98 CHAPTER 6: MANAGING SOFTWARE (AND CHANGE) ■ Changing Methods First things first. When you budget for software, be it new software or upgraded soft- ware, the only reason you do so is that you expect better software in return for the money you spend. If you haven’t thought about software this way before, I can guar- antee that your management does—so it behooves you to consider this perspective. When you get a new software package, whether on subscription or not, one of the following things must be true in order for you to undertake the time and expense of purchasing and installing it: • Existing work tasks should get easier. • Old bugs should be fixed to allow better/faster operation. • New features should allow you to design better/faster. • New methods (like transitioning from 2D to 3D design) should create radically more efficient design processes. The interesting point about all these factors is that they will change how your users work with their software. In essence, the new software you install will force people to learn new things and will jolt them out of their comfort zone. The conclusion I draw is that managing software is really about managing changes in how you design and use software. And managing that change is never easy. Figure 6.1 Change people’s software,and you change how they work.They may not like the change.How will you manage the change process? 16531c06.qxd 3/19/07 1:42 PM Page 98 99 ■ UNDERSTANDING SOFTWARE LICENSING Also note that this change has to happen quickly in order for it to make finan- cial sense. You not only have to change how people work, but you must do so quickly and with an accountant looking over your shoulder. No wonder getting new software installed is so hard! Throughout this chapter, I’ll make references to how wrenching software change can be from the perspective of users (training), senior management (cost and return), and the CAD manager (juggling all the factors). I’ve presented this section on change first in hopes that you’ll keep it in mind as you read. Understanding Software Licensing CAD software is expensive, and it plays a key role in how your company functions, so it makes good business sense to do your homework and squeeze every bit of cost per- formance you can from your software. But before we talk about how to stretch your software purchasing dollars, you need to understand how software licensing works. In this section, I’ll take you through a comprehensive explanation of software licensing and what it means to your business. I’ve found that CAD managers with years of experience often don’t understand how licensing works and thus don’t know how to explain it to their management teams. Take a while to read this section, and make sure you understand it before moving on. It’s Not Really Your Software The perception that you purchase software and elect to upgrade it every so often was first brought to bear with early PC software titles like dBase, WordStar, and Lotus 1-2-3. In those days, we did purchase our software with perpetual rights, and upgrades were offered periodically by the software manufacturers. The software manufacturers sold us software and hoped that we’d upgrade as new features were created and released. In the early years, when new features abounded and bug fixes were fast and furious, upgrading was a no-brainer. Methods have changed, and now a software purchase isn’t a purchase at all but rather a complex leasing arrangement. Read through the licensing terms of almost any piece of software, and you’ll see that the software remains the property of the software company; you have merely acquired the right to use it under the software company’s list of conditions. Note: Installing software is easy.Changing how people use software is hard. 16531c06.qxd 3/19/07 1:42 PM Page 99 100 CHAPTER 6: MANAGING SOFTWARE (AND CHANGE) ■ The first thing companies must be aware of is that because the software isn’t yours, it isn’t an asset that has value: It’s money spent that can’t be recovered in any way other than utility usage of the software product. It’s Really a Lease Because acquiring a software license doesn’t give you ownership of any tangible asset, you’re leasing (a glorified word for renting) the software. To drive home the point of how software licensing is like a lease from a financial standpoint, let’s consider an example of leasing a car and compare it to a CAD software license. You may be sur- prised to learn that the software you thought you owned is really yours to use under a highly restrictive lease. A Leasing Analogy When you lease a car, the following lease components are almost always present: • A lease inception fee (down payment) is collected that is usually equal to about one year of lease payments. • A payment schedule is agreed to (typically monthly) for a set duration of the lease term (usually several years at minimum). • A maximum usage rate is agreed to (a certain number of total miles on the car) over the life of the lease. • A buyout price is agreed to so that at the termination of the lease, you may elect to purchase the car for the buyout price if you choose. Worth noting is that almost all car leases give you the power of ownership at the end of the lease so that you can choose to purchase the car, trade it as collateral for another car, or turn the car back in lieu of paying the buyout price. In all cases, the Figure 6.2 You can usually find the terms of your end user software agreement (EULA) under the Help > About menu of most CAD applica- tions.The EULA spells out what you can and can’t do with your software. 