Guide to Right-sizing Engineering Software

Introduction to Right-sizing Engineering Software

Engineering software licenses such as CAD, CAE, EDA, and PLM tools represent a significant cost for organizations that must be carefully managed amid economic pressures like headcount reductions, layoffs due to downsizing, and mergers and acquisitions (M&A). These economic challenges force companies to reconsider their license inventories to align with fewer or changing staff numbers, ensuring they neither overspend on unused licenses nor hinder productivity by lacking the necessary ones.

During periods of layoffs and downsizing, companies face an average of tens of thousands of job cuts monthly. For instance, US employers announced over 172,000 job cuts in February alone, highlighting the scale at which organizations reduce headcount to save costs. Yet, cutting workforce size has a ripple effect on software license management. When IT teams lose personnel responsible for tracking licenses and contracts, organizations often lose visibility into their software use, leading to compliance risks and unnecessary spending from unused or auto-renewed licenses at full cost. Vendors may exploit this lack of oversight, increasing audits and imposing unexpected fees during vulnerable times.

In mergers and acquisitions, the consolidation or reassessment of engineering software licenses is critical to optimize costs and ensure compliance. Detailed license usage analysis is essential to identify underutilized or overlapping licenses that can be consolidated or renegotiated. Proper due diligence helps avoid inheriting costly liabilities and provides data to negotiate favorable licensing terms. More accurate forecasting of license needs post-M&A supports strategic planning to avoid excess expenses or shortages impacting project delivery.

In general, these economic pressures point to the importance of right-sizing software licenses to current staffing. The financial impact is significant, as studies show that about 30% of software spending can be wasted on unused licenses. Effective license management during workforce changes and M&A not only controls costs but also safeguards productivity and compliance, making it a vital practice in turbulent economic times.

Right-sizing these licenses, ensuring the optimal number and type of licenses without excess or shortages, can lead to substantial cost savings while maintaining productivity. TeamEDA’s License Asset Manager with Usage Monitoring (LAMUM™) provides the visibility needed to assess current license inventory, analyze usage trends, and forecast future needs. By understanding past and current demand per engineer, organizations can make data-driven decisions to right-size their license portfolio now, six months, and a year into the future. LAMUM offers features to monitor denials, identify inefficiencies, and improve engineer productivity, potentially saving 15–25% annually.

This white paper outlines key considerations and best practices for right-sizing engineering software licenses using LAMUM.

Key Considerations for Right-sizing

Right-sizing engineering software licenses requires a comprehensive understanding of several factors to ensure cost efficiency and operational effectiveness. LAMUM provides detailed insights into the following areas:

Current Inventory

Tool Cost per Seat: Understand the cost per license for each tool, which varies significantly (e.g., CAD at $5,000–$10,000, CAE at $10,000–$20,000, EDA at $20,000–$50,000).

Restriction Types: Identify whether licenses are WAN (wide area network), LAN (local area network), or node-locked, as these impact cost and usage flexibility.

Responsible Personnel: Track who manages specific licenses to ensure accountability.

Number of Engineers

Usage by Application: Determine which engineers use specific tools and their average checkout times to calculate the number of seats needed.

Staffing Trends: Assess whether the number of engineers is increasing, decreasing, or stable, and align with management’s staffing plans.

Restrictions and Permissions: Use option files to control access and prevent unauthorized usage.

License Servers

Server Count and Locations: Identify the number and locations of license servers, along with their system administrators.

Daemon Consolidation: Explore opportunities to consolidate daemons across servers for efficiency.

Questions to Address

What applications are required, and how many licenses/seats are needed?

What restriction types (LAN, WAN, node-locked) are optimal?

Can existing licenses be used more efficiently to reduce denials?

Are there unused tools that can be eliminated?

Is server consolidation feasible to streamline operations?

How can better vendor deals be negotiated?

LAMUM provides detailed reports to answer these questions, enabling organizations to optimize their license inventory and reduce costs.

Vendor and Budget Management

Effective right-sizing requires proactive management of vendor relationships and budgets. LAMUM supports this process with the following features:

Vendor Information

Renewal Dates: Track renewal dates for each vendor to ensure timely preparation, typically requiring 3–4 months of usage data (e.g., start collecting data by September 1 for a January 1 renewal).

Vendor Contacts and Contracts: Maintain a centralized repository of vendor contacts, contracts, and negotiation history/strategy.

Remix Opportunities: Identify vendors offering quarterly or annual license remixing to adjust inventory based on usage data.

Budget Management

Annual Budget: For 100 mechanical engineers, the average annual spend on CAD/CAE/PLM tools is approximately $250,000. LAMUM tracks budgets by vendor and cost per seat.

Historical vs. Actual Spend: Compare historical budgets with actual usage to identify trends and savings opportunities.

Prioritization:

High-Cost Licenses: Focus on controlling checkout times and preventing hoarding for expensive tools, especially WAN/global licenses.

High-Quantity Licenses: Balance quantities and license types across servers to optimize usage.

High-Demand Licenses: Monitor contention to ensure availability.

LAMUM’s chargeback reports allocate costs by engineer or group, providing transparency and supporting budget optimization. By identifying surplus licenses and minimizing denials, LAMUM can save 15-25% of licensing costs.

Usage Monitoring and Optimization

Understanding license usage is critical for right-sizing. LAMUM provides an extensive suite of tools to monitor and optimize usage, ensuring efficient allocation and improved productivity:

License Hoarding: Identifies engineers holding licenses longer than necessary, with Long Checkout Alerts to address excessive checkouts.

Average Checkout Time: Tracks the duration licenses are held for informed allocation decisions.

Concurrent Users: Reports the average number of concurrent users over specified periods (e.g., 7, 30, 90, 180, or 360 days, or year-to-date).

Peak Concurrent Demand: Analyzes peak usage to determine capacity needs.

Checkout Patterns (Heatmap): Visualizes usage trends to identify high-demand periods.

Denials (True vs. False): Distinguishes between true denials (no licenses available) and false denials (e.g., server-specific issues) to assess acceptable denial probabilities (recommended at ~5%).

Zero-Use Report: Identifies unused licenses, which can lead to significant savings by eliminating unnecessary seats.

Power Users: Flags heavy users of expensive WAN/global licenses to optimize allocation.

Engineer Productivity: The Available License Alert notifies engineers when licenses become available, reducing wait times and boosting productivity.

Usage Reports

LAMUM offers a variety of reporting options:

Current Checkout Reports: Provide real-time data on capacity usage and long checkouts.

Historical Usage Reports: Assess trends and peak usage over periods like the last 7, 30, 90, 180, or 360 days, or year-to-date, available as interactive, on-demand, or batch reports in graph or table formats.

Customizable Views: Allow managers to select specific tools, time periods, or engineers for detailed analysis.

By monitoring usage and denials, LAMUM helps organizations tighten inventory, negotiate better vendor deals, and prepare for renewals. For example, 3–4 months of usage data enables informed negotiations, potentially saving 15–25% annually. For an organization with 100 engineers spending $250,000 per year on licenses, LAMUM’s $7,000 cost can yield savings of $50,000 or more.

About TeamEDA, Inc.

TeamEDA, Inc., headquartered in Derry, NH, specializes in integrated software licensing management for engineering applications. With its proprietary License Asset Manager with Usage Monitoring (LAMUM™), TeamEDA delivers a best-in-class solution that optimizes license usage, reduces costs, and enhances productivity. TeamEDA offers consulting services to support right-sizing efforts and ensure organizations achieve maximum value from their engineering software investments. Learn more at teameda.com.