License to profit

By Guy Haas |  No Comments  |  Posted: December 1, 2008
Topics/Categories: EDA - IC Implementation  |  Tags: ,


Guy Haas

Managing EDA software involves more than monitoring and studying usage across various tools and features. An effective approach will help the enterprise reduce engineering software costs, reach better and more informed business decisions, become more responsive and ensure compliance with software licenses. To understand how to develop such strategies, we need to look at the various components in an EDA software management chain.


These come in many types and forms (e.g., concurrent/networked, pay-per-use, node-locked, user-locked, shrink-wrapped, dongle-keyed, etc.). There is also a movement away from single-user licenses to shared licenses, managed through programs such as FLEXnet Publisher and Rational ClearCase. Shared licenses have numerous flavors (e.g., LAN, scaled LAN, WAN, scaled WAN and combinations thereof). From the simplest user-locked license right up to the most extensive global WAN option, a wide range of prices applies. Managers want to organize these options so that they assemble the most economical mix of licenses across the company, according to project requirements.


There are hundreds of vendors each offering multiple tools, more than 100 per company among the very biggest players. Tool expenditure is thought to run at around 1-1.5% of sales for a high technology company, and EDA seats can often run to tens of thousands of dollars.

Each vendor relationship comprises a set of very specific elements. The most obvious are personal contacts (sales rep, application engineer, etc.) and personal business styles, but they also include license keys, daemons, file formats, ‘throw-ins’ and so on.

Again, in pursuing that optimal tool mix, questions immediately arise as to how to manage the vendor data (e.g., vendor-by-vendor or purchase order-by-purchase order?), who has control over it (if large chunks are held by individual employees, what then happens if they leave the company?) and where it resides (centralized access or scattered across the enterprise?).


Increasingly strict accounting practices and copyright law—not forgetting the requirements, where they apply, of the Sarbanes Oxley legislation—have increased the frequency with which vendors or internal finance departments are auditing users. Research suggests that the annual percentage of audited users may now be as high as 20%, with the consequences for failing an audit ranging from the embarrassing to the extremely expensive.

Key questions asked in any compliance exercise include:

  • Does the quantity in use match the quantity purchased?
  • Does the license key contain access to all the features purchased and in use?
  • Do expiration dates on the keys match those in the original purchase orders?
  • Do usage terms and restrictions (e.g. LAN, WAN, single-user, multiple-user, etc.) match those in the purchase order and the license agreement?
  • Are cost centers accurately charged?
  • Are the bill backs for usage accurate?
  • Is an approved and up-to-date version of the software in use?
  • Are the terms and conditions of the licenses and agreements being met?

Compliance is a process full of pitfalls and needs to be tightly controlled.

License agreements

Whatever terms of use are agreed upon for a software tool, the purchase takes place on a ‘right to use’ basis. The user is bound to a license usage agreement that is accepted either by a click-through or by signing a contract.

Shared schemes usually have a signed license agreement that defines how, where and when the software can be used, reporting requirements and the rights of both customer and vendor. It can have several parts (e.g., a subscription agreement, perpetual agreement and a maintenance/support agreement), and both sides may also need to sign a nondisclosure agreement.

A big problem, common to companies big and small, is that the engineering managers and IT managers—the people who use and oversee the software most regularly—have not read any of these documents, even though they should have some idea of their content and be able to access the information quickly and easily. If that access is not in place, executive management should be worried.

Subscription licensing

The traditional sales model for engineering software was a perpetual license accompanied by a renewable maintenance agreement. However, vendors have more recently sought to promote time-based subscriptions. These provide better cash flow for the software company and more flexibility in terms of the tools roster for the user. This model means that companies need to monitor expiration and renewal cycles closely—otherwise tools can suddenly disappear off the network.

Purchase orders

The purchase order (PO) is the point at which the software is ordered by the user—notwithstanding the stop-gap use of ‘temp’ licenses. This is where the user can best benefit from drawing together what he knows about various aspects of the vendor relationship (e.g., what is the negotiating style? what kind of discount is available? etc.). At the same time, some insight into tool usage will also be invaluable.

Team EDA

FIGURE 1 License management revolves around purchase orders

However, many of those involved in the actual use of a tool know little about (and contribute little to) the content of the PO. As we now look to build strategies that draw together these elements, we need to stress that the PO stands at the front-end of any real license management system (Figure 1, p. 12) and needs to be based on broad participation and contribution.

Use metrics

A lot of emphasis is placed on usage numbers. Unfortunately, common analysis tools tend to track every feature across every license key. But while a tool might have 10-15 features, its value can be assessed by following only one or two of these that are intrinsic to its function. Also, what do you really need to know (e.g., frequency with which tools are accessed, when and for how long)? Control the volume of data being generated.

Cost minimization

We have looked at the various elements. Let’s draw them together. Achieving the best mix of tools, getting them in the right quantities and on the right license terms, depends on five factors:

  1. Application cost.
  2. Project priorities and timescales.
  3. The location of heavy users.
  4. Overall usage patterns.
  5. Workload trends.

Figure 2 shows a typical schema for purchasing licenses. It suggests the use of node-locked agreements for heavy users, LAN for expensive but locally shared software, and WAN for tools accessed at multiple locations. The purchased quantities can be refined as formulae:

LAN quantity = # of engineers on LAN x (average hours used per week/40-hour week) x 50%;

WAN quantity = # of engineers on WAN x (average hours used per week/40-hour week) x 25%.

One scenario might be to have node-locked and LAN licenses that meet 80% of demand for 80% of the time, backed up by one or two WAN licenses for peak access periods. This assumes that some denials of access are acceptable.

Combining the management elements

Having set this as your strategy, how can you automate this process in a structured management approach? In my view, six activities are fundamental.

  1. Reduce license asset costs by (a) knowing what assets you have and where they are located, (b) equipping yourself to start license renewal activities early and thereby secure the best price, and (c) knowing how to have licenses you can shift around the organization on an appropriate basis to meet demand.
  2. Know when license keys will terminate and work to ensure uninterrupted service.
  3. Maintain records of license expenses alongside details of previous negotiations to get an early insight into future deals.
  4. Ensure license compliance by giving all those involved in managing tools access to the terms, conditions and other agreements governing their use.
  5. Put critical information into a centralized system, so that access is simple and the departure or absence of staff does not remove a whole block of knowledge.
  6. Preserve contact information in a centralized database.

Match these features to the strategy described above and the return-on-investment can be measured in weeks rather than months or years. Yes, we do have our own product in this space—License Asset Manager—but the more important message here is that the principles behind an effective strategy are constant.

Team EDA





Low-cost applications

Heavy usage, multiple platforms


Heavy usage, single platform


Time-sensitive, critical path access


High-cost applications

Power users < 3


Heavy usage, local site


Moderate usage, local site


Moderate usage, multiple sites


Light usage, local site


Light usage, multiple sites


Back-up for peak loads


(S = Subscription, P= Perpetual)

FIGURE 2 Schema for purchasing licenses

Guy Haas is founder and president of Team EDA. More information about its software and services can be found online at

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