Whiteboard Wednesday Episode 7: How to save money on user licensing models
Whiteboard Wednesday is me, a whiteboard and learning about all things IT Asset Management (ITAM), every Wednesday!
This week we look at user licensing. What is it? How do I save money?
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User-based licensing is where you’re paying for the individuals that are accessing software. In contrast to device-based licensing, so if you’ve got five machines, you might have five licensing that will be device-based licensing, user-based licensing is based on the individuals accessing the software. So, me Martin might be one user, I might access the software through three devices but I’m being charged by the user. This is a very common license model these days used by Microsoft, SAP, Zoom, and many, many others.
What the software publisher wants when you are on user-based licensing is for all your users, so this bottom axis is all our users, they want you to pay a certain price for every single user and their only Gambit is going to be the full-fat version, all singing all dancing, bells and whistles version for a great price. They want complete absorption of their software across your entire estate. You can haggle with this, you can lower this price, for example, if you commit to a longer-term, so if you’re going to commit for three years, you might get a better deal.
The real savings come in when you profile your users and look at the actual requirements of your estate. This is the offer from the software publisher, but your actual requirements might be something more like this. You might have within your estate or within your environment a requirement for the full-fat version and a genuine requirement for that full-fat version. Then there’s a subset of users that don’t need nearly as much as that, then there’s a really low requirement here and then the rest of users don’t need anything at all. By profiling the users and actually looking at your real requirements, you can carve out this enormous waste from your spent.
Real-life case studies of this are Viacom saving 30% on their Zoom spent doing this process. Jaguar Land Rover for SAP save 30%, profiling users taking out the full-fat version and reducing it with a lower-cost version, and JetBlue, again with SAP saving 50% of their user base by profiling users. What this flat line has got going for it is convenience. If you just buy everybody the same full fat version, that’s great and it’s nice and easy. But you pay far too much money and you become numb to your real requirements. You don’t actually know what the users require, because there’s no need to know. By carving out these profiles, understanding your real user requirements, you can save a lot of money. This is applicable to all users, so if you did this exercise for Microsoft, you can then apply the same logic to SAP and to Zoom, and to all the other user-based licensing models.