There's no doubt that software licensing is right at the top of the agenda for enterprises of all kinds.
Keeping a tally on which user has what software on their machine has always been an issue, but the problem has recently got out of control.
Some software vendors have dozens of products, which are constantly being upgraded. Different vendors have different rules on how licences are managed, and the range of licensing options even within the same vendor has expanded.
Users, for their part, are losing patience with the trouble and expense of the whole matter and want a system that lets them take licensing for granted, in the way they handle telephone and electricity services. Is this too much to ask?
And the importance of licensing issues for small to medium sized enterprises (SMEs) should not be underestimated just because of their size. If anything, it's worse for them.
"Within the typical SME, different people in different departments buy software, which makes it very hard to co-ordinate licences," explained Shannon Pitchford, channel sales manager at software vendor Workshare, which develops document content collaboration applications.
He claimed that the company's solution is to work with resellers to provide an asset management service which the reseller then delivers on a consultative basis.
"Resellers can hold and maintain licence agreements for customers, and build relationships that way," said Pitchford.
But Sanjay Saxena, business development manager at IBM's Software Group, pointed out that part of the problem is that too many resellers don't have a clue about licensing.
"It would help if our channel partners understood licensing, but lots of them don't," he said. "Too many take a short-term view, but end users want to plan for the long term.
"Resellers need to understand what their customers really want and sell it to their directors. Software compliance is a board-level issue."
Saxena sees SME culture as part of the problem. "At a lot of SMEs, there's a certain amount of apathy about licensing, which means that the firm loses the thread of who has what very easily. It struggles to provide information about what it has," he explained.
"Very small companies are OK. It's the ones with more than 100 employees where the focus goes."
So what should resellers do to help? Well, they can provide a licence management service. This way value-added resellers (Vars) can tie themselves into the end user and make sure that additional software business comes their way.
"This could be in the form of further licences or totally new products," suggested David Ellis, director of e-security at distributor Unipalm. "The key is that the relationship goes a step further than just pure product supply."
He warned that licensing schemes are complex, and that they vary, particularly within IT security. "Firewalls, virtual private networks, antivirus and intrusion detection are all sold differently," he said.
Ellis counsels resellers to try to see the positive issues. "For a Var, licensing can be a headache but it gives those that are adding value a good opportunity to differentiate themselves from non-specialists in the same way that technical support can."
Richard Berends, technical director at LANboss Software, said: "This is a key area where resellers can add value to the relationship they have with their SME customers by undertaking licence management tasks that the customer doesn't have the time or the expertise for.
"Our Vars offer software audit and rationalisation to customers using the LANboss tools to identify not only applications installed, but those actually in use."
Berends added that this provides important information about the number of licences needed to cover the software a business is running. But he insisted that the issue is bigger than just compliance.
"The major software vendors are introducing licensing systems that present new challenges, in the most part because they are now annualised licences," he explained.
"This makes it difficult for end users that, until now, didn't need to worry much about how many workstations they had, let alone which applications were installed.
"Again, there are opportunities for Vars to go to customers and say: 'We understand this issue and can take care of it.'"
Distributors have had their part to play in solving the licensing conundrum for their resellers. Cathi Low, general manager of the software business unit at Computer 2000 (C2000), explained that her message to resellers is that small businesses need reassurance.
Many will be sceptical about licensing software even though it will be the best way for them to buy it in many cases.
"It is important for resellers to understand what they are selling and for SMEs to be comfortable with what they are buying," she said.
"Licensing can seem complicated, but if it is properly explained it makes perfect sense. Customers very quickly see the benefits."
Lots of SME resellers need help now, according to Low, because vendors have started to lower the entry point for licensing programmes, typically to about five copies. "Network Associates and Adobe, for example, have both lowered their thresholds recently," she said.
Some distributors, such as C2000, have launched web-based licensing management initiatives which seem to promise the way forward for stressed Vars and their SME customers.
A good example of such an initiative is Ideal Hardware's Licence Desk Internet, an online service featuring real-time procurement and customer support.
Alex Tatham, vice president of global software distribution at Bell Microproducts, Ideal's parent company, explained that it offers a software acquisition process from pre-sales activities, such as real-time price, availability and product comparisons, to post-sales activities, including delivery information and account status.
