Software Sourcing Project 2015

Prepared by:Manoj Abraham

Scope of the project:

The company has a requirement of the existing

software renewal or source for the year 2015 in a

cost effective manner.

Facts:

Currently under the existing maintenance agreement 1800 users

have this software installed on their desktops. In addition 600 users

have this software installed with no maintenance and are one

version behind the rest of the environment. These licenses are now

required to be brought into the next maintenance agreement.

Objectives:

Reduce the cost of software for the year 2015.

Capture resulting savings.

Create contractual alliances with service providers to

support the long term goal of the company.

Maintain and improve product quality.

Improve business functions.

Optimize the total purchasing process.

Sourcing Project Methodologies:

Step 1

Analysis

Step 2

Plan

Step 4

Optimize

Step 3

Act

Requirement

Analysis

Demand

Planning

Develop

Project Team

Budgeting/Spend

Analysis

Market Research/

Value Analysis

Sourcing Strategy

Identify/Prequalify

Service Providers

Shortlisting

Providers

RFx

Negotiation

Review

Approval

Contract

Implementation

Performance

Measurements

Continuous

Improvement

Analysis:

Requirement Analysis:

1. Analyse the current and future requirements.

2. First step is to collect the usage data (if possible for the last 3 years or at

least for the current year).

3. Check total number of active/full featured users and passive/limited featured

users (i.e. out of 2400 who all are using the full features and limited

features of the software. This statistics can be collected from system logs

that will log each user logging into the system through administrator

settings. This will help to identify the actual requirements). 

4. According to the software requirement analysis we can identify the number of actual

need of full featured licenses and limited featured licenses.

5. Check whether we need to cut short the number of full featured licenses for the next

year.

6. Check whether we need to continue with the existing plan and renew if there is no

expansion.

7. Check whether we need to expand the number of full featured licenses and limited

featured licenses according to the company’s requirement for the next year.

8. Request for Proposal from the provider to consolidate all licenses under maintenance

and co-term as per the previous license end dates.

9. Check the bundle rates and also review different options for consolidation of both

versions if necessary.

Some of the key software licensing models:

Node locked

Feature concurrent user

Devise based pricing

Feature based concurrent user

Pay as you use

Software as Service (SaaS)

Client Access License (CLA)

Utility model (Usage, Time, Number of Transactions)

Cloud and Desktop or Server Virtualization etc.

Assumptions:1. Check if existing system is meeting the future requirements, then negotiate

the price for a long term renewal like 2 or 3 years instead of 1 year with out any hidden costs.

2. As per the software requirement analysis for the next year negotiate the price for a Tier based licensing i.e. $$ for first 500 users, $$$ for next 500 users etc.. this will help us to reduce the cost based on the number of actual users instead of 2400.

3. Analyze the actual software requirements for the next year based on the research and negotiate with the provider for Node locked, Feature Concurrent User, Devise Based, Feature Based Concurrent User, Pay as you use, SaaS, Client Access License, Utility, Cloud and Desktop/Server Virtualization etc. within the stipulated budget.

4. Check for the enterprise package with unlimited users pricing.

Conclusion:

Based on the research, We could choose one of the given four assumptions

within the stipulated budget according to the next year software requirement

analysis. Also explore all the possible global sourcing methods with multiple

service providers for the same software or any other software with more

features available in a competitive price.

Thank you

Manoj Abraham