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The Value of Software Supply Chain Transparency

by Stephen White  |  July 11, 2018  |  Comments Off on The Value of Software Supply Chain Transparency

Last summer I witnessed a passionate presentation addressing the need for greater transparency in the software supply chain. Many end user organizations may concur, interestingly the presentation was delivered at a vendor’s own event by another software vendor.

The past month has  witnessed many observations about Gareth Southgate, and the manner in which a positive performance of the England football team on the field, has been reinforced by the positive relationship manager and team have developed with the world’s media and fans, by being open and transparent.

Perhaps I’ve distracted from the subject line with that world cup reference??? Back to the topic … The core message of the software supply chain presentation was tens of billions are wasted through the software supply chain. There are several dimensions to potential improvements in software and online services transparency. Whilst mature and efficient license management was the focus of that presentation, that’s not the only opportunity for enhanced clarity.

Price transparency

On any given day thousands of organizations will receive a quote for software without any reference point as to whether their deal is good or not. It remains unfortunate that many enterprises are kept in the dark by providers as to what their price represents.

Any enterprise organization seeking to acquire in volume wouldn’t expect to pay list price. Yet many clients receive pricing that lacks any detail addressing the discount/concession offered specifically to their valued client. Whilst there are many factors that represent or contribute to concepts of value, providing clients with a reference as to what their business is worth seems a simple mechanism to acknowledge and strengthen the relationship through transparency.

In an era where access to information is expected to have few barriers, in one of the world’s largest markets ‘Perfect Information’ remains elusive.

This situation becomes even more opaque where a series of providers are involved in layers, creating an indirect price which contains no clarity of how the quoted cost is divided between providers.

Is it time for the selling mechanism to acknowledge its role in strengthening relationships through transparency, and forgo approaches that withhold information in order to create mystery? Where there’s mystery there’s margin it has oft been said, however where there’s transparency, there is also trust, confidence and a stronger relationship.

looking glass

Transparency of consumption

Whilst understanding consumption, and whether an ongoing requirement exists were already important, as software and technology have increasingly delivered as an online service, and billed as a subscription, understanding consumption has become vital to controlling costs. But what degree of transparency do we have?

Without transparency, toxic consumption of IAAS and PAAS can thrive, resulting from scenarios where the meter is left running but delivering no value, an issue with some similarity to VM sprawl but could be considerably more costly.

Within SaaS, without transparency of usage the potential for asset underutilization is significant. Consider for instance provisioned users making no use of a service yet contributing to monthly costs, or using only a fraction of the capability and would be better aligned to a right-sized lower end subscription.

In either type of environment, over-provisioning has potential to contribute to excess cost. Furthermore, the greater number of environments we utilize, the less transparent software usage may become, and justifying costs similarly more challenging.

Where providers do not supply the necessary consumption data, it is essential that end user organizations implement tools that provide the required visibility. It’s positive to see SAM tool providers, CSEM tools and SaaS specific tools being increasingly marketed to address this challenge. Tools are only a fraction of the solution however, without aligning responsibility for reviewing and acting on the data, benefit may well remain unrealized.

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Category: asset-management  cloud  it-cost-optimization  licensing  

Tags: cloud  cost-optimization  pricing  software  software-asset-management  transparency  

Stephen White
Research Director
4 years at Gartner
16 years IT Industry

Stephen White is a Research Director in Gartner's IT Asset Management, Vendor Management and Procurement team, focusing on strategic licensing and negotiation strategies, asset management, and reseller engagement. Mr. White leverages his experience in software sales and consulting to assist IT leaders through his coverage of best practices in license life cycle strategy and trends, license metric and pricing practices, contract negotiations, optimizing terms and conditions, sourcing, and relationship management. Read Full Bio

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