SQL Server Licensing Explained

SQL Server Licensing Explained

SQL Servers are the most complicated, most expensive, and most critical element of an organization’s software infrastructure and it can be confusing to think about how it works, let alone how to license them. It is easy to get overwhelmed and to simply let your SQL Server sales rep handle it and tell you what you need to purchase and how many. Of course, just because they know their way around their CALs, cores, and sockets does not mean they know what is best for your business. Only you can answer that question.

At MetrixData 360, we strongly believe in educating our clients to improve their understanding of software asset management and software licenses in order to lead to strong, long-term SAM practices after our engagement has concluded. So, today we’re hoping to answer some of your more pressing questions around how to license your SQL servers.

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What Are SQL Servers? A Brief Overview

Just to make sure we’re all on the same page, the main job of SQL Servers are to store data and retrieve it upon the request of other software applications, sort of like a company’s personal Google. SQL servers are made of many varied sizes and targeted towards different workloads and different types of workforces. Some exist in the Cloud with thousands of concurrent users and others exist in small to medium size on-prem businesses.

SQL servers are also designed to process different types of data, including primitive types like Char, Varchar, binary, and text, just to name a few. SQL Server licensing can be staggeringly overwhelming due to its sheer size and the number of other applications that interact with it.
Before we get into how a SQL Server works, here are some terms that you may need to know:


SQL Licensing Changes to consider SQL sever licensing diagram

    • Physical Server: the actual wires-and-bolts physical hardware system.
    • Physical Processor: the physical chip that is housed in a socket within the physical server that contains one or more cores.
    • Physical Core: Something like a mini server inside the server, a physical core is a smaller processing unit within the physical processor of the server, and are found in groups of two.


How Do You Buy a SQL Server License?

Microsoft sells their SQL Server Licenses in a variety of ways, including:

  • Retail (although you cannot buy an enterprise license through this means)
  • Volume licensing programs (including the MPSA, the EA, the EAS, the SCA, OPEN)
  • A third party through either Independent Software Vendor Royalty (ISVR) or Services Provider License Agreement (SPLA). Web edition purchases can only be made through a SPLA

Free downloads for some editions (sees SQL Server editions section of this document to learn more about free editions of SQL Servers).
SQL Servers come with different licensing types and different editions, all of which we will break down. First, let’s look at licensing types, of which there are two: Core Based Licensing, and Server + CAL Licensing.

Core Based Licensing

This license allows for an unlimited number of users and devices to be connected to a server. If you want to install your SQL servers under a Core Based License, make sure you can follow these rules: SQL Server Core based licensing diagram

  • You need to license every physical operating system environment (OSE) that is running SQL server software. You will need a core license for every core in the processor.
  • You need at least four core licenses for each physical processor on the server (core licenses are sold in packs of two).
  • The SQL Server or any of its components needs to be licensed. What this means is that you can’t separate products of the SQL server over different machines. If the SQL Server Agent is running exclusively on one SQL server and the SQL server reporting services is being run exclusively on another machine, you’ll run into problems if you try to license that all under a single license. You would need two separate licenses for that scenario.
  • Anything that is installed on the physical machine you need to have a license for. You don’t necessarily need it to be running to require a license for it.
  • The same logic is applied when using virtual cores in virtual environments.

A math problem: Let’s say I have a single physical server. On the physical server, there are two processors, each with six physical cores with a total of twelve cores. In addition to the license for the operating system, I would need 6 core licenses (since they come in packs of two) in order to be properly licensed.

Benefits of Core-Based Licensing

  • Core-based licensing is typically the only option you have at your disposal when the SQL server in question is being accessed by devices and users outside your company’s network, since Server + CAL licenses would require you to purchase a license for every external person/device, which would not only be expensive, it would also be impossible to keep track of.
  • Ideal for larger companies, since it is easy to manage. Imagine having an international corporation with tens of thousands of employees, keeping track of who needed what CAL would be exhausting.
  • It also can prove cheaper for larger organizations, especially if your users far outnumber the cores you have.

Server + CAL Based Licensing

There are instances where a Server + CAL license arrangement may suit your business’s needs better, although it will involve a lot more mixing and matching. You have to fulfill a certain number of guidelines in order to use a Server + CAL license successfully:

  • Just like with the core-based licenses, any physical operating system running SQL server software or any of SQL server’s components will need a SQL server license assigned to the physical server hosting OSE.
  • In addition to the license for the OSE, you will also need to purchase a license for each device and/or user that has access. Think of the OSE license like purchasing the lock on your door, the CALs are the keys, you need both to gain access.

Client Access Licenses (CAL)

Client Access Licenses (CAL), is a license that grants access to specific Microsoft server software, usually in conjunction with other Microsoft server software licenses. Basically, while the server license allows for the installation of the software on an operating system, the CAL allows for people or devices to access the services that the operating system is hosting. There are two different types of CALs, depending primarily on what your company’s needs the server software you intend to use your CAL for.

User CAL: Allows for a single unique physical user to access the Microsoft software from many different devices. This includes work devices, personal devices, Internet kiosk or a personal digital assistant without the need to purchase a CAL for every device. However, you are licensed per physical person, not log-in usernames, so all the John Smiths in your company can breathe easy.

Device CAL: Allows a large number of users to access the server software through a single device.

Be very careful with the version number your CAL has when you purchase it (IE. Windows Server 2010 CAL). The CAL must be of the same version or be a more recent version than the version of the Server software you are pairing it with. For instance, a Windows Server 2010 CAL can be paired with a Windows 2010 or 2008 server but not a 2012 Server.

Each server product will require the associated CAL. For instance, if you have a Windows Server and an Exchange Server, which both access the Active Directory, then you will need a Window Servers CAL and an Exchange CAL. A CAL can also give you access to multiple servers of the same kind throughout your domain.

As you can imagine the pairing of your CALs to your servers can get extremely confusing and complex, especially if you try to mix and match. So, it is always a good idea to consult your Microsoft Rep or your third-party rep, give them a clear picture about what your software environment looks like and then they can tell you about the CALs you need.

Benefits of the Server + CAL Licenses

Types of SQL Server Edition

Now that we have our SQL server licensing models laid out, we can move onto the next level of complication: Editions. Microsoft first deploy SQL Server Express to see if it is sufficient for their specific applications and will only move to the fee-based editions when they can confirm that Express will not meet their requirements.

Developer: This edition allows you to build, test, and demonstrate applications in a non-production environment. It is important that the ‘non-production’ element is upheld in this edition, since using the developer edition on anything that is full production can result in heavy fines. A piece of software will be considered in production if individuals, either inside or outside of the organization, use the software for any reason beyond development, including evaluation acceptance testing such as a review of the application before it is put into general use.

A SQL server will also be considered in production if it is connected to another database that is in production or runs as a backup or to provide disaster-recovery to a SQL server in production. As you can probably imagine, mixing production and non-production environments is a recipe for disaster, as this can cause hyper complexity and compliance issues, especially if access controls are not established that prohibits use outside of development and testing. There are a few ways to counteract this problem:

  • Use naming conventions for SQL Server instances to explicitly state if a Server is in development or in testing.
  • Install the SQL server on a separate network segment or cloud environment to lower the chance of unauthorized interaction.
  • Require that installs be developer-specific editions.

The main challenge with these editions is proving which edition you have. For example, if you are in a software audit, unless provided with evidence that proves otherwise, the software auditors will assume that you only have Enterprise editions, which are the most expensive. Proving which editions, you have could mean the difference between owing hundreds of thousands of dollars and owing nothing.

