President, ePlus Systems & ePlus Content Services

Note from the author (edited 11/1/2017):

I’d like to take a moment to update my blog post in light of ePlus being named Cisco’s first-ever award recipient for Global Lifecycle Management Partner at Cisco Partner Summit 2017. We are extremely grateful and value this recognition.  Supporting customers across the continuum of the software lifecycle, from selecting and purchasing the most appropriate licensing model to optimizing investments through usage and deployment, is a strong competitive differentiator for ePlus.  We continue to be in alignment with Cisco, offering a true lifecycle approach to software management that enables our joint customers to better predict budgets, respond quicker to business changes, and attain increased licensing flexibility and scalability—so they can stay ahead of the innovation curve. 

With that said, I hope you find the article below useful as you navigate through the myriad of complexities associated with purchasing and managing software licenses.  Today, most organizations struggle through a myriad of complexities associated with purchasing and managing software licenses. Apart from dealing with differing termination dates and compliance, the permissible usage of a license can also be governed by elements such as named users, concurrent users, perpetual use, subscriptions, and negotiated volume discounts. Licenses can also be tied to specific hardware devices limiting the manner by which they may be transferred.

Likewise, managing compliance with terms is a challenge. Because there is little license visibility, it’s hard to know how many users you have and if you’re compliant with your agreement. Ever get a true-up bill at the end of the year because you had more users of a software product than you were licensed for? If that’s happened to you (and I bet it has), then you know how shockingly expensive noncompliance can be.

To relieve some of these issues, Cisco has introduced a new licensing model for its software fundamentally enhancing and simplifying how licenses have been traditionally purchased and managed. The new approach can provide you much needed budget predictability, help you respond quicker to changes in your business, and potentially help you save money.

What has changed?

In May, Cisco announced changes to their enterprise licensing model. Cisco Enterprise Agreement (EA) is a comprehensive agreement that simplifies the purchase, consumption, and management of Cisco Software across multiple software disciplines including Cisco ONE, Collaboration, and Security Software.

Cisco Enterprise Agreement can simplify the experience of software licensing by providing increased licensing flexibility and scalability while enhancing access to a broader Cisco technology portfolio to attain maximum benefit from software investments.

This program is a lot more accessible for most clients than were previous enterprise agreements which had much higher points of entry. Rather than committing millions of dollars (some of which may not have ever been used), now, for as little as $250K over three to five years, customers can leverage potential pricing enhancements, maintain a predictable budget, and manage software for the entire enterprise versus managing device by device. With Cisco Enterprise Agreement, you get the following benefits:

  • Software can be licensed for a three-year or five-year term. The price is fixed at the beginning of the term, so you know what your cost will be every year. This provides predictability and helps you manage your budget.
  • There is a 20% growth allowance. Traditional licensing models that you may be familiar with require you to pay for anything above 100%. If you used more than 100% of what you were licensed for, you paid for every license you went over. And it was retroactive. The new model uses “true-forward” licensing up to 20%. That means you can use 120% of what you are licensed for without any penalty. Should you go over, you will only be charged for the number of licenses over 120%—going forward. That means there are no retroactive fees. We see this as a significant benefit to our customers. 
  • License management is simplified. Through an online portal, you have full visibility across your enterprise. You can pool licenses. And you can add and deploy licenses whenever needed.
  • The entry level has been lowered to $250K. You no longer have to spend millions to be eligible for an EA, which is good news. If you’re going to spend at least $250K over a three year period, this may be a great fit for you.

How much can you save?

While every environment is different, the new Cisco Enterprise Agreement can provide big savings over time. Take one healthcare services company we worked with recently, as an example. They had 11,112 software licenses purchased a la carte under Access Switching, Access Wireless, WAN (Routers), and Networking (Nexus).

With so many licenses and limited visibility, they decided to look at the new Cisco One Enterprise Agreement. Over a three-year term, they will receive:

  • Multi-year price incentives
  • Better license management capabilities via an online portal
  • Predicable budget with a fixed price for three years
  • 20% growth built-in (a $1.2 million savings)
  • True Forward annual price with no back penalties
  • Over $4.9 million in total savings

Your experience may be similar. But it may be different. Every environment is unique. What works well for one may not work as well for another. So it only makes sense to evaluate your options carefully.

Is the Cisco EA right for you?

At one time, it may have been true that “all roads lead to Rome.” But the same cannot be said of enterprise agreements. Signing an EA might be your best choice, but it depends on your situation.

Before you make a decision, evaluate your environment. How much have you spent historically on software? Do you spend more than $250K over three years? Do you have a track record of making a large number of a la carte purchases? Do you struggle with visibility and control of your enterprise licenses? Have you paid back penalties for exceeding your licenses?

Consider those answers along with your plans for the future. Do you see growth or shrinkage in your environment? Do you have software coming to end of life? What new initiatives do you plan to undertake? Do you envision utilizing a broader Cisco technology portfolio to carry out those initiatives?

Answering these questions and others will help you determine the best licensing model for your environment.

At ePlus, we’re here to help. Working with you, we can perform a license impact analysis. We can evaluate your unique software needs and help you select the licensing model that delivers the best value for your enterprise. We can help you spread the cost over the term of the agreement. And we can help you deploy and adopt your software throughout your enterprise, so you’re certain to get the most out of your purchases. Our software specialists are available to help you maximize your software investments.

We also have developed specialized programs focused on maximizing software licensing investments for our customers, such as the following:

  • The ePlus Software Readiness Assessment – This assessment analyzes a customer’s licensing practices, software adoption methodologies, and ability to leverage the capabilities that are provided with their software. The goals of the assessment revolve around driving savings, efficiencies, performance improvement, and security throughout a customer’s enterprise.
  • The ePlus Software Economic Value Impact Analysis – This analysis looks at historical software investment, future spend, and how savings opportunity can be aligned by solutions, both short and long term. This analysis evaluates a multitude of available licensing programs to determine the best fit for a customer and enables them to envision a clear path to align and optimize their software investment over a pre-determined period of time.

For more information about the Cisco Enterprise Agreement or the services we offer at ePlus, email CiscoSoftware@eplus.com or contact your ePlus Account Executive.  You can also visit our website at www.eplus.com/partners/cisco/cisco-software.

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