Software licensing is a 21st century world's necessity that is too often left as an afterthought. As the pace of technological innovation continues to ramp up, it is having a significant impact on organisations across all sectors. Whilst the benefits of regular upgrades and new features improve productivity and tighten security measures, the constant cycle means businesses are struggling to understand when they are truly compliant and when they are not.
In fact, many businesses have little idea what software assets they actually own, how their software estate is really licensed, how long those licenses are valid for and if they are actually needed. Earlier this year, news broke that the Financial Conduct Authority (FCA) had wasted £3.2m on Oracle licences it did not need, meanwhile according to a recent BSA global software survey, in 2013 nearly half (43 per cent) of the software installed on PCs around the world - totalling more than £40bn in value - was not properly licensed.
Additionally, research has found that nearly nine in 10 (87 per cent) businesses do not have the correct software licenses to cover the number of users, causing many organisations to either waste money, over-license or enter dangerous unlicensed, and therefore illegal, territory. Lack of visibility about which licenses they've bought (and which they haven't) is more than just an accounting mishap - it is a critical gap in asset management strategy that costs UK businesses tens of millions of pounds every year.
To get to the root of the issue, we need to look at the buying and selling process and understand why businesses are often walking away from the licensing negotiation table with a lot more than they bargained for.
Big vendors are well-practised in engaging with clients to drive - what seems to be - an incredibly discounted deal. For example, an organisation will outline the several projects it intends to deploy over the next three to five years; the vendor will then make an offer to the organisation, stipulating that, if it buys all the licenses for all the projects in one go, it will receive a package-deal discount of between forty and fifty percent. The result is that what appears to be a great discount to the organisation, will in fact cost it more in the long run due to irrelevant or unused licenses. With technology evolving so quickly, it cannot be guaranteed that the landscape will be the same in three months - let alone five years. Focus shifts and it is almost certain that planned projects will change, with some never coming to fruition at all.
Though it might seem like they are missing out on discounted deals with this approach due to paying larger upfront costs; in the long run, they will save a lot more money. If the FCA had approached the negotiation table with a thorough and realistic understanding of what it needed, it might not have made the headlines.
A lack of understanding of what licenses have already been deployed, plans for future needs and a deficiency of expertise are making organisations less objective and ill prepared in negotiations. For economic efficiency, organisations need educate themselves on their licensing status, or adopt a trusted partner with the relevant expertise in order to come to the negotiation table thoroughly prepared.
Integrating tools like Snow License Manager or Aspera can also be useful to bolster license management. But, most crucially organisations must ensure they have the wraparound services in place too. Gartner predicts that by 2017, businesses will be spending ten times more on software asset management services (SAM) than they do currently.
Having a multi-faceted support network in place is also crucial to audit planning and defence. Some of the biggest vendors make their biggest profits from auditing organisations and businesses need to employ advanced audit methodologies to build an up-to-date picture of what they own, what they need to buy and where duplicate spend can be mitigated. Doing so will protect against the risk of non-compliancy fines, increase security, reduce spend and most importantly, allow the IT department to focus on more strategic business priorities.
The key takeaway here is that licensing vendor agreements are not going to get easier overnight - in fact, they are getting more complex. Businesses need to use critical information gathered from audits, advice from trusted partners and feedback from software management tools to ensure they are not only managing their assets wisely and understanding their true software consumption, but looking ahead at their future requirements.
Ian Camino is EMEA license consulting services director at Insight
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