All businesses need to do a lot more in terms of operational and organizational restructuring with fewer resources than they’ve ever had at their disposal. Cloud Computing and Virtualization will demand that more decisions, and attention will be focused on the dramatic licensing changes that will go hand in hand with those services and platforms.  Without understanding, mitigating and avoiding the risks that these technologies pose, C-level executives will be flying blind through a storm of incomprehensible proposals, vendor demands, vendor audits and technology purchases, many of which are likely to be made based on fear and doubt.  What is required is a solid grasp of relevant issues, a deep understanding of IP law, business management and hands-on experience dealing with vendors and their negotiating tactics.

The effects of not remaining current and relevant in both business AND the technologies that support those businesses will be a continued loss of capital.  It takes professionals with decades of experience to actually deliver meaningful results, on time and to the bottom line.  How do we do that?  We learn like anyone else learns, with the difference that we are exposed to more vendor offers across multiple markets and varying sized companies many times each month.  We are exposed to more information and we negotiate directly with vendors on behalf of our client organizations giving us the edge over most others in this field.

Our collective 50+ years in the business and management of IT and all of its processes delivers the “big bang for the buck” that businesses have been searching for.  Without pretense, vendor alliances, or conflicts of interest.  We are the real thing.  We deliver what we promise at a price point that we’ve designed to keep businesses relevant, competitive and more profitable within their markets and amongst their peers.  Our mission is to be given the opportunity to do the same for all of our clients.

MIU understood that it was failing to take advantage of economies of scale. They were also aware of their inability to assure any level of compliance with contract terms or governmental regulations. They feared an audit of any kind but were prepared to reveal internally the extent of their non compliance and to expedite corrective measures.

They turned to Levy LeGette to help them understand what they had, who was using it, where it was, and finally, how it was acquired (e.g., purchase or lease). The future expansion and integration of their diverse IT systems was depending upon the outcome of Levy LeGette’s services.

Levy LeGette’s first step was to gather as much available data as it could from IT and accounts payable departments. The corporate legal department handed over an amazingly slim portfolio of enterprise wide IT contracts it had on file. We realized that MIU’s records were virtually non existent. There were less than a dozen executed contracts and some notes and working documents for other contracts – all ranging in date from the 1960’s to the 1980’s. There was no indication in the files that any price or discount schedules had been amended. There was no indication that any of the twelve executed agreements still governed MIU’s use of the original hardware and software acquired so long ago.

There was a bit more success in working with accounts payable where we found hundreds of IT vendor payments being made. Many of these records did not reference a written agreement; others referenced agreements that MIU could not produce. We had to begin our work with a physical inventory of hardware, software, maintenance programs and services used by MIU’s five major data centers.

Levy LeGette worked to create written records regarding the acquisition, use (and in some cases retirement) of hardware. All products were cataloged, with written notations made to alert MIU to contract expiration and other events that required attention. An event resolution table was built to help MIU take appropriate action depending on what triggered an event.

Written certification verifying compliance with licensing terms for all software were obtained from applicable vendors, all of whom worked cooperatively with Levy LeGette to help MIU get back on track. No penalties were assessed by any of the vendors Levy LeGette worked with on behalf of MIU.

Levy LeGette also effected the cessation of payments for products no longer in use after discovering huge sums of money were being spent for products that had been scrapped and even sold by MIU over a period of years.

In one instance, an IT manager fearing immediate dismissal continued to approve lease payments after he had sold a mainframe on the secondary market. Levy LeGette addressed vendor billing and negotiated the immediate return of all amounts paid based on vendor accounting/billing errors. Where such amounts could not be repaid without the vendor resorting to bankruptcy protection, Levy LeGette negotiated repayment schedules in the form of credits applied towards the purchase of upgrades.

In instances where technological growth demanded the purchase of hardware or software licenses from other vendors, Levy LeGette helped coordinate the sale of MIU’s outdated equipment to secondary market dealers. For a move from one software vendor’s platform to another vendor’s platform, Levy LeGette negotiated competitive upgrades through fair bidding. The redirection of previously paid amounts towards the overall upgrade of MIU’s IT environment, and the re creation of written accounts and executed agreements enabled the IT and corporate legal departments to take control of systems running their businesses and enforce the contract terms mitigating the risk in acquiring and maintaining those systems.

