Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe | June 2017 Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe

Executive Summary: Software Industry Modernization and Transformation

Most companies find managing their software licenses to be wrought with complexity-induced headaches aggravated both by the vast number of contracts to manage and the different types of licenses to deploy. In addition, important licensing information can be decentralized, making it harder to track. But change is coming as the cloud enables new and more efficient ways of organizing, managing, and drawing insights from software and data. IDC expects that the shift to the cloud and digital transformation initiatives will be key factors for positive change, enabling better customer experiences and tangible cost savings and benefits from software.

Other trends reshaping the software industry • From vending machines to cars to devices, software is bringing the Internet of Things to life and forever changing consumer and business experiences. Along with the proliferation of software, there is an explosion of ways to monetize it. • IDC sees a cross-industry shift from ownership-centric models to experience- or relationship-centric approaches that result in a more personalized offering for customers. • The meteoric rise in the number of connected devices and the data they collect is leading to new business models such as a shift from selling products (things) and services to selling experiences.

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Benefits of Cloud IDC survey respondents ranked the top benefits of cloud as the following: Q: Of the following potential reasons for moving to cloud, which are considered important drivers that you expect to achieve when moving to cloud (check all that apply)?

45% 45% 44% 39% 36% 34% 34% 30%

Improve Improve Reduce the Improve our Improve time Simplify and Expand into Shift IT finance IT staff resource total size of IT internal service to market standardize IT new market to opex productivity/ utilization budget delivery levels infrastructure segments redeploy IT and business and staff for other agility applications business platforms processes

pg 3 Source: IDC CloudView Survey, 2016; n=11,500 worldwide respondents Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe

Rapid Rate of Cloud Adoption Wide-scale cloud adoption has rapidly expanded, according to IDC’s CloudView survey, with a 129% increase in the number of organizations embracing the cloud from 2015 to 2016.

Q: How would you describe your organization’s general posture toward using the public cloud for net new IT services?

46%

25%

10% 13% 5% Cloud First Cloud Also Cloud Last Case-by-Case No consistent Basis approach

pg 4 Source: IDC CloudView Survey, 2016; n=11,500 worldwide respondents Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe Who Benefits Most from Cloud Deployment? Respondents to IDC’s survey said that IT will be the biggest beneficiary of cloud deployment.

Q: Which groups do you expect to benefit most significantly from your organization’s cloud strategy during the next three years?

#3 Sales (including web commerce) #1 IT operations #4 Customer support

#2 IT test/ development #5 Operations

pg 5 Source: IDC CloudView Survey, 2016, n= 4,590 Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe

Cloud Enables Modernization Cloud deployment models are transforming the way that we access and manage software functionality.

• Modernization is not an incremental upgrade.

• Rethink process to enable efficient and effective operations.

• Technology enables smart actions and interactions. Top Priorities

• Look to the future to define where you need to be. • Streamline/optimize operations • Increase efficiency • Avoid getting bogged down by what worked in the past.

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How Are Cloud Services Typically Licensed?

All cloud services are based on three pricing methodologies: • “Access” pricing based on a measure of the number of users or machines that can access the product or service • “Consumption” or “pay-per-use” pricing based on a measure of product or service utilization • “Outcomes” or “value” pricing based on whether a predetermined outcome was attained

According to IDC’s Digital Business Models 2017 survey, customers estimated total spending on digital services in 2016 to break down in the following way:

54% 32% 15%

Access pricing Consumption or Outcomes or pay-per-use pricing value pricing

pg 7 Note: Percentages may not round up to 100% due to rounding Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe

Enter Named User Deployment (NUD)

Cloud-based NUD offers a simple and predictable access model that fits into a broader software license optimization strategy. NUD helps companies achieve optimization by enabling them to: • Shift to more systematic license management to maximize software benefits and support the identification of cost savings opportunities • Cultivate a software license transformation mindset in their employees, centralizing key information and breaking down organizational silos • Maximize the potential savings and benefits of software license optimization by buying only what they need and using what they have

Organizations that achieve the highest levels of software license optimization believe that an understanding of license management capabilities is a strategic effort that informs the entire software asset life cycle.

pg 8 Source: IDC MaturityScape Benchmark: Software License Optimization, 2016 Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe Best Practices for Shifting to NUD

Create a self-service environment where users can download and install available applications

Inventory machines and users Provide training resources to make sure that employees know how to leverage the latest technologies

 Take advantage of Consider ways to empower employees technologies to assist with custom configurations or add-ins with deployment and depending on their role ongoing updates

Enable the option to keep all employees on the same update cycle for ease of collaboration and compatibility

pg 9 Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe

Shifting to NUD Can Provide Tangible Results

IDC research finds that some of the risks of managing desktop software with serial numbers include: • Hard to track multiple serial numbers for multiple products, contracts, and vendors • Lots of work for IT to manage one-off requests for new apps, updates, and upgrades • Compliance risks if serial numbers or serial number packages are distributed in inappropriate ways • Hard to achieve compliance when employees, contractors, freelancers, and remote employees leave the organization • Difficult to support work at home (WAH) and bring your own device (BYOD) situations • Hard to minimize unknown shelfware with serial numbers

NUD can mitigate some of these risks and lead to ROI by: • Minimizing time and effort to keep a machine updated and to ensure installs are happening • Increasing IT productivity after migrating to NUD • Reducing cost/time/risk of being out of compliance • Providing the ability to eliminate shelfware or under-deployed/unutilized software

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What About Security, Reliability, and Performance in the Cloud? Despite the benefits and overall growth, there are still notable cloud adoption inhibitors.

