Why Cisco Customers Should Embrace New Smart Licensing

PRODUCT REVIEW: Cisco’s new Smart Licensing simplifies the process of purchasing, upgrading, tracking and licensing infrastructure.

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The network infrastructure market has changed a lot over the past decade--not just the vendor landscape, but also in how products are made. Years ago, the majority of innovation on routers and switches was done in hardware with a little software sprinkled in for management.

Today, the market has flipped 180 degrees as more and more software innovation comes to the fore. This has been fantastic for customers, because new features are being delivered more often, enabling businesses to do more with their infrastructure.

Managing software licenses is a headache

One aspect of networking that hasn’t changed much is the way products are purchased. The existing model of licensing infrastructure has been the same for decades. A business buys a router, switch or server in a perpetual model, in which the company owns the hardware and software until the product needs a refresh. At that time, the company must purchase new hardware and software, and then the cycle repeats itself. Although this has been the standard for decades, it isn’t perfect and has a number of limitations. Among them:

  • Poor visibility into what has been purchased. Tracking licenses without a high-end inventory management system can be nightmare, because there are multiple ways to license software including per-user, per-device, per-core, per-memory or other. Understanding what has been deployed and where is virtually impossible. The problem is fairly widespread; ZK Research estimates that only 35% of companies have the tools to properly meter software usage.
  • Software is often tied to a person or device. The registration process for Cisco Systems devices is tied to the engineer who owns the Cisco Connect Online (CCO) account. There are some devices that can have designated owners, but in either case, if the organization upgrades a device, a new license must be purchased.
  • Complexity of ordering and managing licenses. The lack of clarity into what has been purchased and the ad hoc manner in which licenses are tracked make it very difficult for companies to understand what else needs to be ordered. Companies face a difficult choice: risk non-compliance or overspend. ZK Research found that about 70% of businesses have been audited by a software vendor in the past 12 months. Fear of an audit combined with uncertainty regarding what has been purchased has caused organizations to exceed their software budget by an average of 28% annually.
  • Manual management is impractical. One method of tracking licenses, hardware and license agreements is to load up on people. This obviously isn’t practical as infrastructure is often specialized, and businesses must frequently call upon subject matter experts to understand why things were purchased.
  • Activation keys limit flexibility. The use of activation keys is common in the software industry. They were designed to prevent unauthorized use of software and have accomplished that goal. However, because the activation keys are tied to a specific product, their flexibility is limited, because upgrades or new purchases often require an upgrade of the keys.

Cisco Systems wants to make it easier to work with them

When Chuck Robbins took over for retiring John Chambers as CEO of Cisco in May 2015, he promised to make the company easier to work with, and that includes making it easier to buy its products. The company has recently revamped the entire software licensing process. The program, Smart Licensing, takes a bold step and moves away from the legacy product activation keys (PAK) licenses to a new model that makes the process agile, fast and efficient.

Smart Licensing is a “game changer” for Cisco customers

Smart Licensing changes the way software licenses are managed across all Cisco product families. It’s not designed to be another traditional licensing system. Instead it should be thought of as a software asset management system in that licenses are not installed on the individual products. Instead, licenses are pooled and individual devices use whatever licenses they need.

Cisco’s Smart Licensing is more flexible than traditional models and simplifies the way IT pros activate and manage licenses across the company. This new approach streamlines the way businesses procure, deploy and manage Cisco software licenses, enabling them to maximize investments. The information provided by the Smart Licensing portal gives Cisco customers and its reseller partners the data to make educated decisions about current usage and future investments.

Many differences between Smart Licenses and older licensing models

  • Knowledge: Traditional licensing methods involve using spreadsheets or homegrown tools, thus customers rarely understand what they own. With Smart Licenses, all Cisco software, services and devices are available via a portal.
  • Registration: Activation keys require each device to be registered manually. With Smart Licensing, the concept of the PAK has been eliminated, and the products self-register.
  • Ownership: Traditional licenses are device-specific, so there must be one license per device. Smart Licenses are flexible and pooled, which means they can be moved around to different devices and can be redeployed. The concept of pooling is what gives customers the required agility to deploy new products and services without having to worry about license compliance.
  • Flexibility: Traditional licenses only provide access to devices that have been paid for. Smart Licenses enable customers to “burst” and temporarily overuse the software, allowing licensing issues to be resolved later.

The reporting of license information back to Cisco is done in multiple ways to meet specific compliance and security requirements. The default is direct cloud access where Cisco sends usage data over the Internet to Cisco’s cloud. This is the simplest model as there is no infrastructure to purchase. A more security-focused company can choose either an on-premises license server that syncs with Cisco.com periodically or manually or full offline access, where a manual cut and paste is done between the local server and cisco.com. This option is most useful when there is no direct Internet access.

Customers will realize many benefits of Smart Licensing

With Smart Licensing, customers are no longer beholden to refresh cycles or big penalties for non-compliance. Once the transition to the new program is made, the following benefits will be realized:

  • Real-time visibility of Cisco software license ownership and consumption;
  • Improved asset utilization from centralized visibility;
  • Reduction in the cost of license management;
  • License flexibility, because they can be grouped by business unit, geography or other category;
  • Informed decisions around when to upgrade, refresh or replace; and
  • License portability, which enables licenses to be moved within the customers installed base of equipment. This includes replacement hardware that is RMAed.

The digital business era has arrived, and it’s putting a premium on agility. However, companies are only as agile as their IT infrastructure lets them be. Historical license models make IT infrastructure very rigid causing companies to possibly miss out on a new opportunity. Cisco Smart Licensing helps customers better manage their infrastructure by enabling businesses to purchase the right software capabilities to address their needs today while offering a flexible model to meet the unknown demands of tomorrow.

Zeus Kerravala is the founder and principal analyst with ZK Research. He spent 10 years at Yankee Group and prior to that held a number of corporate IT positions.