Taking the sting out of software licence audits

Most organisations spend approximately twenty five per cent of their IT budgets on software. Because it is not a physical asset, like a computer, a desk, or a chair, software is difficult to keep track of and inventory. The problem gets exponentially more complicated when you consider complex environments (i.e. tracking software on premises, in the cloud, on mobile devices) and the dynamic nature of organisations (i.e. how to track software ownership/use in the midst of mergers, acquisitions, employee hiring and departures, etc.).

Organisations must also track how that software is being used – and whether that use is compliant with the software contract. For instance, each licence agreement contains Product Use Rights that define acceptable software use. If usage exceeds those terms, the organisation would be considered out of compliance, and therefore subject to expensive and unbudgeted 'true-up' penalties.

Consider these statistics:

  • Seventy five per cent of enterprises are out of compliance with regards to at least some percentage of their software
  • Forty four per cent of enterprises (compared to only twenty five per cent the prior year) paid $100,000 or more in true-up costs to their software vendors as a result of non-compliant software use; and for twenty per cent (up from only nine per cent in the prior year) the software audit true-up costs were $1,000,000 or more!
  • Ninety three percent of organisations report spending money on at least some software that is under-used – i.e. shelfware.

In light of these challenges, following are some strategies to take the sting out of audits and reduce their potential liability and risk:

Don’t Boil the Ocean

The 80/20 rule applies especially to software licence management. There are usually a handful of software vendors who provide critical (and usually expensive) software for your organisation. So when setting up software licence management processes, tools, and systems, focus on the 'high rollers'.

Build Licence Management into the Fabric of Your Business

Unless licence management is part of your normal business processes, it will not be attended to. Therefore, licence management must be included within signed off procedures to ensure licence compliance is maintained and software costs are controlled.

Negotiate Measurable Contract Terms and Communicate Internally

Too often there is a lack of communication between IT Procurement (the contract negotiators) and IT Operations (those who deploy and manage the software). Because many players are involved communication is critical across these groups to ensure software licence compliance considerations are incorporated into all decisions.

Let Each Vendor Know You are Serious about Licence Compliance

You can capitalise on the work you put into licence management by letting the vendor know how seriously you are taking the subject and demonstrating that you have control of your software estate.

Involve Senior Management

You will need 'buy-in' from senior management to implement an effective licence management programme.

Centralise Licence Management

There are many business processes and so much data associated with licence management that it is imperative that contract negotiation (and monitoring) is carried out in the most centralised fashion.

Start Early

The key to successful negotiation is to be prepared, be informed, and be clear on desired outcomes. Start early, because it takes time to mobilise a cross-functional team, gather information for a fact-based discussion, and define your strategy.

Use Tools

As discussed, licence management is extremely challenging. Unless advanced Software Asset Management and Licence Optimisation tools are used, making sense of all this data, managing the complexities, and maintaining licence compliance will be impossible.

Track Progress

It’s important to start with a software licence management baseline and track your results, so you can demonstrate the cost savings, cost avoidance, and licence compliance risk reduction.

Publicise Wins

Publicising your successes will help build the credibility of your Software Asset Management programme, motivate others, and align their efforts.

Vincent Smyth, Senior Vice President EMEA at Flexera Software

Image source: Shutterstock/TechnoVectors