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Saving your assets: Software management

Though the high-end AS/400 model 840 is in mainframe range for power, the platform generally waits for new management practices to filter down from its more massive stable mate, the S/390.

One such development is Software Asset Management. While an increasing hot topic for S/390 users, it still hasn't landed on the AS/400 shores. But that is likely to change, said John Anderson, a S/390 salesman for IBM in Canada who runs a Big Blue-sponsored list server dedicated to Software Asset Management on the machine.

Managing software costs is becoming a major issue in the S/390 arena as companies actually pay more software upgrades than for hardware.

"This problem is not unique to the S/390. I see it making its way down to the midrange boxes as software vendors have customers in a technical lock-in and are tempted to take advantage of it," Anderson said.

Recently, Edward Hurley, Search390's assistant news editor, spoke with Anderson about how SAM as a set of "practices, tools and policies" can save companies both large and small money.

Hurley:What specifically is Software Asset Management for the S/390?

Anderson:Essentially, SAM involves a review of all software with an eye to saving money. The first step is forming a multi-discipline of workers with legal, financial, technical and buying expertise. The next step is reviewing all the software contracts.

First, they need to look at what software they have licenses for. The team needs to get their hands on the counter-signed contracts, which for some companies isn't as easy as it sounds. Those contracts are what you bought.

Then they need to look at what they have installed. Finally they have to look at what they have. In a lot of cases these aren't all the same things. It's not the end of the world if a company is out of compliance. It's probably just an administrative oversight.

Once a company knows what their software uses are, its team can even write its own software contract to present to vendors. Other companies can also look into ways to get a better negotiating position such as looking at how the salesperson's commission is structured or look at the company's fiscal year.

Long term contract shouldn't necessarily be avoided since they give you a lot of leverage in the negotiating but the penalties for changing the contract in the future will have to be considered.

Hurley:Are alternative products a viable options?

Anderson:Yes and no. People from procurement or buying probably think it's easier to find alternatives. But we're not talking about pens and pencils here. Some products have some degree of functional overlap but they aren't the same.

Technical people sometimes think their systems as so engrained with products that they can't get away from it. But they're sometimes less expensive alternatives. A good way to learn about it is to look at my list server. Much of the discussion has to do with finding alternative products.

Hurley:What market forces contributed to the rise of SAM? Was it price gouging?

Anderson:I have heard that phrase myself. But I would say price gouging is very, very rare. There are about 2,000 ISVs selling software for the S/390, up from a few just 10 years ago. The ones usually accused of gouging, there may be 10 of them, tend to be larger companies that have been on the platform forever. They view the software as a cash cow.

SAM really came about as the price of software went up for various reasons coupled with hardware prices going down. We used to focus on Hardware Software Management because of the costs associated with it. But now users should be more worried about their software purchases rather than hardware especially since some are paying $5,000 to $10,000 per MIP.

Hurley:How does this save the company money?

Anderson: I know of a company that saved 5 % annually over three years just by getting rid of software they weren't using. Some companies do this every five to six years but they really should be doing this on an ongoing basis?

Companies can use software asset management while looking at its capacity plan. When planning for the company's hardware and software needs, the SAM team can look at ways to save money.

Hurley:Are there any drawbacks to SAM?

Anderson: They're no drawbacks to it. Even if a company just inventories their software contracts. This will help them get back into compliance if they don't have the proper licenses for their software and could save future embarrassment.

Let us know what you think about the story, e-mail Ed Hurley, assistant news editor

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