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This results in:
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Missing out on volume, economy of scale and negotiation power of global contracts and volumes.
- Same user existing on two different instances of the same software, and an organization ends-up paying twice for the same user.
- Sheer administration and management of the contracts.
- Technical skills deployment by the customer. One needs to have skilled IT resources within customer organization to handle this issue.
Consolidating licensing can range from being a quick-hit to an arduous journey. Here are some of the issues you can have in the consolidating the licensing contracts:
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You may have long-term binding contracts, with defined jurisdictions.
- The company with who you licensed the platform may have been recently bought-over by another company (this is quite possible in BI space, where at any point of time, half of the companies are buying the other half).
- Very lucrative contracts from the vendor point of view, and vendor does not want to change it.
Here are the various methods in which you can do the licensing consolidation:
Having a common maintenance and services contract
There are typically two components- one is the licensing fee and other is annual maintenance, which includes support services. The support services, sometimes may not be bought from the vendor but from a third party service provider. For example you may pay license fee for your DBMS to oracle, but maintenance and services could be bought from Tata Consultancy Services (a global IT company based out of India).
Consolidating licensing regime- Usage based vs enterprise level license
An organization is able to work around with the vendors, to decide on if they want to go for enterprise level license (with certain bucket of licenses given), or usage based license (per user or/and per concurrent user).
Consolidating licensing regime for economies of scale:
With consolidation of license, one is able to move into the higher usage slabs, generally leading to less cost per unit of license.
Getting a more dedicated service from the vendor:
Consolidation of the contracts and associated volumes, will lead to reduced cost from the vendor point of view. Also to retain a larger customer, vendor may throw-in dedicated help-desk, X hours of free support from their centre of excellence for the platform.
One more scenario
The above is limited to consolidating the contracts and licenses for the same software. However, there are some other opportunities as well. One can consolidate the maintenance agreements for legacy and small platforms to a single vendor. Some organizations have a long tail of legacy BI systems. These systems are typically shrink-wrapped and are waiting for their replacement with next generation BI initiative. By consolidating their maintenance and contract to a 3rd party supplier, will help the company cut-costs and also enable a better transition during a new BI initiative. |