Licensing for Development Environments

While Development and Express environments can be great in saving you money, in testing and demonstrating your software before deployment, it is important that these scenarios are licensed properly and that you understand their limitations. There are two types of SQL Server Development licenses:

Developer-Specific Licenses: Used primarily for debugging, designing, development, testing and demonstrating purposes. This license is for non-production use only and is often purchased when programmers, professional testers, technical writers, database professionals, or IT administrators are involved. Developer specific licenses are assigned on a per-user basis, in which Users can install and access an unlimited number of SQL Server instances and share those instances only with other users who have been assigned the same type of developer-specific user licenses.

That means, for this licensing model, if anyone wishing to access a development environment requires a developer-specific license, even for tasks as hands-off as administrative purposes. The only exception to this is user acceptance testing. Installations can be set up and taken down at any time and can be placed on desktops, dedicated servers, shared servers, and cloud environments. Some potentially less expensive alternatives to this license include the following:

  • Purchasing new production licenses
  • Cloud-based services like Windows Azure, which are usually based on a monthly subscription model (if you have an MSDN subscription, it includes Windows Azure credits, discounted rates and the ability to use MSDN software at no additional charge)
  • Free editions like SQL Server Express and the SQL Server Compact (a free embedded edition of SQL specifically for developers)

</div class=”listbox”>Evaluation Licenses: Used to assess the software for potential business use. Again, only used for non-production environments but it is not often used in development and test environments. Usually comes with an expiration date (60-180 days to evaluate the use of the software) when obtained through volume license contracts.

Licensing Virtualized Environments

It is possible and necessary to license virtualized environments, and you have the ability to cover your VMs under your Enterprise + Software Assurance addition licensing model if you have one. This will cover all the VMs that your software environment will ever see, which comes in handy since VMs are so easily and quickly cloned and installed.

However, it is terribly important to consult with your Microsoft Rep to ask if virtualized environments can be properly covered by your software assurance as you don’t want to run the risk of facing any compliance issues with Microsoft. You will need a license for every virtual core that you have.

Licensing your Virtual Environment all depends on the licensing model you choose, with the per core model proving much more cost-effective for many clients. If you aim to license the Virtual Cores on Virtual Operating System Environments (OSE), then you will need a minimum of four licenses per processor if you have more than four cores on each of your virtual processors, then you’ll need to calculate what you’ll need based on the number of cores. If your OSE is mapped to different pieces of hardware, you’ll need additional licenses for anything the OSE is touching.

Power BI and SQL Server

Power BI is one of the most popular services for large businesses, and it can quickly become the most complicated due to its robust environment and its complicated, although critical, relationship with SQL servers. You can obtain Power BI either through purchasing one of the Power BI plans or through having SQL Server Enterprise Edition + Software Assurance. SQL Server Enterprise Edition + Software Assurance will give you access to the Power BI Server, this will allow for on-prem sharing of Power BI Content through the Power BI report server.

Although you will still need to have a Power BI account for content creation. If your organization already has an Enterprise SQL Server edition and intends to use Power BI strictly for On-prem sharing of content, simply getting Software Assurance will be the more cost-effective option as opposed to buying a Power BI plan.

It is also important to note that Power BI Desktop has access to SQL Server, but not Power BI Service. Although Power BI Service can provide a connection to Azure SQL Database and SQL Data Warehouse, it can’t do the same with SQL Server. With the Desktop, however, you can retrieve SQL Server data from tables and run queries that can retrieve a subset of the data from multiple tables.

Licensing for Disaster Recovery and High Availability

Making sure that your SQL server can properly store information and making sure you can access it at any time is a critical element for SQL servers’ customers and one of the most popular features in their software assurance benefits. Which is why Microsoft, as of November 1st, 2019, has three enhanced benefits to offer to software assurance customers, which can be applied to any SQL Server that is still supported by Microsoft, including failover servers for high availability, disaster recovery, and disaster recovery in Azure. What this means is that you can run passive SQL Server instances on separate operating system environments (OSE) or servers for high-availability on-prem or in Azure to cover any sort of failover event.

If you have a secondary server that is only used as failover support, then you do not need to license that server separately from the SQL server it is supporting, as long as the server remains truly passive and the primary SQL Server is covered by your Software Assurance.

If the passive server is providing data, such as reports, to clients or performing any other ‘work’ including additional backups, then it will be considered active and will require its own license. It is most important that you have a means of proving when your servers are passive, since during a software audit, the software auditors will assume that all your servers are active if given the chance to assume so.

If you are licensed using the Server + CAL model, then any user or device that is indirectly accessing your SQL server data through another hardware device or software application will require their own SQL Server CALs.

Upgrading your SQL Server

If your SQL Server Edition reaches a certain age (Server 2005, for example) Microsoft could eventually announce that they are no longer supporting your particular brand of SQL Server (Microsoft announced in 2016 that support for SQL Server 2005 would end that April).
This means no more security or feature updates, no more help from Microsoft to keep your environment healthy and protected. Even if your license is perpetual and legally speaking you are allowed to keep the product forever, it may still be within your best interest to upgrade your license anyway to one that Microsoft supports.

However, it will not be easy since a SQL Server upgrade will take months and you should plan accordingly. When you are considering updating from one Server to the next, the first thing you need to do is make a to-do list containing everything you have to do, such as:

  • Making sure you have all the Window Updates
  • Do you have .NET Framework installed correctly?
  • Do you have KB2919355 installed (if you are using Server 2012 with SQL 2014 installation)
  • Insure that you have enough free space to allow for the upgrade (at least 100GB). After all such preparations are ready you can begin the whole upgrading process

If you have Software Assurance, then you are covered to upgrade your SQL Server edition, if not then you will have to purchase more licenses. Check to make sure what sort of changes have occurred since you last updated SQL Server, since depending on how old your SQL Server is, you may find yourself confronted with new features, new definitions, and new licensing metrics.

Do some research into the new SQL Server model you are planning on upgrading to and familiarize yourself on any differences the new edition has compared to your old model. If you are purchasing brand new licenses, consider which new SQL Server Edition will best suit your company’s needs and budget. Lastly, decide whether, this time around with your new SQL Server, if Software Assurance is something that interests your company.

Want to Learn More?

SQL Server licensing should not be a mystery, it’s important that you have a strong understanding of your software environment, including the backbone of the whole infrastructure. SQL Servers are so thoroughly implemented throughout the software environments of organizations that a simple mistake could easily be scaled up to mean millions of dollars in software auditing fines.

At MetrixData 360, we understand the importance of making sure that your SQL Server licensing is understood and maintained. Our expertise in software licenses has led to clients saving 20%-30% of spending on your software environment. If you’d like to find out how you can put money back into your IT department, you can contact us using the information below.

Book an Appointment with a SQL Server Licensing Expert Today


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Oracle’s 2020 Q4 Report Is In, Does It Mean An Audit For You?

Oracle released their 2020 Q4 report and it may mean that there are Oracle Audits coming. Software audits can be a living nightmare if you find yourself unprepared, leaving the possibility for things to spiral out of control until the next thing you know you’re facing outlandishly large compliance gaps no idea how to prove them wrong. Oracle audits are no exception to this and many of their customers find themselves at a loss when confronted with one. While we have covered how to handle a general audit, there are a few things about Oracle audits that make them unique, which is what we’ll go over today. At, MetrixData 360, we have gone up against the biggest software companies in the software industry today and have empowered our clients with the knowledge they need to walk away from such audits with minimal damage to their IT budget.