16531c06.qxd 3/19/07 1:42 PM Page 100 101 ■ UNDERSTANDING SOFTWARE LICENSING option of how to transfer ownership of the car at the end of the lease is up to you, the lessee. During the span of the lease, how you use the car is up to you as long as you meet the financial terms at the end of the lease. The car company won’t tell you how to drive the car, who you can drive in the car, or where you can take the car. In general, a car lease is a financial agreement that serves the interests of both parties and protects the rights of both parties. Now, let’s contrast a software license to the car lease example to see just how restrictive the software license is. How Software Compares A software license begins with a lump-sum fee like the car lease, although software inception fees are usually equal to about five years of lease payments (called subscrip- tion or support in the software business) rather than a single year of payments as is customary with a car. Whether you decide to pay for the subscription service is up to you in theory; but in reality, the pricing policy of most software vendors now makes it punitively expensive not to do so, because the software company can make your license non-upgradeable at any time they choose. For example, Autodesk’s present policy states that software older than three releases is considered old enough to be non-upgradeable unless you pay a renewal fee that is much higher than paying the software subscription in the first place. So, although software subscriptions in the CAD business are said to be optional, the financial reality is that they aren’t, unless you want to risk letting your software licenses lapse. Software licenses are said to be perpetual in that as long as you pay the subscrip- tion fee to keep your license current, you can retain the software forever. However, close examination of the software license agreement shows that the software company is under no requirement to keep the software in production or even to deliver timely updates in exchange for the subscription fees you pay. There is no “end of lease,” so there is no buyout option. Licensing Limitations As you examine the software license agreement for your CAD software, you’ll likely find a number of other usage restrictions. To make sure you don’t inadvertently violate your license agreement, I highly encourage you to read your EULA. I’ll highlight some items you should evaluate carefully: Geographic usage restrictions Think you can use your U.S./Canadian software in another country? You may not be able to. Because software companies don’t want their software taken to countries where it can be pirated without any chance of prosecution, their license agreements often preclude you from using their software in other countries. We have non-enforcement of patent and intellectual property rights in the Far East, specifi- cally China, to thank for these sorts of restrictions. 16531c06.qxd 3/19/07 1:42 PM Page 101 102 CHAPTER 6: MANAGING SOFTWARE (AND CHANGE) ■ Software audits Your license may grant the software company certain rights to audit your compliance with their usage terms by specifying the ability to search company property or by making you subject to the site visit and license auditing terms of the Business Software Alliance (BSA), which many CAD software developers are members of (along with Adobe, Intuit, and Microsoft). Transfer of license Think you’ll be able to move a software license to a sister company or subsidiary in case bankruptcy or corporate reorganization requires it? Your software license may preclude such transfers and almost always requires written permission from the software vendor. Resale of license Think you can put an old copy of AutoCAD on eBay and sell it? Every EULA I’ve seen specifically precludes resale of your software license. Remember, you don’t own your software; you’re just leasing the right to use it. And because leasing terms are set by the software company, they can preclude you from selling your license. When you finish reading your software EULA terms and think about the stream of money your company pays to retain a software license, you have to conclude that software licenses are extremely restrictive rental agreements with few protections for you, the customer. Purchasing Software What the lawyers take away from us in the form of restrictive software licensing docu- ments, technology can partially restore via licensing technology. With reliable networks, Internet purchase validation, and remote activation technology, you can make a smaller number of software licenses serve more people and thus keep costs down. It’s impor- tant to note that each software vendor has their own preferred licensing schemas and enforcement mechanisms, so you’ll need to do your homework for each software ven- dor you purchase from. The key vocabulary words to examine in licensing schemas vary from manufac- turer to manufacturer but can generally be described as follows: Standalone, activated license A standalone, activated license is a licensing schema for a single copy of software that is restricted to use on one computer. After installation, the software is activated, typically via the Internet, and the software’s serial number is associated to machine biometrics like the operating system serial number or even the hard drive’s formatted volume serial number, which is then tracked. The activated license schema, currently utilized by manufacturers like Adobe, Autodesk, Intuit, Microsoft, and Symantec, has made it impossible for the CAD man- ager to install a single copy of software on multiple machines, because the activation technology allows only a metered number of activations to be performed. There was substantial resistance to activated license schemas when Intuit and Microsoft started the trend, but activation technology is now standard throughout the industry. 