Day to day operations were further improved after Levy LeGette identified missing control processes. Some of these processes included:

• hardware inventory,
• purchasing records for software licenses (proof of license),
• Inventory & purchasing tie ins
• purchasing records and contract terms
• license compliance
• distinctive inventory records for leased products
• the use of standard amendments to vendor agreements for all purchases under $25,000
• the use of an automated process to help MIU determine vendor compliance with contract terms negotiated by Levy LeGette, e.g., Price & discount, SLA compliance, application of purchase credits & Shift of responsibility to vendor for pick up of demo products

Levy LeGette negotiated 26 master enterprise wide hardware and software agreements and amended 458 standard vendor agreements. We recorded transactions involving 48 different software development/customization agreements and drafted, negotiated and effected the execution of an equal number of amendments to them. Levy LeGette tracked down 718 vendor agreements that had previously not been recorded by any of the parent company’s purchasing (or accounting) units and amended those agreements pursuant to MIU’s ongoing needs.

Needless to say, MIU was pleased, if not amazed. The amazement and sheer relief came from realizing that their house was now in order. In fact, they were speechless after our executive summary and final presentation when we announced a total hard dollar savings of $32.3 million as the result of our efforts.

Microsoft was pressuring the client to enter into a new enterprise licensing agreement at a time when the client company was attempting to finalize their legal divestiture from their parent company (with less than 12 calendar days remaining in the year, all client’s executives and legal staff were occupied and not able to turn their attention to this very costly acquisition).

ISSUES:

1. The client was uncertain that the deal presented by Microsoft was in their best interest.
2. Microsoft’s sales representative was anticipating execution of an enterprise agreement reflecting their written proposals on the very day that the client engaged Levy LeGette to provide its services, putting the rep’s bonus and/or performance metrics (and those of his managers) in jeopardy.
3. Most employees of the client company as well as the individuals that we needed to contact within Microsoft were either already on their holiday vacations or preparing to leave for the seasonal holidays.
4. Microsoft’s own focus was on pleasing the much larger, former parent organization.
5. Microsoft refused to correct errors it had made in calculating the final pricing for the client, and further tested the client’s resolve to obtain reasonable terms by insisting that all negotiations be completed between Christmas Eve and New Year’s Eve – thinking they had set an impossible task for a client that they described as “difficult”.

STATUS:

Microsoft’s failure to correct errors; and, its reneging of offers extended after long hours of negotiation with Levy LeGette drove the client to cancel the pending EA unless Microsoft found a way to correct its errors and to restore the concessions that Levy LeGette had negotiated.

RESOLUTION:

1. The client was given an extended period of time (6 months) to evaluate its new licensing deal and make any needed adjustments within its first year of operation following the divestiture.
2. During this 6 month period the client was able to transfer licenses between its (newly formed) operating units, redistributing their fully paid licenses more effectively. The transfers and redistribution of these licenses allowed the client to avoid paying for new licenses as originally proposed by Microsoft and its reseller.
3. Server software would be provided at a version level that was more appropriate for the client’s needs without penalty and at the lowest price levels available to the client. [Two examples of the “penalties” and inferior pricing would be: (a) the need to pay for step up licenses (intervening versions of a software application from the original application licensed by the client to an upgraded version); and (b) the payment of license + upgrade fees versus payment only for the upgrade, which can only occur when a volume purchase agreement is in place.]
4. The client had enough time to have a thorough inventory of its Microsoft assets performed by LL, allowing them to correct the inaccurate accounting and billing that had been taking place for years. The credit for the client’s overpayments, along with the economies realized in the re distribution of paid licenses, allowed the client to fund the new EA and other projects, and hire staff needed elsewhere in its newly formed organization.
5. Through the delivery of Levy LeGette’s services, the client is now better prepared to track and order all vendors’ products and services with greater efficiency and the continuation of a better return on their investment in software products and services.

TOTAL HARD DOLLAR SAVINGS: $2,345,000.00
DURATION: 10 Days