Oracle’s Results Released for Q4

On June 16, 2020, Oracle released its Q4 report for their fiscal year and the results show case exactly how hard Oracle has been hit by the COVID-19 pandemic . The report showed four areas of Oracle’s business that were suffering. First, the Cloud services and licenses support, which saw only a 1% increase in revenue over the past year, which is a considerably weak increase since, historically, Oracle has seen a 4% increase in that same category. Their other main streams of revenue have declined with hardware seeing a 9% dip, services seeing an 11% dip, and cloud licenses and on-prem licenses seeing a staggering nosedive of 22%.

Those are 2008-recession levels of bad and it doesn’t help that Oracle’s traditionally highest grossing month is May, where they haul in almost 40% of their year’s total revenue. May was also the same month that saw the worst of the pandemic lock down, where the last thing on anyone’s mind was buying more software. Part of this may be just a COVID-19 blip, with Oracle having only to make it to the other side of this truly terrible year before they can see their usual numbers again. However, these numbers have many of Oracle’s customers sweating at what this might mean for Oracle audits.

From the Beginning: What Attracts an Oracle Audit, and How to Respond to Receiving One

With this news, there is a strong chance that there will be an increase in audits, and it’s suspected that these audits will be aimed towards small to medium size companies with lower investments in Oracle, while companies who have large investments in Oracle are not expected to feel any significant changes. But while there might not be any significant increase for these large companies when it comes to Oracle audits, there will certainly not be a decrease in them any time soon, so it’s important that you are prepared all the same. While some software companies have routine audits or send out audits at random, Oracle tends to be a bit more precise when it comes to who they audit.

Generally, you can expect an Oracle audit once every 3-4 years, unless your last audit was restricted to only a single Oracle product or area of your software environment, then you can expect to be audited more frequently. Your Oracle audit may have been brought on by any of the following factors occurring in the past 24 months at your organization:

  • You’ve gone through a merger or acquisition
  • You are still in possession of old or outdated Oracle software whose metrics are no longer used by Oracle
  • You’ve conducted a hardware environment refresh
  • Your organization has seen an organic growth of 10% or greater
  • You have trimmed back on Oracle products in any way such as cancelling or reducing support from Oracle
  • You have an Unlimited Licensing Agreement (ULA), since it is suspected that Oracle will be focusing its auditing efforts on either getting you to renew your ULA or switch to a perpetual ULA

When you receive either an Oracle License Review or an Oracle License Audit, don’t let the different names distract or tempt you to take the Review as less serious than the Audit. They are essentially the same in both process and stakes. The only real difference between the two is that ‘review’ is a friendly, less threatening term when compared to an audit.

LMS and Oracle Tools: Dealing with Both

Oracle Licensing Management Service (LMS) is the internal team from Oracle that you will likely be dealing with throughout your audit. Although it is possible for Oracle to outsource the project to their partners, and other departments of Oracle will perform audit-like services such as reviews, their internal audit team is the only department authorized to perform License Audits on behalf of Oracle.

When you interact with Oracle’s LMS, one consistent element that you’ll run into is that they will want you to run their own, Oracle approved, SAM tools to collect the data from your software environment. Your first goal in this audit is to make sure that your tools are used instead, an argument which we cover in length in our Software Audit Defense Procedure . While you are required to comply with the audit, nowhere in your contract does it require you to install their SAM tools. So long as you can prove that your own SAM tools can accurately retrieve the data that Oracle is asking for, then there is nothing wrong with using your own tools.

Who Foots the Bill? The Old Oracle vs. the New Post COVID Oracle

In the past, Oracle’s audits and their sales reps had the same goal: sales for the sake of sales. Sales reps got commission annually for every transaction, these numbers were usually 1% of the contract value, and if it was cloud services they were selling, that number rose to a tantalizing 5-10%. So, sales reps preferred cloud services and at the end of an audit, it was often the case that cloud services would come up when it was time for settlement. Oracle has essentially offered its audited customers get-out-of-jail free cards in exchange for the purchase of cloud services at a much smaller cost than your compliance gap, even if you didn’t need the cloud solution you are purchasing. All the sales rep really cared about was selling the services, it didn’t matter to them if you never used it again afterwards, since they got to walk away with that 5%-10% commission jingling in their pockets.

Now, however, Oracle has made a few changes to their sales rep models. They have significantly cut back on their staff numbers, and have put the vast majority of the remaining sales reps on the task of exclusively selling cloud services, and will only see that same level of compensation if their customers use the cloud services that were sold to them. This means that you will not see be seeing any cloud service deals at the end of your audit, you’ll just be expected to pay the compliance gap, which will be painfully more expensive than the previous alternative.

Now, however, Oracle has made a few changes to their sales rep models. They have significantly cut back on their staff numbers, and have put the vast majority of the remaining sales reps on the task of exclusively selling cloud services, and will only see that same level of compensation if their customers use the cloud services that were sold to them. This means that you will not see be seeing any cloud service deals at the end of your audit, you’ll just be expected to pay the compliance gap, which will be painfully more expensive than the previous alternative.

In addition to these costs, if you are found to be out of compliance by a significant degree, then you will be forced to cover the expenses for the entire software audit, including any expenses that Oracle racks up.


How Should I prepare?

Once you have received a software audit notice from Oracle, you will have about 45 days to respond. During that time, you need to get the following ready:

  • A Non-Disclosure Agreement: This will ensure that any information that you give to the auditors must remain between you and them unless they ask for your consent to send it to the rest of Oracle’s higher ups. This will allow you to remain in control of how Oracle perceives your organization and your compliance, both of which will become important when you enter into the negotiation and settlement phase of the audit.
  • A Single Point of Contact (SPC): You will need to make sure that you have a team to act as a single point of contact (ideally with legal, technical, and Oracle specialization) in place who will exclusively deal with communications with Oracle’s audit team. The auditors will only talk to the SPC and anything that is passed from your organization to the auditors will pass under the SPC’s eyes first. Anyone who is planning to be interviewed by Oracle will discuss with the SPC what they are planning on saying and how they should answer Oracle’s questions. This isn’t done for the sake of hiding anything from Oracle, but this will help to keep track of where you stand with Oracle and ensures your negotiation strategies remain uncompromising.
  • A Scope for the Audit: This is done so that, in the case that you are not so far out of compliance as Oracle originally thought, they do not keep looking through your software environment trying to find the profit they anticipated, also referred to as ‘scope creep’.

This needs to be laid out during the kick-off meeting and it’s important that you do not let the data collection phase begin without those three things in place.

Want to become an Expert a Handling Software Audits?

No one will claim software audits are easy or simple, and if they claim it’s anything other than a thinly veiled attempt to squeeze more money out of your company, then they’re kidding themselves. Oracle audits can be especially tricky, considering the sheer size of Oracle’s company and the vast amount of resources you’ll be going up against. It can feel like you’re outnumbered and out of your depth as you’re surrounded by sharks who do this for a living. Which is why you don’t have to go through this experience alone. At MetrixData 360, we have created a whole reservoir of resources in order to better equip you to face any software audit that comes your way. If you would like to download our free e-book on a step-by-step process on handling software audits, you can click the link below.

