ITS to Save $700,000 Through New Licensing Agreement

Sep 19, 2019

Iowa State University Information Technology Services (ITS) will save nearly $700,000 in operational costs over the next five years by switching to a new licensing agreement with multinational technology company Cisco Systems. 

The new Cisco Licensing Enterprise Agreement alters how ITS licenses network switches and wireless access points, which provide internet connections to university facilities. Under a previous agreement with Cisco, ITS purchased and paid for each license or piece of equipment as the need arose. The new license grants ITS permission to use both Cisco’s internet-providing hardware and the advanced features of its software, while allowing payment as part of an annual sum, not at the time of individual equipment purchase.

The new agreement went into effect July 5 and will save ITS a total of $693,297 between now and 2024, with no unfavorable effect on the university community at large.

“As networking hardware is upgraded across campus, we need a licensing agreement that can meet the university’s evolving needs, streamline procurement, and help control costs,” said ITS Director of Enterprise Services and Customer Success Mike Lohrbach. “Shifting to an enterprise-style licensing agreement afforded all those benefits.”

ITS began to consider a new licensing agreement after starting a project to replace more than 800 network switches in campus buildings at the beginning of 2019. Functioning as a controller, the switch equipment allows networked devices to communicate with one another, and the upgrades performed by ITS allowed for faster network speeds and solved the looming end-of-support timeline for certain hardware. 

Intending to replace network switches more widely throughout campus in the next two years, the ITS Network Team performed a cost projection analysis with the existing and new enterprise models offered by Cisco, and after conducting a deep dive into features, rates, and benefits of both, decided upon the latter.

The enterprise agreement’s “True Forward” terms, in particular, played a key role in the decision-making process. Under them, ITS will be able to purchase and license new equipment with payment automatically deferred until the contract’s annual review, which amounts to months of no-cost usage and reduced operating expenses.  

Along with flexible purchasing terms, the agreement offers greater license portability. In the past, each software license paired indefinitely with a single piece of equipment, and when that equipment was replaced, the license expired. With the new enterprise agreement, ITS can effectively decouple a software license from its hardware mate and apply that license elsewhere.

“Re-purchasing individual licenses for all the network switches and eventually 10,500 access points would have been very costly,” said ITS Network Engineering Manager Mike Broders. “The Cisco Enterprise Agreement eliminates the need to re-buy a license when upgrading equipment and adds to the cost savings we’ve worked to provide.”

According to Broders, the nearly $700,000 saved will be reallocated across ITS’ Networking Team — a cost recovery operation in entirety — and applied to service rates across campus and upcoming projects within the department. 

On top of cost savings, the enterprise agreement’s benefits include a known annual expenditure for licensing costs and centralized licensing management.

“This transition brings major advantages that align with our departmental initiatives,” Broders said. “Rather than projecting licensing costs for the coming year, we have that knowledge and can move forward with greater confidence and continued transparency.”

ITS will feel the impact of the enterprise agreement immediately as switches continue to be replaced across campus, and while there are no immediate plans to replace existing access points, the 5-year agreement will span the advent and installation of newer wireless technologies.