A shift in the software paradigm is empowering organizations to consume entitlements smarter and faster
Software is everywhere. As the cloud moves mainstream, not only are end users consuming software like never before, but businesses are relying more on their workloads living off prem. When it comes to software, businesses now demand flexibility, cost transparency and functionality from their software vendors.
Even hardware stalwarts like Cisco have significantly changed their go-to-market strategy to be more aligned to the changing software needs of their customer base. Last month the tech giant introduced a single enterprise agreement for its entire software suite, adding collaboration and security to the mix, and a “True Forward” provision that allows purchasers to exceed their software allowance by 20 percent without any retroactive charges.
As the industry caters to new consumption models, consumers of technology can shift purchase risk to manufacturers and partners. Understanding how to purchase software and extract its full value is critically important when building a competitive strategy.
Currently, the major selling point of an enterprise agreement (EA) is the assumption that an organization will save money compared to what it would otherwise spend by purchasing software at a run rate or per business as usual. Although an organization may save money in the transaction of an EA, often they’re missing out on broader cost savings. Rarely do they deploy most of the software included in the deal and thereby overspend on the sliver of software they’re using.
The trick is to maximize the total value of an EA, not just the immediate savings obtained at the date of signature. These eight questions can get you thinking differently, and more strategically, about an EA.
1. Are you purchasing the right EA for your business?
Choosing the right EA isn’t just about the software you’re using today and attempting to save money on “run rate” purchases. The decision to purchase an EA should be based on whether software entitlements correlate with your overall business strategy. The structure of your EA should be in line with your growth plans, budget and overall strategic goals.
2. How are you educating teams about what’s contained in your EA?
In most cases, due to the price, strategic value and potential savings of an EA are negotiated with sourcing departments, CIOs, CFOs or a combination of these folks as well as a few others. Once the deal is signed, there’s not always a clean transfer of information to the team or teams that will be tasked with consuming software contained within the EA. To maximize the effectiveness and use of an EA, teams tasked with gaining maximum value from the EA need to be completely educated on what’s included within the agreement. Not only that, they need to know how to order and obtain software, as well as options for driving adoption within their engineering and end-user communities.
3. Have you aligned EA entitlements to your current projects?
Knowing what you have purchased as part of your EA is only part of the value extraction battle. Taking an inventory of initiatives in flight and mapping those to software entitlements is an excellent way to get started. Conduct this process right after an EA is signed. Not only will it give you a chance to explore how to drive costs down by using software entitlements, but it will set the stage for looking more closely at your EA. Quarterly business reviews about how EA software has been incorporated into identified initiatives will keep this momentum going throughout the course of the agreement.
4. Do you have a roadmap that prioritizes EA software integration?
In addition to taking immediate advantage of your EA purchase by putting it to work for current initiatives, it’s important to plan and document how an EA can be applied to future projects and business relevant opportunities. A roadmap of how you plan to incorporate software in your EA gives you a plan to drive consumption of software. Plus, you can budget projects with great accuracy. This is where you want to weigh any potential point solutions that may be coming up for renewal against the software contained in your EA, an exercise that could lead to cost savings through software displacement.
5. Do you have a plan to test new software away from your production environment?
Testing and certifying the software in your EA to ensure compatibility in your production environment is critical. Not only should you ensure the software has all the features and functionality you require, but you need to be able to test it in a location that closely resembles your production environment. This gives engineers the opportunity to learn the features and functionality of software for accelerated integration into a production environment, identify any integration hurdles and compare software entitlements against your existing technology and the impact on end-user productivity. Seek out testing services that can emulate a production environment with multi-OEM components and corresponding subject matter expertise for accelerated implementation of EA software.
6. Do you have a training plan for engineers?
Training is fundamental to the adoption of any new technology. Too often, decisions focused on incorporating software into an environment are made with minimal or no emphasis on training, especially training for engineers. Training should extend beyond a few hours in a classroom or lab. Make sure engineers have a sandbox environment in which they can get their hands dirty. This guarantees that they know how the new software operates and integrates with other solutions in your environment, not just how it works. Empower your engineering community.
7. Can you track the use and over-use of software to avoid financial surprises?
The current, purely transactional paradigm of an EA generally involves minimal follow up from the seller with little interest on how much software is being used. Put a system in place that can give you metrics on the usage of software throughout the agreement. What have you used to date? What software remains to be used? What potential changes to software entitlements are on the horizon? Answers to these questions should be at your fingertips at any given time.
8. Are you up to speed on changes to your EA or additional options to maximize your agreement?
Although contractual, EAs often carry changes over the course of their term. These may include areas of additional technology options or changes coming up in the renewal. Don’t forget to maintain your focus on contractual changes. By keeping your eye on the ball, you can ensure the EA remains a fundamental tool in your ongoing strategy.
For more resources that can help you maximize the value of your enterprise agreements, visit our enterprise agreement page.