How IT Service Providers Can Maximize Profits When Managing Hosted Licensing Portfolios

The sale, hosting and management of software and applications continues to be a lucrative opportunity for IT service providers. Particularly with increasing adoption of cloud services and technologies, end-user clients increasingly to rely more on service providers not only in the procurement of software and applications, but in the management of their portfolio of the licenses tied to the software – which happens on a user-by-user basis.

Besides the adoption of the cloud, the proliferation of mobile and remote workforces – oftentimes on a global scale based on shorter-term projects – the management of each seat license can become even more arduous for an end-user, requiring a trusted service provider partner even more so.

Licensing will continue to grow in importance, especially since more IT hardware makers are entering the software and application development market for custom buildouts that apply to their individual technologies. Microsoft and Citrix already play a major role in offerings, but more are following. According to a report in eWeek recently, 84% of major hardware makes are focusing more on software buildouts, and 37% are even switching to a software-centric business model.

Bottom line: Customized, cloud-based software and licensing is growing in importance.

The challenge for IT service providers? They’re experts in IT deployments and management, but software procurement, hosting, and licensing portfolio management has become extremely complex with major compliance issues now tied to it. Service providers themselves are relying on their own trusted licensing experts who can help identify the right hosted applications and licenses for their solutions, but also a consultative approach to identifying ways to build a licensing portfolio in a way that identifies business growth potential while reducing costs.

Consultative License Portfolio Adjustments

Here is an example of how one IT service provider recently worked with DXC SLMS Hosting to restructure their licensing portfolio to reduce costs to the service provider and maximize profit potential.

Example A

Part Number Item Name Unit Price Quantity Ordered Extended Cost
7JQ-00341 SQLSvrEntCore ALNG LicSAPk MVL 2Lic CoreLic $460.15 8 $3,681.20
228-05018 SQLSvStd ALNG LivSAPk MVL SAL $12.97 3521 $45,667.37

In Example A, the IT service provider has a client portfolio of SQL Server showcasing 20 host servers for a total of 704 Cores. Because of the highly virtualized environment, the IT service provider decided to opt for a subscriber access license (SAL).

Example B

Part Number Item Name Unit Price Quantity Ordered Extended Cost
7JQ-00341 SQLSvrEntCore ALNG LicSAPk MVL 2Lic CoreLic $460.15 48 $22,087.20
228-05018 SQL Svr Standard Core All Language L/SA 2Licenses CoreLic $119.99 32 $3,839.68

In Example B, the IT service provider consulted with the experts at DXC SLMS Hosting to make some adjustments to the structure of the licensing environment, enabling the service provider to save a substantial amount of money. In this scenario, the service provider decided to license some servers with just the minimum requirement of four cores per physical processor, or four virtual cores per VM using the standard edition. When licensing the VMs using the standard edition, the same rules apply (4 vcores per VM). Here, the service provider can license highly virtualized servers with the Enterprise edition to run unlimited VMs. Lastly, they can still license using the SAL option on servers based on the number of users who access those servers.

The changes to the structure of the environment resulted in the service provider using only ten Host Servers instead of twenty at sixteen cores per host. Four of these ten servers are licensed with SQL STD CORE, and six are licensed with SQL Enterprise.

The changes resulted in a 47% savings to the service provider and end-user client, enabling the service provider to offer greater savings/profit management for their customer.

Who To Partner With For Profitable Licensing Portfolios

As cloud-based hosted software services continue to reshape and expand the principles of modern IT, the future of any hosting services provider depends on the quality of its partnerships. DXC SLMS Hosting offers Service Providers the best opportunity to build the right portfolio of cloud-based hosted solutions, including Microsoft Windows Server 2016, that best positions for optimum business growth potential while cutting costs out of the portfolio.

For more information, visit the DXC SPaRC resource community at dxcsparc.com.