Software License as a Status Symbol


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While companies globally are trying to transform into the new way of working, with flattened organizational hierarchies and agile teams, one of the challenges they face is the importance of status symbols to their employees. We are all familiar with the manifestations of how high up the totem pole one has ascended. They range from small items like an upgraded chair, table or better laptop to more expensive and valuable ones like the corner office with windows, company car and a parking spot near the entrance. Certain jobs demand specific perks, like golf club membership for marketing and sales executives.

When it comes to the engineering sector, there is an interesting variant: the dedicated software license. Chief engineers, long-serving draughtsmen and even engineering executives may well have their own ‘personal’ copy of one or more very expensive software application. Whether they make extensive use of the software is not open to debate, it is a very costly recognition of their value to the firm. It also makes the license administrator’s work just that bit harder, as he has to manage these assets in addition to the licenses owned under a concurrent licensing agreement.

The Cost to the Company

Concurrent or floating licensing is an efficient way of containing costs where there are many users of a specific product. When the license agreement is entered into, the aim is to buy the minimum number of licenses for the maximum number of users, taking into account peak usage, company growth and expected projects in the pipeline. This is not a simple balancing act; no user should be denied service because all the licenses are booked out; but there should also not be too much spare capacity or “shelfware”.

Contrast this with a dedicated license, which adds an overhead to the license management portfolio, because its expiry date is probably not in sync with the concurrent license contract, although it does come in at a lower cost. There is an alternative way of creating a dedicated license by taking it from the available concurrent licenses, either by borrowing or reserving it. Both of these options convert the concurrent license to a “node-locked” license. This means that for every borrowed or reserved license there is one less floating license available to the users of that software application, which could result in denial of service at peak times. From a cost aspect, this is like paying for a limousine and getting a family car. The reservation or borrowing could have been a temporary remedy which became permanent because the dedicated software was not returned to the concurrent license pool at the end of the designated period.

If the lucky recipient of this reserved or borrowed license makes full use of the software, there is less of an issue. However, if there is anything less than continuous use, the full benefit of the license is not being realized and this can amount to an additional cost to the company, because the reduced number of concurrent licenses could be too low to prevent denials of service. When users are locked out because of a license shortage, this causes frustration and loss of productivity, which carries its own costs; it can result in purchases of additional licenses to satisfy demand, if the poor utilization of reserved licenses is overlooked.

Companies that have paid attention to this problem have saved up to $1 million per year by monitoring the use of all forms of dedicated licenses and removing the rights where the software asset is not being utilized sufficiently. We will discuss the ramifications of reserving and booking out concurrent licenses in another article, but they can have a material impact on software licensing costs.

Status Symbol or Essential Tool?

But not  all dedicated licenses are mere displays of rank and status, some engineers genuinely need almost uninterrupted access to specific toolsets, for instance the transmission and distribution engineers who design lines for the power utilities, or the engineers who deal with piping and instrumentation diagrams (P&ID) in oil and gas plants. You must first define sufficient use to justify a dedicated license, and then monitor and measure usage.

Designing Parameters for Dedicated Usage

Engineering software that is used continuously and widely within organizations, like computer-aided engineering (CAE) and project management applications, are especially suitable for “floating” licenses. However, there are certain classes of software where there will be periods of extensive use alternating with periods of complete dormancy, such as lightning shielding applications and other  specialized applications that are used by experts in their field. In this case, it is better to buy a few individual licenses for those specialists; 100% usage of these products will never be achieved, but they are essential for those niche jobs.

When it comes to products where a concurrent license is justified, a set of rules or guidelines justifying a dedicated license can be drawn up, based on number of hours per day, per week or per month or project priority. Depending on how formal you want to make it, this could be used for a policy document. The parameters for use should be based on historic usage values extracted from your asset or license management software. These parameters are not cast in concrete and should be revised periodically. There will undoubtedly be mutterings about any such policy or guideline, but if it is issued company-wide it is seen to be objective and not a personal attack. It should also be made clear that usage will be monitored.

Measuring and Monitoring

We discussed this in an earlier post – Getting the most from your concurrent licenses, as it is important to distinguish between reserved licenses that are idle and reserved licenses that are being used. We also explain how to interpret the reporting on reserved licenses and what actions need to be taken. The reporting output can be used to explain diplomatically to an engineer that has a dedicated license but is not making much use of it, why the license should be brought back into the concurrent license group. To pacify aggrieved feelings, have an alternative perk available, such as a personal cappuccino machine, or a serious laptop upgrade.

Going Forward

Working through all the concurrent licensing software on board will take time, some companies have several hundred engineering applications in their portfolio. It makes sense to deal with the most widely used and most expensive applications first. It is also important to keep a watching brief on future usage – the last thing you need is an irate chief engineer saying “I told you so!”, because he got a denial of access to “his” software .


Learn more about OpenLM solutions for software license management

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