What to Expect from Oracle Contract Renewals

2020 has so far been quite the cruel mistress and, although software companies have been relatively spared when compared to other industries, that hasn’t stopped Oracle from being dealt a heavy blow, as detailed in their Q4 report for 2020. Traditionally, May has been Oracle’s most lucrative month, but this year it was a month of tight lockdowns and a sweeping pandemic, so things did not go well. Now, Oracle customers are wondering if now is the time to start negotiating an Oracle contract renewal. But Oracle is known for being one of the toughest software vendors to hash out a contract with, their arrangements may be unwavering regarding their software, databases, and middleware, but if you want that wonderful Oracle software, then you’re going to have to find some happy middle ground. At MetrixData 360, we have dealt with Oracle on many different occasions and we have seen what it takes to get the deals that our clients are looking for, so when you’re getting ready for your contract negotiation with Oracle, here are a few things that you can expect.


Expect Oracle to Take their Sweet Time

This may be a byproduct of Oracle’s sheer size, as each new request triggers a bureaucratic process, but that doesn’t stop this drawn out process from being frustrating at the best of times. If you are used to dealing with smaller software companies, it may seem like Oracle is dragging out their process unnecessarily. This will be especially true since Oracle has recently reshuffled its sales team structure. The old Oracle sale structure had their whole sales force focused on selling on-prem license and cloud services, with a 1% cut of the contract value of each transaction for on-prem licenses and 5%-10% on cloud service contracts.


However, their focus has now shifted to only 25% of the sales force working exclusively on on-prem licensing with no compensation for selling cloud services, and the rest being exclusively put on the task of selling cloud services. This means if you want to cut a deal with a sales rep for on-prem licenses, they might be extremely busy and overworked. Despite the pressure they might be under, make sure that you take the time necessary to understand your current and projected usage so that you can secure a deal that serves your best interest and ensures you don’t get swept up in the whirlwind of licensing jargon.


Cloud Services are No Longer a Get Out of Jail Free Card


In the old model of Oracle, cloud services would often come up at the end of audits in exchange for a lower overall cost when compared to the compliance gap. Even if you had no intention of using it, the sales reps were happy since it meant they got their 5%-10% cut. However, Oracle’s new sales model now has sales reps only receiving compensation for the transaction if the customer uses it. On the one hand, this means that you no longer have to spend money on a cloud solution that you were never planning on using in the first place, but offering to simply buy a cloud solution no longer makes the sales rep’s eyes sparkle with interest – not unless you’re going to back up your claim with the actual intent to use the products.


Exiting Your ULA will be Difficult at Best


If your contract negotiation involves redefining the terms of Oracle’s Unlimited License Agreement (ULA), then you might be facing an uphill battle. The ULA has often proved to be quite troublesome, as they are expected to be the target of Oracle’s new audit wave after the release of their 2020 Q4 report. It can also be the target of an audit if you’d like to exit out of your ULA, as one common surprise Oracle likes to give as a going away present when you’ve decided to leave your ULA is an audit of your scripts to compare it to your usage. If you are thinking about exiting your existing ULA, you may find yourself being pushed towards renewing it anyway for a variety of scenarios Perhaps you’ve mistakenly deployed Oracle software not covered by your ULA, or perhaps you have lost track of what has been deployed in your software environment and now have no idea what you would owe if you left your ULA . You may have also deployed your ULA software onto non-Oracle cloud platforms, like Azure or AWS, which will require you to purchase missing licenses.


Know Your Data Inside and Out


This is true of any negotiation, not just with an Oracle contract renewal. Having strong visibility into your data regarding your software spending and usage will give you the information you need to do more than just guesswork when it comes to your anticipated usage. Data will also give you the ability to plan, instead of simply buying for what you are currently using, you can purchase to accommodate for future growth. Oracle products are also known to be quite lenient – they will often allow you to install and use products without checking your licenses, expecting you to simply know what you are and are not licensed to use. Understanding the ways in which your company intends to or is currently using Oracle will allow you to pick out any changes in use that might occur over time, whether that is intentionally or (more alarmingly) unintentional usage. Knowing your data regarding Oracle will prevent any compliance issues that may arise, even if you are perfectly in control of your Oracle usage.

Take Control of your Oracle Contract Renewal </h2 class=”headline”> 2020 has been rough and it might be necessary to renegotiate your contracts to accommodate for this new normal. Knowing what to expect from a contract negotiation with Oracle will allow you to be better prepared. If you would like help in organizing your next software contract with Oracle, MetrixData 360 has helped successfully navigate our clients through Oracle contracts on many occasions and saved them millions of dollars. If you’d like to know more about how MetrixData 360 can help minimize your software expense while maximizing its value, you can read our new article on how to negotiate for layoffs and saving money during a pandemic.

Debunking Software Asset Management Myths

People tend to not take a keen interest in software asset management, brushing it off as half-baked assumptions, corporate fairytales, and IT lore and mythology — until their company’s most recent software audit has gone south and they’re now looking down the barrel of a multi-million-dollar settlement. Then, all of a sudden, they care an awful lot. At MetrixData 360, we take pride in educating our customers in order to demystify the complexity of your software, so that it’s not a game of Russian roulette every time you’re audited by one of your software vendors.

Software Asset Management is Not as Important as IT Asset Management

While IT Asset Management and Software Asset Management both belong to the technology department, they approach that technology in different ways. ITAM is interested in the lifecycles around all IT assets, including hardware, software, devices, keyboards etc. while software asset management only deals with…well, only the software side of things. Since ITAM has a broader scope and tangible assets to work with, ITAM will often have more opportunity within a company to interact with different departments and display their worth. Compare this to software asset management, which deals primarily with intangible assets like software and deals with either the IT or financial department exclusively, so SAM can easily get lost in the shuffle of things.

I’m Not in a Software Audit, so I Don’t Need to Worry about my Compliance

Software audits are on the rise, and they won’t be slowing down any time soon due to the massive amounts of revenue that the software publishers can generate from them. There are many factors that can increase your risk of receiving an audit, such as the size of your company, the software vendors you have in your profile, and even your recent conversations with your sales rep. However, there is a certain level of inevitability to software audits as some software publishers send out audits on a routine basis or at random. For many companies it is hard to go more than three years without receiving notice of an audit of some kind. It is not a matter of if you will be audited, it’s a matter of when. The moral of the story is that if you are not being audited, you should still prepare as though you will eventually be audited (odds are, you will be).

On that note, there are many benefits to remaining in compliance other than avoiding potentially paying out huge auditing penalties (although that is the main appeal), such as:

  • You can optimize your spending and cut back on any wastage. Software asset management doesn’t just reveal where you are underpaying but also where you are overpaying
  • You can track the value of software and whether its consumption is worth the amount you’re paying

I have Installed a Software Asset Management Tool; My Job is Done!

Many companies struggle with software asset management but not for lack of trying. However, their struggle begins when they rely too heavily on automated software for licensing and inventory. Software asset management is not really a flip-the-switch-and-leave-it-alone type of processes but that also doesn’t mean that you should get out a pen and note pad and start counting things yourself, unless you want to repeat that phase in your childhood where you tried to count to a million. Even after your SAM tool is deployed, SAM is a journey that requires a lot of work to reach full optimization, which can take anywhere from a few months to a well over a year, depending on your goals for software asset management and how deep down this compliance rabbit hole you want to go. After implementing your SAM tool, you will need to address work towards finding the answers to the following questions:

  • Is the data that my SAM tool collects accurate? The last thing you want is to be working off of faulty numbers. It will undermine the authority of your whole SAM process; you can test the accuracy of your data through physically spot-checking, asking for lifecycle updates from the IT teams, and comparing data sets.
  • Are there any compliance risks that your SAM tools are picking up?
  • Are there any redundancies or cost-saving opportunities?