16531c06.qxd 3/19/07 1:42 PM Page 102 103 ■ PURCHASING SOFTWARE Figure 6.3 Simple networks like the one shown here can use standalone, multi-seat, or even network licensing mechanisms with equal ease.Cost and ease of administration are the deciding factors. Multi-seat standalone A multi-seat standalone license is a licensing schema for a single serial number of software that can be used on multiple machines as dictated by the number of licenses purchased. After installation, the software is activated, typically via the Internet, and the software’s number of available licenses is lowered by one. Autodesk, the maker of AutoCAD, introduced this hybrid combination of a single serial number with multiple product activation keys, and the practice is now becoming more common for companies that use large numbers of CAD licenses. With a multi- seat standalone license, the CAD manager can install the same software serial number via a network and activate it on any number of machines without messing with net- work license manager utilities. Named user network This installation method uses network-based tracking compo- nents that require a copy of software to be purchased for every user on the network. Each user who ever logs in to the software is a billable seat of software. Note: Named user licensing isn’t as common in the PC CAD world but is common for Product Lifecycle Man- agement (PLM) and Engineering Data Management (EDM) software tools.This is the least cost-effective way to deploy software because it has all the costs of standalone with all the hassles of network licensing utilities. Note: For CAD managers with many full-time CAD users,this method gets you back to the good old days of easily installing a single software package over multiple machines. Network Server CAD Workstation CAD Workstation CAD Workstation CAD Workstation 16531c06.qxd 3/19/07 1:42 PM Page 103 104 CHAPTER 6: MANAGING SOFTWARE (AND CHANGE) ■ Concurrent/floating local network This type of network-aware installation tracks the number of users simultaneously logged in to the system. The global number of users of the software is irrelevant; only the maximum number logged in at any given time is billable. This is the most cost-effective mode of licensing for most corporate users. Concurrent/floating WAN network This approach is essentially the same as the local network option but is enabled to work across wide area networks (WANs) so that licenses can be shared by offices in different buildings, cities, or even countries in some cases. Most software products that support WAN network deployment require licens- ing software to be installed on multiple servers and, as such, are more IT intensive than other licensing options. If the economy of sharing licenses between multiple locations balances the IT overhead, this licensing option can be a great alternative. License borrowing An increasingly common adjunct to concurrent network schemas, a license-borrowing utility allows you to take a shared license out of the concurrent pool and place it onto a single workstation or mobile computer for dedicated use. Autodesk network licenses, which use Flexible License Management (FLEXlm) technology from Macrovision, offer license borrowing. Figure 6.4 WANs can take advantage of wide area network licensing and can enable laptop or relocating users via license-borrowing techniques. Note: Not all software products support this type of architecture, and several CAD products I’ve received specifically prohibit such license sharing.Read the fine print on the EULA of any software you plan to purchase. Note: For CAD managers with many casual CAD users,the concurrent network licensing schema offers real cost benefits, because licenses can be shared. Although some network overhead is introduced, the cost benefits typically outweigh the hassle. 16531c06.qxd 3/19/07 1:42 PM Page 104 105 ■ PERFORMING UPGRADES Informing Management Now that you have a working knowledge of how software licensing works and how to get the most for your licensing dollar, be sure to discuss these issues with your manage- ment team. It’s been my experience that senior management teams are unaware of how little control they have over corporate software licensing terms and costs. None of us, CAD managers included, can continue to be ignorant of software licensing issues. I believe CAD managers will have to become much more aware of software pricing policies and EULA terms in order to keep management aware of the true cost of software leasing and to ensure that usage terms aren’t violated. Be prepared to jus- tify software purchases and upgrades not only on features and ease-of-use metrics but also in terms of restrictive licensing and financial conditions. Performing Upgrades In my early days as a CAD manager, I remember the Christmas-morning feel of getting the latest AutoCAD release and seeing how fast I could get it installed. Rapid upgrad- ing was justified in the old days when CAD programs experienced massively upgraded feature sets on a 12- to 24-month basis. These days, the metrics of upgrading are more