SOFTWARE LICENSING

Managing Software Licensing Compliance: Three Strategies

By Jacqueline Lee, Contributing Writer

Flexera Software makes solutions that help organizations to match their software usage with their licensure agreements.

Large corporations, in particular, can have thousands of software licenses that they manage at one time. According to a joint research report from Flexera and IDC (News - Alert), which was released last November, 38 percent of executives from companies grossing anywhere from $100 million to $3 billion admitted that 11 percent of their software spending is on applications that are used by more employees that the licenses allow.

At the same time, Flexera discovered that 56 percent of executives spent 11 percent of their software budgets on applications that were underused by employees. Companies pay penalties for what they overuse when vendors discover those abuses, and they also receive no refunds for applications that they underuse.

In a recent Flexera blog post, Randy Littleson, senior vice-president of Marketing, wrote that software producers usually use three approaches when checking up on their licensees.

Some software producers utilize a practice that Littleson calls strict enforcement. Strict enforcement, he says, mirrors a bank’s overdraft policy. Producers either completely disallow usage when licenses are exceed or allow organizations to have a light “overdraft” cushion.

Other producers utilize third-party or internal auditors to visit companies and download usage records or to observe software use in real-time. Still other producers dispense an enterprise “all-you-can-eat” licensing agreement, which doesn’t restrict usage but also may not reflect fair value for the producer.

Each approach to compliance management has advantages and disadvantages. Strict enforcement is reassuring for producers, but it also gives organizations no options when they have legitimate business reasons for exceeding licensing requirements.

Audit teams create an adversarial relationship between software vendors and organizations. Also, maintaining audit teams and dispatching them can be costly. At the same time, audits are becoming more commonplace. Sixty-four percent of organizations surveyed by Flexera and IDC reported that they had been audited within the past 18 to 24 months.

Whether companies are abusing or underusing their licenses, they are positioning themselves to lose money. Flexera’s solutions help companies determine optimum usage. Then, companies can use that knowledge to renegotiate licenses accordingly.