How to negotiate virtualisation licensing


How to negotiate virtualisation licensing

John-Paul Kamath

IT managers negotiating the price of virtualisation licences with software suppliers such as Microsoft, SAP and Oracle could get cheaper deals if they audit software use beforehand.

Presenting evidence to suppliers showing how often applications are used and by how many users in a hardware environment helps establish a baseline price, which can be marked down when moving to a virtualised environment, say experts.

Tony Lock, programme director at analyst firm Freeform Dynamics, said that software suppliers can be flexible on virtulisation pricing if IT managers provide evidence showing the value of an application to the business.

"Businesses are using virutalised environments in dozens of different ways, so it is hard for suppliers to argue a single licensing model for any one company," he said.

If an IT manager quotes a precise number on the software packages they use, and can place a value on it to their businesses, they can use this as a baseline to mark down virtulisation licences, he said.

"Large software suppliers do not want to alienate their biggest customers, and they are the biggest customers are using virtulisation. IT managers should find out what their peers are paying for virtulisation licensing and use that to argue cheaper deals," said Clive Longbottom, service director at analyst firm Quocirca.

A survey by Freeform Dynamics of 1,500 IT managers showed that 70% found current virtulisation licensing models complex and a barrier to negotiating cheap deals. But IT managers could be in a stronger position to negotiate than they think.

Ian Osborne, project director at IT supplier trade group Intellect, said suppliers are keen to keep customers rather than issue fines for under-licensing in a virtualised environment. To date, no high-profile fines have been issued to companies who may have under licensed in virtual environments because it was still a grey area that software vendors were working out, he said.

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