Q: Which of the following best describe your organization’s It is important to be aware of these concerns, main concerns about cloud and are important inhibitors for but it is also important to recognize that many your organization in considering public cloud services or organizations find security and performance to be important cloud benefits. These private cloud technologies? customers find that cloud service providers are in a better position to source and maintain cloud infrastructure expertise and 48% technologies than most organizations. 27% 26% 25% 25%

Security concerns Regulatory or Reliability concerns IT governance issues, Vendor lock-in compliance issues in terms of service including challenges availability (response related to defining time and user standard services downtime) and SLAs pg 11 Source: IDC CloudView Survey, January, 2016, n= 2,359 Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe

NUD: Benefits Organizations that move from outdated forms of license management to more modern approaches, such as NUD, may recognize the following benefits: • Faster access to the tools that customers need to do their best work • Improved ability to adopt innovation as soon as it is available • Centralized license management with self-service capabilities for teams or individuals • Flexible options for named user identity types based on an organization’s needs • Ease of administration through a console that enables delegation and accountability • Quicker design and delivery of creative work (or any work) via modern workflows • User access to services/cloud only tools as vendors move software to a service/app

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NUD: What to Consider While evaluating the benefits of NUD, consider the following potential challenges: • Change in workflow/processes requires time to adapt

• Decentralized organizations with busy IT desktop staff may find it hard to pull together the resources needed to make change happen fast

• Users may face difficulty adapting to rapid rate of innovation

• Potential concerns about security, privacy, and performance in the cloud

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Prioritizing License Modernization: Steps to Consider - 6 Months IDC believes that ineffective license management – such as using outdated or manual methods – costs organizations up to 25% of their software budget annually. Address this challenge by taking the following steps.

In the next 6 months Identify key individuals responsible for software license modernization/optimization. Understand key audit triggers, and be vigilant with virtualization/cloud initiatives and merger and acquisition activity. Identify technologies to track license entitlements and true software usage. Take steps to self-audit before an audit. Do a proactive review of top vendors.

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Prioritizing License Modernization: Steps to Consider - 6-18 Months

In the next 6–18 months Build common licensing terms and conditions repository and outline accepted practices. Consolidate license agreements and obtain accurate inventory. Institute process changes that complement technology investments. Establish internal controls. For the top 20% of your software assets (by spend amount) ask: Do we need this product? Does it fit within our strategic road map? Are we paying for the correct quantity? Do we need support/ maintenance? Then retain it, change it, or cancel it.

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Prioritizing License Modernization: Steps to Consider - 18-36 Months

In the next 18–36 months Drive toward a full life-cycle process with supporting automation. Focus on highest spend and value. Use technology and process to identify how each application is used, create business rules based on usage, and provide recommendations on increasing adoption and reducing spend. Compare current software entitlements with deployment data to identify opportunities to optimize spend.

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Key Stakeholders A cross-functional software license modernization team should: • Drive intelligent adoption and highest ROI from the software • Communicate regularly with software suppliers to identify how software can be more useful • Use tools to understand how the application is used, create business rules based on usage, and recommend how to increase adoption and optimize spend

Key stakeholders and their roles include:

Finance: Considers Procurement: Assesses impact impact of license of purchasing behaviors on modernization on IT costs compliance, considers time/ and organizational risks. cost/risk of managing licenses at every step.

LOB: Participates in IT: Drives modernization, training to understand/ assembles/leads cross- use software capabilities, functional teams, provides shares knowledge expertise to other through community and stakeholders. collaboration.

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Recommendations for Successful Modernization IDC offers the following recommendations for organizations:

• Undertake a software license modernization initiative

• Ask software companies to shift to models such as NUD that allow you manage software licenses effectively while empowering users with current technologies and self-service capabilities

• Be business-outcome focused (speed, agility, ROI)

• Centralize and automate

• Pursue efficiencies by implementing modern technologies with staying power

• Digitally transform software license management processes

pg 18 Source: IDC MaturityScape Benchmark: Software License Optimization, 2016 Software License Deployment and Management in a Cloud Era An IDC InfoBrief, Sponsored by Adobe

Methodology The data presented in this InfoBrief comes from the following IDC global, web-based surveys: • IDC Digital Business Models Survey, January 2016; n= 146 providers and 146 customers

• IDC CloudView Survey, January 2017; n=11,500

• IDC MaturityScape Benchmark: Software License Optimization, 2016

• IDC FutureScape: Worldwide Software Business Models and Monetization, 2016

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