What is an Effective License Position and why do you need one?

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If you’ve been in the world of IT or Software Asset Management for any length of time, you’ve likely heard the term “ELP”. But you might be asking yourself: What exactly is an ELP and do I need one?

What is an ELP?

ELP stands for “Effective License Position”, and was a term originally coined by Microsoft to refer to an organization’s compliance position. An ELP is essentially a reconciliation of your current license entitlement against your current software consumption. It will uncover any gaps between the two sets of data, and is used to help identify whether you’re under-licensed (usage outside the terms and conditions of your contract, a potential audit risk) or whether you are over-licensed (meaning you have a surplus of licenses, or ‘shelfware’), a sure indicator of overspend that needs addressing prior to an annual true-up or renewal date.

By helping you reconcile what you’re using with what you’re licensed for, the data gathered can be critical to right-sizing your environment ahead of your next true-up or renewal.

It’s important to note that with the rapid move to cloud and many vendors moving to subscription-based licensing models, the ELP becomes more useful for optimizing consumption and spend. For more information on getting greater visibility into your SaaS application usage and spend, and for recommendations on optimizing cloud-based subscriptions, check out SHI’s SaaS and 365 Cost Optimization Services.)

So, how do you go about establishing an ELP?

SHI’s 4-step methodology

Using a four-step methodology, our licensing experts establish your current licensing position for in-scope publishers – and even go a step further by delivering recommendations on how to optimize it.

Step #1: Entitlement Position

We kick off the process by creating a single, reliable view of your entitlements.

Our experts analyze your license reports and review what software you’re entitled to by consolidating information from a variety of disparate sources such as:

  1. Original and electronic copies of your licenses and contracts.
  2. Documentation from the software publisher or their license management portals.
  3. Transactional data from resellers and licensing providers.

This allows you to approach your next true-up or renewal armed with data on what you’re currently using and what you will or will not need going forward.

Step #2: Deployment Position

Next, we identify software consumption across your organization.

We’ll reveal how your software is being deployed across your entire organization – on-premises, in the cloud, or hybrid – by taking the following steps:

  • Inventory all deployed operating systems, applications, and databases for the in-scope publisher(s).
  • Install and run discovery tools to recognize all software deployed and accurately identify the applications (including editions and versions) you have running in your environment.
  • Collect comprehensive hardware configuration information to understand the relational components of the licenses you have running on your hardware devices, including in virtual and cloud environments.

Step #3: Effective License Position

This is where SHI’s Software Asset Management (SAM) experts get into the nuts and bolts of performing a reconciliation and gap analysis using data provided in steps one and two. Our SAM team pores through the details looking for any of the following:

  • Licensing shortfalls exposing you to compliance risks.
  • Usage outside the contract terms and conditions, indicating potential compliance risks.
  • Surpluses – This indicates overspend. Our experts can help identify areas of under-used or un-used licenses ripe for re-harvesting, downgrade, or cancellation.

But SHI takes it a step further by delivering recommendations on how to optimize your position. Which takes us to step 4.

Step 4: Optimized License Position

Actionable insights and optimization recommendations are provided during this last, crucial step. This is where our specialists look at all options across the platforms, apps, and vendors in scope of the ELP, providing you with a full range of optimization recommendations including:

  • Identifying under-used software for redeployment to new users.
  • Adjusting licensing programs to better fit actual consumption.
  • Upgrading license agreements where better financial terms are available.
  • Negotiating with vendors to trade unwanted licenses for new subscriptions.

When do we recommend doing an ELP?

  1. In advance of a renewal

An ELP (or, as we call it at SHI, an Optimized License Position), is a snapshot in time. Because of the dynamic nature of software and IT in general, your environment is always changing.

In our recent eBook, “SHI’s 4 Step Plan to Optimize your Microsoft Enterprise Agreement Renewal”, we outline a 4-step plan for EA renewal success recommending that you start working on optimizing your renewal at least 12 months out. A lot can happen in three years, whether within your current usage, to the use rights within your entitlements, or programmatic changes to the program covered by your EA.

So we recommend starting with an Optimized License Position at least six months in advance of your anniversary date to ensure you understand your current entitlements and usage. This data allows SHI’s Microsoft Licensing Advisory specialists to begin modeling the licensing scenarios that best align to your current and future IT strategy and meet your budgetary requirements.

According to Danielle Kraft, SHI’s Sr. ITAM Services Manager, “I tell my customers it’s never too early to assess your license position for your strategic publishers. But I definitely recommend they do it at least six months prior to an annual true-up or renewal anniversary. That gives them sufficient time to assess the results and make budgetary decisions. Plus, you’ll be surprised how much things can change, especially with so many vendors coming out with new subscription-based licensing models.”

  1. In advance of an annual true-up

Many customers also come to SHI to perform an Optimized License Position in preparation for an annual true-up, whether that be with Microsoft, Adobe, Oracle, SAP, IBM, or any other strategic vendor.

As an example, with their first annual true-up date fast approaching on a three-year Microsoft EA Agreement, our customer, Panduit Corporation, approached SHI to ensure they were compliant with their Microsoft licensing. Within eight weeks, SHI not only confirmed compliance, but also identified opportunities to save about $102,000 across their SQL & System Center environment.

In this case, not only did we provide expert advice and analysis to our customer regarding compliance and license usage, but we also laid out various opportunities to optimize their investment.   Furthermore, by leaving the heavy lifting to our experts, our customer relieved their internal team of needing to dedicate valuable time and resources to analyzing the data and deciphering Microsoft’s licensing requirements on their own.

  1. Before engaging in a software vendor audit

As a practice, you never want to engage in an audit discussion with a vendor or auditor until you have all your ducks in a row. Engage your ITAM partner as soon as possible to gather the data needed to assess your license position. Your partner will then validate the data and use it to verify the accuracy of the vendor’s claims and prepare an appropriate course of action.

Remember, engage early and don’t wait until the last minute!

  1. Periodic health checks

We also recommend doing periodic health checks on your estate to stay on top of what you have running across your environment. With all the new use cases and changes brought on by COVID-19, it’s always good practice to perform periodic health checks so you can remediate any problems early on, before they become a compliance, security, or financial risk to your organization.

Stay on top of your software usage and licensing and feel confident going into your next true-up or renewal.

Reach out to our ITAM team today at ITAM@SHI.com to get started.

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