of outsourcing the work with limited hours at the beginning and gradually increasing the allocation as the benefits become more apparent and executive ‘buy-in’ can be obtained.

“It’s Hard to Stop Maintenance on Software After so Many Years”.

This is an understandable fear but it is based on an illusion. It’s not the same issue as cancelling insurance or freeing an investment. Software is a liability and not an asset, it continuously costs you money so if it’s not in use, drop it! You can add back licenses or their maintenance anytime, if and when you need them.

Summary

The above-listed reasons are those we most commonly come across in our day-to-day interaction with license admins, IT managers and even senior stakeholders like directors of engineering, when they explain their avoidance of proactive administration of expensive engineering software licenses. However, as you can see, all are based on just a partial view of the whole picture. Seeing the full picture, becoming proactive and breaking the chains holding you down will push you and your organization forward to more productive projects while having greater insight and reducing licensing costs.

Not true for your organization? If you’ve got another good reason for not administering your engineering software licenses with a ‘strong hand’? Let us know. We’d love to hear your ideas and comments!