Tatham is keen to stress that Licence Desk Internet helps resellers and their customers with the complexity of licensing, but also helps them to steer clear of a dreaded software pitfall: unwitting software piracy.
"Software piracy costs billions of dollars a year," he said. "The problem is largely among small businesses and private users, which often have no formal arrangements for software management."
He claimed that, with tools such as Licence Desk Internet, piracy can be removed at a stroke by moving SMEs from box sales to licensing.
"Resellers can be given a new source of income from software rental," explained Tatham.
"To date it has been impossible to provide a cost-effective system for doing this, but now online licensing gives resellers an incentive to sell software as well as ensure that businesses pay for software, because they will be billed direct."
Although many of these schemes are still in their infancy, they seem to have the backing of vendors.
Graham Peat, European marketing manager at Rainbow Technologies, said: "Online licensing schemes are invaluable to Vars and SMEs.
"By using licence management tools it is possible for software licences or applications to be distributed anywhere in the world with a click of a mouse. It also relieves some of the administration headaches that Vars have to deal with."
He added that they also allow the Var or SME to use the web as a try-before-you-buy mechanism, then deliver the licence automatically upon payment.
"This is a cost-effective way to reach new users," explained Peat. "Secure software licensing tools protect software from unauthorised use, so it can be posted on the web or burned to millions of CDs for mass distribution without having to worry about piracy."
Phil Robins, channel and partnership director at Symantec, agreed. "Online licensing schemes help customers to report and administer their software assets and allow resellers to support and manage the number, deployment and location of their customer's licences to ensure that it is all legal," he said.
"Online licensing also enables resellers to benefit from a faster turnaround of licence certificates, cost savings on delivery and an improved returns process. Distributors can add value by offering streamlined services to the channel."
Robins pointed out that Vars need to exploit their unique neutrality. "They can help and advise their customers and work with vendors to ensure that customers are compliant," he explained.
But what are vendors doing to solve a problem that is arguably of their own making? In their individual ways, many are making a contribution.
Allan Poot, European sales director at Ipswitch, said: "Our approach is to monitor service agreements and inform the channel of agreements that are soon to expire.
"This gives our channel partners the opportunity to generate additional revenue, promote new product sales and prompt users to purchase the correct licence."
Each month Ipswitch runs a report of service agreements that expire in 60 days. It then distributes this list to the channel, and follows up with an email to end users with expiring agreements.
"We have good success is prompting renewals, and at the same time we rely on the fact that our clients are legitimate corporations that do not consciously abuse the licences. Often they upgrade to new versions of our software," said Poot.
John Beech, customer services director at Access Accounts, explained that, like most software manufacturers, his company no longer considers itself a seller of software, but of licences.
"Our channel is very focused on this fact," he said. "Live software 'unlock' keys are issued only after Access has received a copy of the licence agreement, signed by the user."
He added that resellers can help end users by explaining the licence terms and the need to renew each year in order to stay valid.
"One of the benefits of an Access annual licence is that version upgrades are completely free," said Beech. "Licence renewals give the reseller every opportunity to renew the user's licence year on year."
David Ison, managing director at ServiceTec, said that his company offers "sweeping and locking" as part of a managed service, claiming that this provides benefits on a number of levels.
"Users with a standard desktop image need less support, and problems can often be resolved over the telephone, reducing service calls," he explained.
"The service can be used to create an inventory of the system to support warranty and licence management, and regular sweeps can be used as part of a security policy."
Too many options
Tony Price, managing director of WStore, suggested that the problem is not necessarily down to individual vendors.
"Vendors such as Microsoft provide a wealth of information regarding licensing and the importance of using legitimate software, but for many customers - particularly SMEs - the different options can be bewildering," he said.
Price explained that WStore recommends that its customers use a software auditing tool, such as Microsoft Software Inventory Analyser.
"Once the customer has completed an audit it will be able to provide us with a report of the software it has installed on its desktops and servers," he said.
"We can then determine what licences it currently owns and what it may be short on. Then we can help it get legal and stay legal."
He added that for resellers which understand the major vendors' licensing programmes, licensing can be a good source of revenue.
"However, this is provided that they can reduce the costs of transacting this business, and the best way to reduce cost is to automate," he explained.
