Enterprise Licence Solutions 

Unlimited Licencing Agreements renegotiation strategy advisory COVID19 update

Customers who gain real value from Unlimited Licencing Agreement (ULA) renewal negotiations have followed a clear process with key guiding principles:

  • They are in control of their destiny – i.e. they have not allowed their vendor to take control of the agenda
  • They understand the value realisation from their current ULA
  • They have a clear assessment of compliance issues and audit vulnerability across the entire vendor stack
  • They have a clear demand forecast post the current ULA
  • They start early – it typically takes a year to get in a position of strength prior to the expiry of an existing ULA
  • They, not the vendor, decide on whether an extension, renewal or exit from their current ULA makes sense

The coronavirus crisis has tipped the ELS default advice in favour of exiting ULAs on their contractual expiry dates, because:

  • Business models (immediate and long term) are changing rapidly as a result of the crisis
  • Future requirements are much more uncertain
  • Spare cash is needed now to deal with immediate business impacts
  • Customers need to retain cash for potentially tough times ahead
  • Doors need to be kept open for new technology options
  • More than ever, customers should be in control of their own cloud destinies

Major factors may still warrant pursuing ULA extensions or renewals, such as:

  • Significant M&A activity – wherein vendors may offer favourable terms for divested or acquired entities
  • Major project delays or postponement
  • Major anticipated growth of the existing footprint

Regardless, you can expect vendors to push hard for a ULA extension through the usual bag of tricks:

  • Progressive offers of ULA extensions and renewals based on their (unfounded) predictions of your footprint growth
  • Bundled offerings including Cloud subscriptions that you never asked for
  • Audit threats

ELS is strongly advising customers in current ULAs to engage their vendor on their own terms from a position of strength:

  • Take control of the renegotiation schedule
  • Establish internal governance and communications
  • Undertake a comprehensive value realisation and compliance assessment – this will provide:
    • a vendor neutral view on the actual business value of the current ULA
    • an optimised Effective Licence Position – i.e. how to use the ULA-gained licences in the most effective way
    • a view of audit vulnerability across the vendor stack with a clear remediation plan
  • Establish a three year demand forecast for product sets under the current ULA
  • Understand if they are in the “goldilocks zone” where they can exit the ULA with the right amount of entitlements (not too much, not too little)
  • Establish and evaluate any clear factors which could justify a ULA extension
  • Evaluate alternative options

ELS lives and breathes this stuff – contact us today for a discrete, no obligations discussion.

Email: enquiry@enterpriselicencesolutions.com        Phone: +61 407 728 623