perspective Many organizations unknowingly overspend on software license agreements and maintenance. This is typically a result of organizations struggling to understand and manage complex licensing and pricing models, across multiple vendors.
Technology changes also complicate licensing and are difficult to predict. For example, the growing popularity of virtualization and increasing employee mobility mean IT departments are under further pressure to keep up to date with the different types of software licensing and patterns of usage.
At the same time, the issue of compliance is ever more present as audits by third party firms such as the Business Software Alliance and the Software and Information Industry Association are becoming more and more frequent, in response to the large amount of unlicensed software being used globally.
However, despite the high financial costs associated with non-compliance, not to mention the potential negative publicity, most organizations today struggle to adequately track and manage software license usage.
The end result is that few organizations today accurately know what software they are running, how much they have paid for it, who and how it is used--and, in fact, if it is ever used at all.
This lack of visibility into licensing has significant implications on software purchasing decisions and can lead to compliance problems. Some organizations, in order to contain software costs, may purchase too few licences, leading to users not having access to the applications they need or using them without a license.
Other organizations may overcompensate and buy extra licenses--which they don't need--to make sure they are covered.
All this can lead to unnecessary support and software update fees.
A high proportion of organizations use manual techniques to track software licenses, which are prone to error as well as being costly in terms of resources. This also only tells half the story--manual records may report what software is deployed but not if it is under- or over-utilized, for instance.
Using effective software license management tools is essential for centralizing licensing operations and obtaining accurate, granular usage data to properly track and report on license usage. This not only puts organizations in a stronger position when renegotiating software contracts but also reduces the management burden on IT.
To manage software licenses, some organizations have invested in software asset management(SAM) tools from companies such as BMC Software, CA, HP and IBM. However, while traditional SAM solutions can look at what software is installed, where and by whom, they may fall short on determining how software applications are being used.
The 'how' dimension is addressed by compliance monitoring tools from companies such as Acresso (formerly part of Macrovision) and Safenet, which supply technology to software publishers. Such tools continually monitor software usage and in some cases this technology can be used by publishers to enforce licensing.
Products such as Acresso's FLEXnet Compliance Monitor use a non-intrusive agent to collect data from applications, and can be configured to support a wide range of license models. This enables publishers to proactively manage entitlements as well as create flexible licensing models for their customers based on usage.
Meanwhile end-user organizations can also use license-monitoring solutions to reconcile application usage with entitlements, thereby potentially minimizing time-consuming physical audits, preventing over-deployment of software and gaining an accurate view of their application usage.
For organizations to gain the most value from such compliance monitoring tools, their software suppliers should already have enabled their products with third-party licensing technology.
The legal and financial risks, as well as the negative publicity of non-compliance, cannot be ignored. Because of this software license management is an issue that should be a priority for board-level executives as well as IT managers.
To stay ahead of the game and avoid the extra work and costs associated with compliance testing, Quocirca recommends organizations should move to centralized software purchasing to gain a better handle on their software assets.
As a first step to ensuring compliance, they should then identify the software applications which are the highest value to the organization and aim to understand how this software is actually being used.
By using a compliance monitoring system, organizations can gain an ongoing insight into usage and then use this information to optimize software spending and negotiate favorable terms with software vendors.
Finally, organizations should self-audit periodically to ensure that software purchasing and licensing policies are being adhered to. Ultimately, conducting such proactive audits means organizations can demonstrate and maintain compliance in the event of an external software audit.
Louella Fernandes is a principal analyst at Quocirca. She and five other analysts contribute to a regular column in ZDNet Asia's sister site, Silicon.com, that seeks to demystify the latest jargon and business thinking.
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