These aren’t easy questions to answer, and the data that you gather could be interpreted to draw different conclusions. It requires knowledge and experience in different software vendors and licensing metrics to be able to read and manage your SAM tool effectively. This is why it is important that you hire a SAM expert, either in-house or outsource the project to a third-party. Your SAM tool is just that: a tool, it will never be anything other than a waste of money if you don’t have someone who knows how to use it.

If We can Run the Software, it must be Properly Licensed

This would a nice scenario for an ideal world where every day is sunny but sadly, life and licensing, tend to get a bit messy sometimes and there are many scenarios that can leave you running software that isn’t licensed. There are many software vendors that will allow the installation and running of their software without a proper license in place, trusting you to know whether your software is properly licensed or not. Microsoft for instance, will often let their EA customers install software under the pretenses that they will pay for any missing licenses during the next true-up. For IBM, customers have the option of either licensing their software as Sub-Capacity and installing ILMT or licensing them at full capacity. If you do not have ILMT properly deployed over every piece of software that is licensed at sub-capacity and you do not have it licensed at full capacity, you’ll be smacked in the face with some massive penalties in the next audit. If you have your software properly licensed but then you move to the Cloud, your licensing metrics could change, and you could suddenly be missing licenses.

On the flip side, you could also have a license for software that you cannot run. We have often seen when using our Office 365 Consumption tool to evaluate our customer’s software licensing environments that they have licenses with blocked users that were unaware that they had licenses because…they couldn’t access Office 365.

Here’s the moral of the story: Don’t take the fact that you can turn it on and run a piece of software as any solid indicator that you’re allowed to do so.

Software Asset Management is Nothing but an Expensive Luxury

When it comes time for companies to pick which processes will be invested in, software asset management often gets the short end of the stick. It can often seem like SAM isn’t worth the money but when SAM is properly implemented the return on investment can be huge, for a number of reasons:

  • You pay what you actually owe in an audit, nothing more: we have often seen companies without a proper SAM process in place end up being forced to pay an overly inflated audit penalty (many times more than what they actually owe) and being unable to do anything otherwise because they do not have the data or licensing expertise they need to defend themselves.
  • Avoid Compliance Issues altogether: you know what is better than paying the minimum? Avoiding paying altogether. SAM can catch compliance issues before they become issues, which will lower your exposure during an audit, keep your relationship with your vendor in a good place, and lower your risk of being audited continuously.
  • Your Cybersecurity can benefit: savings aren’t the only area where SAM can provide your company with valuable information. With a software estate that is devoid of redundancies and untracked assets, your IT security will be able to effectively apply patches and upgrades throughout your system.
  • Cut Spending: Not knowing what is in your software licensing environment can easily mean overspending and wasted licenses which can be recycled and put back into the system.
  • Empower your IT Department: knowing what is in your software architecture will mean that you can make important decisions based off of that information like whether the software is worth the continual investment, if there is room for better software, or how you intend to reflect any expected growth for your company regarding your software spend. With the hard data that software asset management provides, your IT department can answer these questions with confidence.

Sure, software asset management might not be everyone’s cup of tea. It might be hard, tedious, and overwhelming but important things are often hard and having a clear understanding of what software asset management is and how it can better your company can mean the difference between watching your company flourish and watching it flounder under crippling software expenses. At MetrixData 360, our goal is to educate our customer base, so that they are not at the mercy of their software. If you’d like to learn more about how you can take back control, check out our other articles: What is Software Asset Management, and Beginner’s Guide to Software Asset Management.

How to Avoid Software Audits

It’s no crime to not enjoy software audits, who would? They’re stressful, unpleasant experiences that can result in crippling audit penalties and the feeling of being powerless when it comes to your own software. Humans naturally want to avoid things that cause us distress, so is there any way to avoid software audits? The short answer is no, there is no guaranteed way to completely eliminate the chance that you’ll be audited but there are ways you can decrease the frequency and likelihood of your company being audited. At MetrixData 360, we have noticed a pattern in the behavior of the auditors, and we’d like to share our findings in what can lower your chances of getting audited.

Why Do Software Audits Happen?

The first step in understanding how to decrease your chances of incurring a software audit is understanding why software audits happen.

(Un)Luck of the Draw

There is a sense of randomness to software audits, as some software vendors send out audit notices either regularly to their customers or through picking unfortunate names out of a hypothetical hat. So, there’s little you can do to stop it from simply being your turn. However, many companies think this is the only reason for software audits and so hang their heads and accept their fate, but there are other things that can cause a software audit as well.


I wish I could tell you it’s more complicated than that, but in the world of business the heart and soul are plated in gold. Software publishers will often use software audits as a source of revenue, and if the software audit plays out the way they want it to (with you being out of compliance and writing a check to them with many, many zeroes on it), then they won’t even have to cover the expenses for the software audit process, that will instead be handed to you. However, if their goals are purely fiscal, then that means they’ll target companies that are guaranteed to reap massive rewards. Companies that the software publishers have strong reason to assume are out of compliance enough to yield a large return on investment might as well coat themselves in barbeque sauce, because all the software publishers will see is a meal.


Software Audits are also used to meet sales quotas because at the end of a software audit, you’re forced to purchase all your missing licenses at full price (no historical or contractual discounts will be included, sadly). It also puts you in a pressured position to buy, they’ve got you in a corner, they wait until they see the glint of panicked sweat on your brow and then they deliver to you a sales pitch.

The Payout for Hyper Complex Software Contracts

There are plenty of legitimate reasons why software contracts are as discouragingly complicated as they are: technology is constantly changing and licenses constantly struggle with dealing with that complexity, and many customers request hand-tailored licensing options. However, that doesn’t eliminate the fact that software vendors make no effort to simplify the matter into something their customers can actually understand.

How to Lower Your Risk of Being Audited

Now that we understand why software publishers conduct software audits, we can talk about what you can do to reduce the risk of software audits.

Demonstrate Organization and Understanding to the Software Vendor

This is especially true if you are a sizable company with multiple branches or if your company has recently gone through a merger or acquisition. Such situations will make you susceptible to disorganization and from there it increases the likelihood that you’ve missed something. If you are asked questions by the software auditors, it is important that you answer them effectively and completely to demonstrate a strong understanding of your software contracts. To gain full insight into your software estate, you will need to perform internal audits regularly, have a SAM tool in place that manages your software estate, and a team in charge of the project.

For more information on getting someone to manage your SAM or if you’re in the market to buy SAM tools, check out our articles: How to Hire a SAM Expert and 5 Factors to Consider When Buying a Software Asset Management Tool.

Have a Plan in Place

Educate your employees on the value of software asset management and have a defense strategy in place in case of a software audit. Even if you do receive a software audit, having the process be organized, streamlined, and resulting in minimal penalties will prove to the software vendor that you are not an easy target. Getting organized means having your licenses in order, having a defined person in charge of your organization’s response to a software audit, and having an audit defense plan in place. Software audits tend to have tight response times, so this cannot exactly be a ‘learning on the job’ scenario. By knowing what to do, it will mean that any software audit that is presented to you will go smoothly with minimal damages, so you are less likely to be audited again in the future.

Know What is in Your System

Have an effective asset life cycle in place, including a means of purchasing and a means of retiring any assets to ensure they are effectively tracked. We have seen rogue purchasing and ineffective asset retirement result in a quiet drain on IT budgets through the purchasing of multiple unneeded licenses.

