Maximising software cost savings from ManageSoft

License recycling is the process of reclaiming licenses from retired hardware. Many organizations have

a three or four year hardware refresh cycle, so one quarter to one third of the machines are retired

each year. Frequently, software licenses that could be reused instead go out the door with the retired

hardware. If only 10% of the software licenses on retired hardware could be reclaimed, then 2.5 to

3% of the software spend could be saved by recycling.

Reharvesting and recycling are important elements of an optimized software asset management

program. Software purchase and renewal costs can be reduced by 5 to 10% or more in the first year

of implementation of a program that includes these strategies.

Example software cost savings scenario

Let s take the case of a hypothetical mid-sized insurance company that has the following IT hardware

and software profile: 10,000 PC s (desktops, laptops), 500 servers, and total software spend per year

of 7.75 million ( 23.25M over the three year term of their volume agreements). The annual software

costs are allocated as shown in the table below, with 350 per PC and 1500 per server spent under

MS EA, on average, 160 per PC and 200 per server under an MS Select Agreement, 50 per PC for

Adobe applications, and so on.

Insurance Company IT Profile Showing Annual & 3 Year Software Spend

Now consider the cost savings that can be attained in year 1 by proper allocation of licenses based on

PUR for PC licenses purchased under MS and Adobe volume agreements. Under MS Select agreements,

as noted above, second use rights may be applied to all those users who have both a desktop and a

laptop let s say only about 10% of the users fall into this category. Since MS Select PC spend is about

25% of the total, the potential savings is 2.5% (10% x 25%). If Adobe and other vendors account

for another 14% of the PC spend for licenses that include second use rights, then an additional 1.4%

(10% x 14%) savings is possible. This means that 3.9% of the PC software cost can be saved by

correctly applying second use rights.