How do Engineering Managers Save Money on their 2nd Highest Overhead?

For many companies, March 31st marks the end of the quarter. This may be time to make decisions about engineering budgets. How are engineering licenses impacting your business? The second highest department costs are likely to be the cost of Engineering Software Applications. As renewals are coming up, make sure you are well prepared. Would not it be helpful to have a few months of data analyzing the actual usage of the expensive software your team uses?

Whichever industry you are in, the use of CAD tools is very widespread with many leading companies adopting virtual development techniques such as CAE, CAM, EDA, ALM, MBSE, MES, PLM, AR, VR and others.

At TeamEDA, our research has shown that for every 100 engineers a company employs, it is spending approximately $250,000 per year maintaining the Engineering Applications. So, it always amazes me, that when we ask engineers, managers or directors about their perceived use of the software tools, most estimate that they are using less than 40% of the functionality owned.

It is evident that many organizations are not tracking engineer use effectively or managing their expensive software assets. All too often we hear that managers and directors wish to save money, but they do not have the data to allow them to change to more efficient working practices or negotiate software renewals.

So how are managers saving money year on year?

  • Knowing accurately what licenses they have. This involves understanding the number of licenses, the feature add-on purchases and what functionality this provides. Asset management is also very important at this stage for compliance with Software vendor contracts, such as licenses that are only to be used in certain countries (WAN/LAN) or restrictions on license borrow features. Companies must have a strategy for Compliance Audits (Software Vendors) and Quality Audits such as ISO9001. A manager needs to understand information on Vendor, Discipline, License Type, Purchase Type, Restriction Type, Responsible Person, etc. for complete asset management.
  • Having the data to negotiate on software purchase and renewals. Negotiating with Vendors is an important aspect of managing expensive CAD/CAE/+ tools. Every Vendor is different in terms of discounts, negotiating tactics, personality, the side that gets the best “deal” is the one that is better prepared. Managers need to understand historical discounts, vendor behaviors, ‘giveaways’ plus techniques for negotiating future discounts, feature remix deals, multi-year ramp up deals, etc.
  • License usage data is essential. However not all tracking capabilities are equal, many vendor-provided tools are very limited. A leading Engineering Application asset management tool like LAMUM, will provide current ‘Checkout’ information by vendor, feature and user including tools to manage users that hold on to licenses for too long. Engineers are resourceful and know all the tricks in the book to ensure they keep their CAD/CAE/EDA/+ licenses all day, this includes holding while in long meetings or scripts that keeps apps alive for weeks!
  • Historical data and batch reporting is key for decision making. Managers need to understand the concurrent use of features, but maybe, more importantly, the spread or heatmap use of tools and features over a week. Maybe meetings could be modified to get greater license efficiency across the department and avoid buying another 10 licenses? Could licenses be moved from one server to another? How could FlexLM Options files be used for greater efficiency? License denials are critical to a business, many companies rush to buy more licenses when analysis of the occurrences could avoid this. Learn about LAMUM’s best-in-class reporting functionality here.
  • It is most important to understand what you are NOT using! CAD and development software has been in many companies for over 30 years, with purchases often preceding the current management team. At TeamEDA we often see companies that have two or more sets of CAE, CAM, CFD, etc. toolsets, where a new development process has superseded the requirement for the original software, but the company lacks the confidence (or even knowledge of existence) to stop paying for these tools. Eliminating zero-usage features is where the most money can be saved, understanding usage and proactively managing preferred tools, whilst pruning those that no longer offer value to the company.

All of these techniques and many more help Managers understand their license and software tool estate, with the data to make informed decisions whilst ensuring compliance. This is where the 20% can be saved.

TeamEDA are have one product (LAMUM) and a single focus, which is to provide a complete Engineering Application business intelligence platform, delivering data for informed decision making.

LAMUM (License Asset Manager™️ with Usage Monitoring) is an Active Directory enabled application providing a complete overview of assets including all vendor information, where servers are located and who are the local admin’s. Full usage reporting, both live and historical, allows managers a complete toolset for analysis and strategy definition.

This post was based on this LinkedIn post by Paul Empringham, TeamEDA’s European Sales Director. Paul has over 20 years experience within the Engineering and CAD/PLM software industries. He was a consultant with Siemens PLM working with many of Europe’s most innovative manufacturers. Paul has also held management positions at a number of organizations running Engineering Application teams and delivering large PLM transformation programs. Outside of work, Paul is a Level 2 ECB Cricket sports coach and enjoys skiing whenever the opportunity arises.

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