complex, and the enhancements to the software are much more subtle. Consequently, the most common question I’m asked when a major software package comes out is, “Should I upgrade to this version?” I can’t answer the upgrade question with a simple yes or no, but I can give you a benchmark by which you can make smart decisions on your own. What’s required is a methodology you can use to analyze the upgrade process to make a business decision about when to upgrade. Everything I’ll discuss is applicable for AutoCAD, MicroStation, SolidWorks, or any other software package you care to analyze. Understanding the True Cost The root of any upgrade decision should be an analysis of the relative costs and ben- efits involved. As a CAD manager, I find it easy to get caught up in the coolness of a new release, but I’ve learned to force myself to be more business focused about the upgrade decision. I’ve also learned that what I think of as upgrade costs and what upper management thinks can be two very different things. For the sake of making sure you’re on the same page with management, I’d like to run through a listing of the costs associated with a typical upgrade and give you some brief background on each: Software cost This cost can be either an annualized subscription or a one-time upgrade fee. Either way, you need to account for the actual cost of procuring the upgraded software. CAD management and IT This is the amount of time you and your information tech- nology (IT) department will spend investigating, implementing, and supporting the 16531c06.qxd 3/19/07 1:42 PM Page 105 106 CHAPTER 6: MANAGING SOFTWARE (AND CHANGE) ■ upgrade. Some companies consider this a normal part of your job; other companies don’t. Either way, I find it useful to estimate the time required. You can convert this expenditure of time to a dollar figure by using an hourly rate for the involved personnel. User training expenses Expenses here include books, tuition, in-house training sessions you have to create, and so on. This is an easy cost to miss, and it can really add up if you’re training a lot of people! Loss of user productivity This cost is something management cares a lot about. You need to be as honest as you can in tallying lost work time for each user as they train and ramp up to speed with the new software. Remember that users may not come to a halt while learning new software, but they will be less productive until they acclimate, and management will notice this lost productivity. Again, convert the loss of productive time to dollars by using the employees’ hourly rate. Support expenses Will you need help from an external consultant or reseller? Will you have to spend a lot of otherwise billable time supporting users during the upgrade process? Will you need to spend time implementing new standards necessitated by the new software? If you answer yes to these questions, then you have to account for the expenditure. Be honest when tabulating these costs, and don’t scrimp: Few things doom an upgrade more than insufficient user support during rollout. Computing the Benefits Once you’ve tabulated the costs associated with an upgrade, you can proceed to the identification of benefits and decide if the expenses of upgrading can be justified. Historically, these are the major areas of benefit offered by upgraded CAD systems: Increased productivity Does the upgraded software offer new benefits that your com- pany/users can leverage to save time on a daily basis? Will you be able to get more work done with the same staff using the new software? If so, how many hours per month would you estimate that you can save or gain? Convert the time savings to a dollar basis by multiplying saved hours per year by the users’ hourly labor rate. Bug/error reduction Did any problems and/or bugs with the last software version cause your company heartburn? If so, have these problems been fixed in the latest version? Try to estimate the annual savings as outlined previously. Compatibility with collaborative partners If you work with outside vendors, customers, and so on, will the new software version help you do so? If so, try to estimate the sav- ings you could achieve on an annual basis. You’ll have to use a gut-feel approach in this area, but it’s better to make an educated estimate than to have no idea when man- agement asks about your assumptions. Note: For a detailed look at costs and ROI methodologies, see “Using ROI Metrics”in Chapter 7. 16531c06.qxd 3/19/07 1:42 PM Page 106 107 ■ PERFORMING UPGRADES Making the Decision You should now have a detailed list of costs and benefits that can be weighed against each other to justify (or not justify) upgrading your CAD software. By focusing on the metrics of cost and benefit, you avoid the “new software is cool” trap and focus on what management cares about—return on investment (ROI). For example, suppose your savings are computed for a full year, and the costs you’ll absorb to upgrade will also be realized in the first year. You’ll be able to compute an ROI value for the first year of the new software’s lifespan. Figure 6.5 There’s no shortcut to pursuing upgrades.You need to spend time with the software,list your findings, and crunch the numbers to make a good decision. The basic rule of determining ROI is to divide savings by cost and multiply by 100 to achieve an ROI percentage value. The ROI value for software upgrades typi- cally has to come in at 66 percent so that the cost savings you generate cover the cost of the software upgrade in