How MAD can impact your software licensing compliance

Any organisation undergoing a merger, acquisition, or divestiture (MAD) should undertake due diligence in respect to their hardware and software assets. This is necessary to understand the impact on its business and any potential risk to which they may be exposing themselves.

Some of the major software vendors closely observe the activities of their customers with regards to organisational change and frequently target those who have undergone any form of MAD activity. So, it makes good business sense to ensure you are aware of the full implications of any organisational change on your software licensing position.

Understanding your software licensing position

To understand the impact, you will need to follow a series of steps, which may seem obvious but are worth stating here:

Scope definition

This is normally the first step and will confirm what software is in scope of the MAD. Context is determined by what aspect of a MAD is being performed and who needs to be asked for what. It will start from the top down, beginning with the areas of the business in scope and for each, ascertain the business services in scope.

Hardware and software inventory and discovery

Is where all of these business services are explored to ascertain the hardware infrastructure required to deliver each one. Next, obtain clarity on the software that runs on these systems. Consideration needs to be given to system interfaces, as there may be indirect use of a system thought not to be in scope. Also, cloud or SaaS-based solutions may need to be brought into scope. The outcome will be a view of all computer hardware and software products in scope.

Entitlement discovery and inventory

Is where all entitlement relevant to the business is collected and collated. This can be a daunting task involving many people from different organisations and vendors, all depending on the circumstances and software asset management maturity of the entities involved with the MAD. This is key to obtaining clarity on licenses owned for the entities in scope and the terms and conditions that would be relevant in respect to the MAD.

MAD agreement of specific strategy options: Outcomes

This is the identification of viable options relevant to each vendor agreement and the products and services within its scope. It will map discovered software products to what entitlement already exists. Whilst in some cases there will be no option about how this is done, for others, there may be multiple agreements that provide entitlement for a software product, so mapping to the correct or optimal agreement is important.

Next, each agreement is reviewed to ensure in terms of the MAD the options available to the parties involved. Cost implications are critical as part of this to ensure, of the available options, the costs are clearly understood.

This information should be fed back into the due diligence team so that any implications on the overall MAD are understood.

MAD agreement recommendations and execution

This is the work associated with sharing these outcomes with those that would execute the approach, for example, legal and procurement teams working with vendors. In some cases, the preferred outcome will be unachievable, in which case there will be iterations until a way forward is agreed between all parties.

Russell Fry at Certero