"The way we have approached this has been to develop a series of online tools and configurators that make it very easy for the customer to work out which licensing solution is best for them."
Confusion at the client end
Some types of software present more of a licensing challenge than others. Perhaps the greatest challenge of all is represented by software residing at the client end, necessitating far greater vigilance because of its wide distribution.
To this end, a significant dividend is represented by software that is server-based, viewable by browser alone at the desktop end of the business.
For example, Emerge, a new product from software vendor CDE Solutions, provides business information and data integration functionality for small to medium sized users of Sage software.
Ray Dutton, managing director of the company, said: "The solution is easy to deploy because it is installed only on the server.
"This added efficiency means that the Sage reseller can either adjust its prices and make more sales, or increase margins through lower project costs.
"Either way, it is a refreshingly simple proposition for a reseller channel overwhelmed by software management issues."
Some solutions are even more technically cutting edge. Gary Milner, chief executive at Softwrap, explained that his company provides electronic software distribution and digital rights management technology, offering a viral distribution solution to combat the unauthorised use of software, particularly in the games sector.
He claimed that Softwrap is the only firm in the UK providing both encryption and e-commerce technology in the same offering.
"Our encryption comes in the form of a polymorphic encryption engine," said Milner. "While it is not uncrackable - no-one can claim that - it does prevent generic cracks.
"If someone cracks the encryption, as soon as they try to distribute or copy it the polymorphic engine will re-encrypt any copy that is distributed. So the recipient receives an encrypted, rather than cracked, copy, and it's back to square one.
"Software developers and publishers benefit because there is no up-front payment. They just pay a percentage of actual sales revenue to us so they have nothing to lose."
As Milner pointed out, there is no product that completely eradicates piracy or totally disposes of the licensing challenge.
There is no silver bullet to magically transform the task of maintaining legal and up-to-date software for a user or for a reseller acting on its behalf.
But the problem has probably already peaked as a threat to corporate wellbeing. There is too much for vendors to lose, and too much pressure on them and on resellers from users wanting a fresh start.
Microsoft on crime
When it comes to the issues of anti-piracy and software licensing, no company has been more active than Microsoft in trying to solve the problems. And it seems to be prepared to compromise its popularity along the way.
Its new licensing scheme, which came into force this July, was greeted with howls of protest from end users, but proved something of a channel bonanza as users rushed to become compliant.
Caroline Smith, anti-piracy marketing programmes manager at Microsoft, explained that resellers can do their bit by ensuring that they obtain stock from authorised distribution channels, so that SME end users can be sure of getting legitimate software that is virus free and fully coded.
"Resellers are also in an excellent position to raise awareness and educate the SME market about software compliance requirements," she said.
"Resellers can explain the benefits of being compliant, such as savings through better software management and certain tax advantages, and they can also explain the dangers to SMEs of under-licensing and using illegal software, such as viral damage to networks and IT systems."
Alex Hilton, sales manager at Microsoft, added: "Many Microsoft partners have now recognised the opportunity that exists with regard to licensing, and have made major investments to ensure that their sales people have the relevant skills to understand and sell Microsoft's and other vendors' licensing programmes."
He suggested that, with the launch of various online licensing schemes, distributors are aiming to provide a service to both Vars and SMEs.
"All Microsoft's distribution partners have been developing licence configurators that work across vendor schemes, and therefore offer a solution for resellers and customers alike to help simplify licensing requirements," said Hilton.
He explained that C2000 was first in the UK with Licensing On Line, a configuration tool that built on code developed by Microsoft.
"C2000 added pricing and enhanced the development to ensure that resellers found real value in it and now place the majority of their licensing orders through it," he said.
"Ideal Hardware's Licence Desk Internet, which is now linked up with Microsoft via a .Net XML connection that allows resellers to place a Microsoft Open Licence order, have it confirmed by Microsoft, and in the end user's hands within a couple of hours."
Workshare (020) 7481 6100
LANboss (01189) 823 500
Ipswitch (0781) 676 5700
Access Accounts (01206) 322 575
Symantec (0800) 389 7030
CDE Solutions (01242) 258 177
Rainbow (01932) 579 200
Unipalm (01638) 569 600
C2000 (08700) 603 344
Ideal Hardware (020) 8286 5000
Softwrap (0800) 917 2110
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