Your Active Directory is the place most software auditors will look when attempting to compile your compliance gap. Many companies do not have access to their Active Directory and as such their AD will consist of every device and every account that has passed through their software architecture, not just the ones that are currently in use. Employees that have left the company, and devices that have been sitting in storage collecting dust will all be present in your Active Directory and the auditors will argue that they will all need a license.

For More Audit Defense Information

Software audits are on the rise and they aren’t slowing down anytime soon. There’s no magical cure to repel auditors for good, but there are ways to reduce your risk of software audits. Your best weapon of defense is to be prepared. If you’d like to learn more about how to get ahead and stay ahead of the audits, you can download our Audit Risk Checklist, which will give you a breakdown of all areas where we see our clients struggle with compliance.

IBM DB2 vs Oracle Database

With a constantly growing IT infrastructure, it is important to know how your company plans on managing data storage and data management. At MetrixData 360, our customers are taking an interest in IBM’s DB2 and Oracle’s Database, although there seems to be a bit of confusion about which one is right for their system. While we are unaffiliated to any software vendor, we aim to empower our customers to make smarter IT spending decisions for their business and so today, we’d like to go over what IBM DB2 and Oracle Database are and some things to consider before signing any contracts around either.

IBM DB2 Databases

IBM DB2 is a collection of relational database management systems (RDBMS). First commercially released in 1983, DB2 offers its clients a means to manage their structured and unstructured data that is stored both on-prem and in the Cloud. These hybrid data management products are powered by AI capabilities to create an efficient means of providing data insights while being both flexible and scalable. It is one of the three most popular databases available in the market today, alongside Microsoft SQL Servers and Oracle’s Database.

Features of DB2

The reviews for this product rank it highly for its ability to work with substantial amounts of data without reducing its performance by any means. Clients also report receiving very little downtime from the product. IBM’s DB2 is praised for its stability, customers reporting that both its hardware and software have proven reliable. DB2 is also proven to have excellent storage capabilities, and claims to be especially SQL server compatible, so if you have experience with similar products, you won’t be starting from square one.

Disadvantages of DB2

Reviews on Gartner from IBM’s clients reveal that the setup of DB2 can be quite laborious and there is a risk that queries would produce the wrong results if the DB2 fails to interact correctly with other products. There is also a learning curve to be found with DB2 and it requires a skilled team for the product to reach its full potential. The tools for queries have also been reported to be a bit lacking.

What is the Future of DB2

In June of 2019, IBM released DB2 11.5, which is praised for its AI capabilities. This new database is powered by and run by AI. The benefits of this can be found in the database’s high-speed queries, and its ability to handle natural language querying, which are styled after search engines and can provide a similar user experience.

Can IBM DB2 be Taken to the Cloud?

IBM does offer a Cloud solution, IBM DB2 on Cloud, which presents tempting features like quick and easy installation, compatibility with Oracle’s database, and even a free tier available if you’d like to try it out – though we always advise caution around free software and exposure to shadow IT. Although reviews have claimed that it lacks the regional options of larger Cloud platforms, so it is always best to check the availability of IBM Cloud capabilities in your particular region, as it could easily influence its overall performance and your user experience.

Oracle Database

Another popular option that many businesses are opting into is the highly reputable Oracle Database. Oracle Database appeared in 1979 with Oracle v2 being marked as the first commercially available SQL-based RDBMS.

Features of Oracle Database

Oracle comes with many wonderful features, such as their high quality support, scalability, and the ability to track sophisticated architecture. It has also been reported to be extremely reliable, with very little down time and applying new instances to Oracle can be relatively painless.

Disadvantages of Oracle Database

Some of the disadvantages of having Oracle as your database is, according to reviews on Gartner, that the system needs an experienced administrator at the helm in order to properly manage it. The product is also very expensive, with the tool proving out of reach for most start-up businesses on a budget.

The Future of Oracle Database

Oracle has been tentatively looking into things like having algorithms embedded directly into microprocessors and integrating big data storage with the data their customers have already accumulated when installing Oracle Database. Oracle’s database also wishes to make its product able to more easily integrate with other products like SQL Server and JSON.

Can Oracle Database be Taken to the Cloud?

Oracle can be taken to the Cloud thanks to Oracle Cloud for Database Management, which offers a variety of features including the ability to easily implement it, easily creating backups and restore processes and easy patching. One of the main appeals of Oracle Database, according to Oracle’s own website, can be found in in the fact that you can move to the Cloud seamlessly, using the same technology that you had on-prem and claiming to have zero downtime during the transition (although reviews have tracked the installation time to anywhere between 2.5-3.5 hours). The product has also been praised in Gartner Reviews for being able to handle a large workload (one review even claims to run a million daily transactions through Oracle). Although, more critical reviews have said that the auto-extend data storage needs to be improved, and the DB monitor alerts are not exactly effective.

Which Works Best for You?

At MetrixData 360, we want you to make as an informed decision as possible about your next purchase with IBM or Oracle as both have reputations of frequently auditing their customers’ compliance with their difficult to read contracts. It is important that you get a fair deal that best suits your business’s unique software profile. At MetrixData 360, we have saved our clients millions of dollars through successful contract negotiations with IBM, Oracle, Microsoft, and Adobe, just to list a few of the vendors that we have handled in the past. Get the Software Contract Negotiation Experts on your team and save big on your next software contract.

Guide to Software Contract Negotiations

Not many people enjoy software contract negotiations. This is because not many people think that they are good at it. There’s an anxiety that you’ll run up against a smooth-talking salesman who will spin circles around you until you’re signing your life away on the dotted line. This fear is only exacerbated when we consider the hyper complexity of software licensing that makes it difficult to understand on the best of days. Software negotiations may not be an exact science, but they are not derived solely from born talent either — you can learn to be good at it.

At MetrixData 360, we have spent 20 years going through software contracts, and as a result, we have successfully negotiated over a billion dollars in software contracts for our clients. In this booklet, we will go over how best to get ready for your negotiation with your software vendor, whether that negotiation is a contract renewal, the arranging of a new contract, or looking for a concession at the end of a software audit.

Table of Contents

  • Inventory and License Knowledge
  • Trained Responses to Suite Their Goals
  • Cultivated Relationships
  • Time
  • Focus On What You Need, Not What You Want
  • Prepare and Surround Yourself with the Right People
  • Follow Your Own Timeline
  • Know Your Data
  • Come to the Table with the Right Attitude
  • Know Your Vendor Better Than They Know You

Understanding the Vendor

It may be unfair to paint the vendors as the villains of this scenario, but while they don’t have forked tongues and horns coming out of their foreheads, it is important to remember that they and you sit in adversarial roles with opposing goals in this arrangement. They want sales, maximum profit, and a push to popularize certain platforms (Microsoft has been aggressively pushing Azure as a good example of this tactic). You, on the other hand, want software that will only bring value to your company, and you want to pay a fair price for only the features you need. By their very nature, these goals will butt heads and therefore you must keep in mind that for this moment, the vendor is your opponent, no matter how much your sales rep will act like they want to be your friend or business partner. To start this battle, it is important to get to know your opponent first. So, what advantages will your software vendor’s sales rep have when they come to the negotiations?

Inventory and License Knowledge

Usually when vendors first hire new sales reps, they will have them go through extensive training that forces the new hires to learn the ins and outs of all the vendor’s products and the licenses to go with them. They will most likely have a strong understanding of contract templates and will be trained on customer relationship management. A seasoned sales rep spends their days going over these same products again and again, however, their knowledge of software licenses only really covers how to effectively sell the software to you. In addition to this, the software that they are pushing on you might have very little to do with your goals for cost-saving or value, it’s simply what they were told to sell. Often, we have seen software sales reps, when pressured, produce more cost-effective deals that fit our client’s needs far better. So, whatever you do, do not let the mind-set sink in that the sales rep knows what is best for you, only you can answer that question.

