With promises of maximized value and streamlined purchasing, the IT industry is seeing a definite rise in the proliferation of ELAs.
When you hear the words “Enterprise License Agreement” (also lovingly referred to as an ELA) your thoughts more than likely start to turn towards companies such as Microsoft, Oracle or IBM. You may even feel a little sweat on your brow as you think about the annual “true up” exercises you have to go through once they are signed.
With promises of maximized value and streamlined purchasing, the IT industry is seeing a definite rise in the proliferation of ELAs. The traditional software stalwarts still have their long-standing ELA offers for large and medium enterprises. Yet, more recently, we are seeing non-traditional software companies turning their focus towards these specialized agreements as an easier and more strategic way of delivering value to their customers.
But why? How does a company that has been traditionally focused on hardware like Cisco, Dell EMC or Netapp come up with a purchase agreement that revolves exclusively around software licensing? Most importantly, should you and your enterprise be entertaining these programs? Are the programs mature enough and are the benefits great enough to add an ELA as a strategic initiative for your organization at this point in time?
You may be surprised to find out that these companies are not new to the software business. While they may not be software-only companies, they are definitely packing most of their products’ features into software of some sort – either embedding it within the hardware device itself, or selling subscriptions that only run on specific appliances. Most of them have even offered some sort of ELA program to the largest of the large enterprises – but typically by invitation only.
Becoming more agile with software licenses
However, as technology changes at an ever faster pace, these traditional “hardware” companies are being forced to become more agile and deliver more value in a much faster and flexible way – and not just for their top tier customers. The only way to do so is to use software as the vehicle through which they deliver value. And once software is decoupled and treated as its own asset,and arguably, becomes the more valuable part of a company’s investment, the need for easier ways to manage and fully utilize that software becomes critical.
For example, Cisco traditionally offered a collaboration-focused or a security-focused ELA to large enterprises. These agreements gave customers a catalog of premium products that provided license coverage for all of their “knowledge workers” or “security content users.” Depending on how the customer defined their enterprise, it would include license coverage for their onsite and remote employees and any contractors. The financial break-even point for such agreements typically required a deep commitment to each of the technology architectures, but each of these agreements existed as separate silo’s requiring separate cycles in order to negotiate and manage them.
The evolution of the ELA program
Recently, Cisco has made a major evolution to their ELA program. It now allows customers to combine multiple technology architectures under a single foundational set of terms. Now for the first time, customers can have a single agreement through which they can negotiate and manage their investment with Cisco. It takes the guesswork out of understanding a company’s entitlements and reduces the friction between IT and purchasing by providing coverage for 3-5 years across multiple technology domains. It is still best suited for companies that are growing, but it also provides a 20 percent growth allowance before any additional licenses have to be purchased.
They’ve also released an “ELA for the Network,” which allows you to cover your switching, routing or data center footprint with their latest Cisco ONE software. This may be shrugged off by people who have been purchasing Cisco equipment for the last 10+ years under the model where software was embedded on the hardware. Their reason? There simply was no other way to acquire the technology.
However, the recent changes to Cisco’s ELA allow customers to more easily manage their environments by establishing technology standards and removing the barriers to new features and versions as they are released. It oftentimes allows customers to refresh or upgrade their network or data center environments faster than before, because they have already negotiated the bulk of the investment (i.e. the software) needed for their entire device footprint.
Getting the full value of an ELA
Yet many leaders within IT organizations express doubt over whether they will ever fully utilize the software features provided to them through these agreements. They question whether the purported value of the ELA will be fully realized when they face real challenges such as lack of skillset or lack of resources to test and introduce new technology – or even just a new version of an existing technology.
These concerns are valid and should not be swept under the rug when your organization is considering an ELA. In fact, it’s when you couple the simplification that an ELA provides along with lab services and adoption services, that you really start to unlock the power of an ELA. On the one hand, lab services will provide the resources needed for your organization to test and evaluate a product before introducing it into production – all while reducing the overhead and risk typically associated with doing it in-house. On the other hand, adoption services ensures that any training and communication needs are discovered and addressed at the outset of your agreement.
In other words – ask your partner how they can help you extract the maximum value of your ELA through customized programs that take into account your organization’s specific goals and objectives. There shouldn’t be any surprises – an ELA has a defined start and end date and those should help align the timeframes and critical outcomes your organization is looking to achieve.
The result of combining an ELA with a customized adoption program is a much more nimble and agile IT organization that can more easily meet the demands of their end users and business owners. Other tangible benefits that we find are accelerated time to market, increased productivity and greater ROI realization. With all these factors at play, my one suggestion would be: don’t wait for your technology provider to invite you to an ELA conversation. There is a lot to choose from and you may be surprised at how accessible the programs have become.