the first 18 months of use (which is, not coincidentally, gen- erally the upgrade period observed in industry). ROI values lower than 66 percent are typically rejected, and you’ll need to wait until the next upgrade cycle to analyze the problem again. It isn’t easy to achieve a 66 percent ROI with a CAD upgrade, by the way, which explains why there are so many old CAD licenses floating around! You have to understand management’s mindset that a CAD program typically has only a 1- to 2-year lifespan and thus must be able to pay for itself quickly. It’s now your duty to present your ROI findings, good or bad, to senior manage- ment and obtain their approval before proceeding with your upgrade plans. By present- ing an ROI analysis, you give full disclosure to management and insulate yourself from 16531c06.qxd 3/19/07 1:42 PM Page 107 [...]... Projects like the Great Pyramids, Rome, the dikes of Holland, and the early space programs illustrate what can be done with paper-based 2D design methods Although the 2D tool of choice is no longer the pencil but CAD software like AutoCAD or MicroStation (to name the two most common options), the end result—a 2D drawing—is still the same Upper-level engineering management learned on 2D CAD or drafting... to form the basis for training guides For more information, see Chapter 5 1 653 1c06.qxd 3/19/07 1:42 PM Page 111 Debrief users You can make use of lunch breaks or quick CAD debrief meetings to gather user input, answer common questions, and plan for the following day These quick sessions (no more than 15 minutes) should expose common questions and trends that could become large if not detected These... upper management won’t accept the lag in productivity associated with learning new software, it’s better to know about it earlier than later 1 653 1c06.qxd 3/19/07 1:42 PM Page 1 15 The good news is if you’ve made it this far into the process, you’ve got upper management s attention, and you know they’re interested The bad news is that you’ll have to assess your staff and be sure you can make the transition... G E ) ■ Place all the tasks you can’t complete (server upgrades, operating system upgrades, and so on) in another column 5 6: Rewrite the list with all the tasks you can do (fix template files, update standards, and so on) in one column 4 CHAPTER Rewrite the list in the order the tasks must be tackled (note any tasks that can happen in parallel; otherwise, write the list sequentially) 3 118 Create a... is probably the most multifaceted part of the CAD manager’s job precisely because software directly affects the users’ ability to get their job done Along the way, software requires budgeting, planning, senior -management interaction, and the hard work of software implementation But before you feel overwhelmed, remember that if CAD software were easy to run/use, your company wouldn’t need a CAD manager... statements demonstrate the conceptual overview of your move to 3D and show management that you have a clear value concept On the other hand, if the architect is doing basic remodeling jobs where 2D drawings of walls and doors are the only project drawings, you may not need 3D It could be impossible to justify the training and lost productivity costs because there are no clear benefits to using the 3D features... providing an ROI-based example, management will still be reluctant to allocate the funding required At this stage of the process, you need to understand whether the level of investment will be evolutionary or revolutionary in scope Let’s say a robotics design firm using AutoCAD wants to jump into 3D design methods: Will they go to Autodesk Inventor, or will they want Pro/ENGINEER? The move to Inventor would... your answers during the previous phase If an evolutionary path is followed (like AutoCAD to Inventor), then training can be minimized but will still be required The main thing to plan for in addition to the costs of training is the lost productivity time that will be the result of the learning curve Even if you feel that accounting for lost productivity may reduce your chances for management acceptance,... Chapter 5 Closing Thoughts I’ve used the techniques presented in this section to guide me through upgrade scenarios since my first CAD management job in 1989, and they haven’t failed me yet If you analyze a CAD upgrade based on what it can do for your company and keep the costs down enough to yield a good ROI value, you’ll be well served when you upgrade If you do upgrade, take care to avoid the upgrade... trained and developed in house Sometimes the training and internal development merely educates staffers who then leave for better pay somewhere else During this phase, you need to be realistic and gauge whether upper management will pay for the talent you’ll develop or need to hire If management expects to have a high-end 3D CAD design department, they’ll have to pay the higher salaries required to retain . of the car at the end of the lease is up to you, the lessee. During the span of the lease, how you use the car is up to you as long as you meet the financial terms at the end of the lease. The. at the termination of the lease, you may elect to purchase the car for the buyout price if you choose. Worth noting is that almost all car leases give you the power of ownership at the end of the. can be either an annualized subscription or a one-time upgrade fee. Either way, you need to account for the actual cost of procuring the upgraded software. CAD management and IT This is the amount