Trained Responses to Suit Their Goals

Any objection you could possibly think of to why you shouldn’t buy a product, there’s a guarantee that your sales rep has heard it before, and they already have a perfectly timed answer ready. It’s important that you let go of the idea that both of you can come to a win-win scenario. That’s not how the sales reps will be thinking, at least, because sadly we live in a world where behavior is controlled by business objectives and annual reviews. This means that no matter how much they might like you as a person, the software vendors are always going to work solely with their own victory in mind, so you will need to take the same approach.

Cultivated relationships

The software vendor will work hard to cultivate relationships with the C-level employees of your company; doing research to figure out where the upper levels of your management went to school, past employment, favorite charities or civil organizations, searching for any and every connection. If you aren’t on “golfing buddy” terms with your CEO and you need to walk into a software negotiation with people who are, it could leave you at a disadvantage. If you aren’t necessarily the be-all-end-all decision maker of your company, then that means the software vendor will be especially rigid towards you, because whatever progress you make with the software vendor, the sales reps will have to go through the same process again with the people above you in your company, only this time the starting price will be whatever progress you made.


Software vendors will often pressure you to wrap up the deal quickly. The truth is that the software vendor has the advantage of time on their side. The situation is exacerbated if the software the vendor is selling is critical to run your business because there’s only so long you can wait before not having that technology impairs your business’s productivity. In many cases, if the vendor doesn’t like what you’re proposing, they can simply fold their hands and wait in order to outlast you.

Of course, you will be able to tell if you have a good vendor on your hands if they don’t resort to any of these ploys: if they don’t take their merry sweet time about closing a deal; if they don’t leap-frog over you to get cuddly with the C-levels; and if they offer deals based on your business’s interests and needs, you should reconsider your relationship. If you find a vendor who makes it clear that these underhanded strategies are not how they roll, cherish that relationship.

Tactics at Your Disposal

Despite the seeming unevenness of the situation, there are a few tactics you can use when approaching a software contract negotiation that can ensure the best outcome for the situation.

Focus on What You Need, Not What You Want

We all like shiny new things and getting the latest and greatest software always seems like a tempting offer to give into, but it may not be what your company needs. Even just going for a discount may not serve your company the best in the long run. You need to know exactly what your company needs based on the following factors:

  • Use: What do employees at your company use, and what do they not use? There is no point renewing products that your company’s employees have used only once or twice in a year. This may be due to lack of education on the new software, or it may be that they just don’t need it to get their jobs done.
  • Future Growth: Buying based only on what you have purchased in the past does not allow your company to grow.
  • Manageability: Do you have the processes in place to manage this software? Does it look too complex for your current SAM processes to handle? Signing up for overly complex licensing models may lead to disorganization and compliance risks later down the road.
  • Full Cost: Subtle expenses like maintenance and upgrades can easily add up to outweigh the overall value of the software.

Prepare and Surround Yourself with the Right People

When it comes to software contract negotiations, there’s no such thing as too much information. We have often seen customers rush into a conversation with their suppliers about features and needs before they are completely ready to do so. You need to start preparing for your contract negotiations long before you start arranging a kick-off meeting. Make sure you have a firm understanding of your business’s requirements, the full extent of the features and benefits your desired product offers, and the particular licensing metrics of the software vendor you’re dealing with.

Take the time to prepare a meeting agenda outlining any and all outstanding questions or issues you may have.

As part of your preparation, you should surround yourself with a team of experts. Expertise sits in many different departments, including procurement, IT, and the legal department. Remember, the ones who are arranging the purchase of the product are often not the ones who will be using it. Seek insights from a variety of sources and don’t get caught up in the petty squabbles between departments; despite the fact that many organizations often create internal walls that are difficult to overcome, it’s important that you face the software vendors with a united approach.

Follow Your Own Timeline

The vendor will often press you and make it seem like they need your answer quickly but that hardly means there is anything tangible behind this pressure. It’s not like the vendor’s main office is going to collapse into the sea unless they get your answer; if they can meet with you tomorrow, odds are they will also be available next week or the week after. It’s important that you pick a schedule that works for you, and that you resist the vendor’s pressure whenever possible. Try breaking your contract negotiation into parts, instead of taking an all-or-nothing approach. This strategy will compartmentalize your efforts, which can allow you to track your progress and will give you a feeling of accomplishment rather than slogging through one giant battle.

A negotiation can be broken down into four parts:

  1. Preparation: In which both parties prepare their stance and approach before meeting.
  2. Negotiation: In which an agreement is reached between both parties.
  3. Execution: In which the terms of the deal are carried out.
  4. Further Cultivation: In which the deal is completed but the relationship between the two parties is nurtured and further partnership opportunities are explored.
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Know Your Data

This is the key to developing a strong approach to a software contract negotiation. If you don’t know what you have deployed, if you don’t know what you are using or how much value your company is getting out of it, then you won’t be able to make smart purchasing decisions. We have often seen companies buy simply based on what they have purchased in the past or they make an educated guess at what they need. However, if you purchase based on what you have bought in the past, then it both fails to account for any future growth your company may experience and opens you up to rebuying licenses that you never needed. Guessing will also lead to similar problems since guessing a license number that is too high means you are losing money and guessing too low leaves you exposed to heavy penalties in the event of a software audit.

The best way to gain insight is through effective software asset management procedures. If you want to know how you can get started, you can check out our article, Implementing Software Asset Management for Beginners.

Come to the Negotiating Table with the Right Attitude

While emanating charisma might come easier to some than to others, it is a skill that can be learned given enough practice. Bringing the right disposition to negotiations will allow for the meeting to go smoothly.

  • Be optimistic and positive, even if you are frustrated.
  • Be bold, don’t let the software vendor push you into deals you don’t like.
  • Be creative, problem solving is often met with favor.
  • Be generous with your willingness to supply equal opportunities for growth and prosperity for both parties.
  • Be humble. Approach the situation with kindness and grace. They are humans, after all. Treat them the way you’d like to be treated.

Know Your Vendor Better Than They Know You

The software vendors will have to go through a few questions while they are considering their partnership with you. Considering these questions can help you direct the conversation in a way that ensures that they are positively answered in the mind of the vendor:

  • Do we have ongoing business with this customer?
  • Do we have an established relationship with the decision makers within this customer’s organization?
  • What are the customer’s goals?
  • What is the customer’s budget?
  • What is their project schedule? The importance of their project?
  • Is there a way we can become their sole supplier?
  • Is the customer doing business with our competitors?
  • Is the customer doing business with one of our resellers or distributors?

Your knowledge cannot be limited to what your sales rep likes and dislikes. Many companies are not willing negotiate with anyone within the software vendor’s company other than the sales rep, especially when they have developed a friendly relationship. You don’t want to upset the balance within the software vendor’s company and the software vendors are great at making sure things stay this way. It’s critical that you break out of this cycle in order to get the software contracts that you want. Be willing to escalate the situation up the chain of command if needed. A well-placed phone call to a high-ranking member of the company may be just what you need to get your software negotiations moving again.

