5 Questions to Ask Before Renewing an Unlimited License Agreement (ULA)

By Rich Staas

Director of Client Services, NPI

October 23, 2019

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Do you have an Unlimited License Agreement (ULA) up for renewal in the next six months? If the answer is yes, keep reading.

It’s easy to approach ULA renewals with a business-as-usual attitude. We often assume a renewal is a re-signing of a well-negotiated, well-structured deal. Unfortunately, that’s not always (or even usually) the case.

Here are 5 questions you should ask to ensure your renewal reflects an accurately-established and fairly-priced baseline:

How much due diligence did your organization put into the last Unlimited License Agreement? 

Your current ULA renewal will be based on the prior renewal, which means the extent of work you did back then sets the stage for the new renewal. Knowing how in depth you or others in your organization performed due diligence during the prior agreement will help gauge the vendor’s mindset on the current ULA.

Did you meet the expected growth to realize the benefit of the prior Unlimited License Agreement?

Vendors position ULAs as a huge benefit to customers that anticipate growth and/or increased usage across the software estate – and often they are! But vendors also favor ULAs because it promotes adoption and growth, which in turn secures more revenue for the vendor. The flipside, of course, is what if you’re not growing into the ULA as anticipated? If you’re not, and can demonstrate this to the vendor, it may be a good time to negotiate a non-ULA option.

Did you pay too much for the last Unlimited License Agreement?

NPI has reviewed many ULAs with various vendors and found a lot of disparity in pricing. The issue is further compounded if renewal pricing is established on above-market-value pricing set forth in the original ULA. Don’t forget – vendors will also include past growth and possibly anticipated growth if they are aware of your future needs. They typically take the peak user count over the last 12-month period and use it as a basis for pricing the ULA.

Fortunately, paying too much on your last ULA does not mean you are doomed to repeat. By conducting IT price benchmark analysis on your renewal, it’s possible to successfully achieve an agreement that includes more functionality on the new ULA for less cost than the prior.

Did you give yourself enough time to look into all options and alternatives as well as future needs for this renewal?

Plan well in advance of a ULA renewal to understand your true needs moving forward. If you don’t, you may end up with bundled software (sold as a benefit to the ULA renewal) that ends up becoming shelfware. Look into all of your usage from your prior ULA to make sure you’re not already paying for software you don’t use. If you are, this can also be used as leverage to put the ULA renewal in question.

One thing to consider is conducting a formal license position assessment that will provide you with fact-based data on actual usage – this baseline is powerful input to your next renewal.  You should conduct the license position assessment at least 6 months prior to your renewal.

Do you have a solid understanding of your projected growth?

The main value of an ULA is the ability to grow at no additional costs during that term. Matching your projected growth and the potential costs outside of the ULA with the potential savings entering into the ULA shows the true value of the agreement.