Have a List of Talking Points

There’s no hard and fast rule to leading a successful negotiation because contract negotiations are as unique as the software that you are trying to obtain. However, there are a few general things that should be addressed during the negotiations, consider the following areas:

  • Definitions like Use, Licensee, and Parameters. Ensure they are properly expanded upon.
  • How software is defined, will it include everything the licensee is ordering or simply what the licensor is delivering,
  • Restrictions surrounding copying, access, transferring, sub-licensing, or providing the software to a third party.
  • How both the licensee and the licensor intend to protect their own information; if the licensor will have any access to the software in the licensee’s environment, along with data protection or security measures.
  • Auditing rights, whether the licensor is required to provide notice, who can conduct an audit, the number of audits that can occur in a given time period, whether the audit must be conducted during regular business hours while also having minimum impact on the licensee’s business are all important details.
  • Where will the software be located? On-prem on designated machines or servers? Third-party host? Cloud Environment?
  • Will a third-party need to be accessed by or have access to the software?
  • Other than the installation if not provided by the licensor, what will the licensee be expected to do with the software? Will modifications, patching, or maintenance be required?
  • Are there territorial restrictions surrounding the software?
  • Is the license perpetual or only for a fixed period of time?
  • What is the process around expanding the licensee’s rights? If the licensee wants more users, more devices, or anything else similar in nature, what is the process around that increase? If you expect an increase in your counts soon, consider actions that will protect any current discounted rates you’ve gained during the negotiations.
  • Test and Development server environments, disaster recovery scenarios and how both pertain to the licensor’s definition of ‘Use’.
  • Are there any disclaimers and other warranties within the software license?

Having answers to these questions will give you a lot of the information you need to make sure you will be able to use the software correctly without compliance issues. Most products and services can be purchased in a variety of sizes, models, and shapes, each with their own unique benefits and varying costs. Be certain to evaluate each option carefully.

Knowing what you want to say will also help you in figuring out how you will say it. Messaging will be everything and understanding what to say and when to say it will be critical. We’ve seen simple careless statements like “don’t worry about it, procurement is just playing hard to get,” absolutely destroy months of hard work. Make sure that everyone in your company is on the same page of what can and cannot be said and that all departments’ goals are aligned to deliver the best results.

For More Information

Software contract negotiations can be stressful, and it may seem like you’re surrounded by fake smiling faces that are pressuring you into bad deals for software you ultimately don’t need. But it doesn’t have to be this way, with the right tools in place, you can properly defend yourself against these ploys and be able to counter them effectively. Have insight into your own data, prepare, have questions, and above all else, don’t do this alone. At MetrixData 360, we’ve spent years perfecting the art of business negotiations. We’re here to save you money, to stand for your interests and your goals in this venture. If you’d like to learn more about our approach to contract negotiations, you can contact us using the information below and we can get started on getting you the deals you need.

About Virtual Machines

An Overview on Virtual Machines

Virtual Machines can bring increased mobility and productivity to your business, but before you start filling your screen up with VMs, it is important to first have a strong understanding of what they are and how you can license them. At MetrixData 360, we have worked alongside plenty of organizations looking to maximize the efficiency of their software environment, including the use of their VMs. So today we’ll get into a few of your most pressing questions surrounding virtual machines.

What is a Virtual Machine (VM)?

Just to quickly summarize, a virtual machine (VM) is a virtual environment that behaves separately from the rest of your software environment. It is basically a computer that runs inside another computer, appearing as a window on your screen. It can drastically reduce the time that is required to bring a new server online, going from weeks or months to mere minutes or hours. By booting an operating installer disc (either a virtual or physical one) inside the VM, it is tricked into thinking it is running on a real computer. The actual operating system on your device is called the Host operating system and the operating systems on the VMs are called Guests. Just to keep things from getting too confusing, here is a guide to some terminology from VM Ware.

VMs come with many advantages:

  • They allow you to safely try out new applications or data that you know is infected with a virus without having them mingle with the rest of your software environment through the use of sandboxing.
  • They allow you to use different operating systems and run applications your main operating system wouldn’t be able to support.
  • They are easy to remove from your operating system once you are finished.

The downside of VMs is that the virtualization process has the tendency to add some lag to the programs you are attempting to run, especially if that program requires copious amounts of storage.

You can run multiple VMs at the same time, with the only limitation being how much storage your hard drive has.

VM Sprawl

The main appeal to virtual machines is how fast they are to bring online and the lack of governance that usually surrounds physical servers within an organization. However, with this agility comes the main concern with VMs: letting them run away from you. This is true for anything that is easy and fast to make, whether that is emails, files, or databases, all of which suffer from sprawl issues. VM sprawl occurs when your company loses track of how many VMs are connected to your software environment. It remains one of the biggest concerns organizations face when it comes to virtual machines. When employees can spin up as many VMs as they like, your company runs the risk of having more than your network can support or than your licenses allow you to have.

There are a few ways one can deal with VM sprawl. You can get a reporting tool to monitor your software environment, however, this only addresses part of the issue, since reporting tools will only give you visibility into the problem. You can track whether it is getting better or worse but there may be very little indication of where the problem is coming from. It is also important to have policies and governance in place that will allow for the cleanup of unused VMs and make it possible to recycle them back into your environment.

Licensing Virtual Machines

Virtual machines are essentially devices that have been built and simply exist on another device. So, in case you were wondering, you absolutely need a license for them. How those VMs are licensed is the real tricky part. Some of the features that can create challenges around licensing VM include:

  • High Mobility: You can potentially move an entire virtualized operating system from one host to another.
  • Near-complete Isolation is Needed: If you want to create portability of your VMs guest files, you’ll need it to be near totally isolated, with the main exception being CPU/processor models.
  • Snapshots of a Machine State: Being able to take snapshots allows for the possibility to revert back to a previous state quickly and to repeatedly reinstall a trial to gain additional usage.
  • Advanced CPU Compatibility Masking: this allows for per-virtual machine customization.

As you can see, trying to license VMs can be challenging, especially with the minimal fingerprint a VM leaves on its host device and the quick and easy ability to clone a VM. If you license a device to a piece of software, potentially countless VMs could access that software.

The specific rules revolving around licenses differ from vendor to vendor and licensing type to licensing type.

For IBM, for instance, a VM needs to be licensed for any software that it comes into contact with, and it must be licensed as though it were a regular device. You can find more details about the matter in our article.

For Microsoft, licenses that are eligible for license mobility through software can be moved to an Azure environment with default per-minute cost. Windows Server licenses are not eligible for license mobility but if you have Software Assurance, you can utilize the Azure Hybrid Benefits in order to access cheaper per-minute costs.

If you can’t already tell, this can become quite confusing very quickly.

There are general rules you can use to minimize your risk of running up against compliance issues.

  • Detection and prevention tactics
  • Utilize Network Floating Licenses, which will allow you to track the number of concurrent users using the software, which will force VMs to communicate with a central licensing server.
  • Periodic license validation, this will allow for a central server communication and the transfer and revocation of licenses.
  • License a special build if you can’t avoid running virtual machines. This will allow you run virtual machines, although it will be set at a higher price point in order to counter the costs of anticipated VM cloning.

Working from Home? Make Sure Your Licensing Allows It!

Still Have Questions?

Virtual Machines can make our lives so much easier and make our work so much more productive, so long as we properly understand them and know how to license them. The last thing you need right now is being forced to either prove which nearly invisible virtual machine did what or simply take the brunt the full blow of an audit penalty, especially when you’re pretty sure you don’t owe as much as the auditors are saying you do. At MetrixData 360, we have helped companies clean up the messiest software environments by getting them started on software asset management and taught them to keep even the most untraceable software in line. Learn more about how you can get started with software asset management.