Driving licensing

Where once vendors attacked businesses for having insufficient software licensing, now they are helping with a more efficient management of the process

The thought of being raided by the piracy police has generally been a deterrent to businesses thinking about purchasing illegal software. The heavy-handed approaches of Microsoft and the Business Software Alliance (BSA) over the years have done much to implant the idea that even casual copying of software is illegal.

This has resulted in vendors placing an increased emphasis on software licensing. However, there is also the issue of internal software copying, which stretches the licence beyond its legitimate reach. This is called under-licensing, and vendors are pushing resellers to get to grips with software asset management (SAM) to ensure their customers are legal.

In contrast with a few years ago, vendors are becoming more lenient towards firms that do not have the right licensing in place. Where once the emphasis was on software auditing, it is now on helping businesses manage licensing more efficiently, and here lies the opportunity for resellers.

"SAM is a big initiative for us this year," claims Alex Hilton, who runs the Software Licence Management Group at Microsoft UK. "Customers should manage licences in the same way they would manage a company car fleet."

Microsoft will roll out a new strand of reseller authorisation next year to recognise suitably trained asset-management resellers. As part of the Mobile Solutions Partner Programme (MSPP), this authorisation will be tiered and is likely to be a competency in Asset Management Reseller certification.

"This will ensure we have a trained and mature channel capable of auditing and managing business software licensing," adds Hilton. "We will reward this authorisation with SAM leads, and access to auditing and management tools."

The trouble with software licensing today is that it is an increasingly complex business, so access to auditing and management tools is almost a pre-requisite. The complexity is not in the concept but in managing the varying software licences in an organisation.

Then there is the network software and the related security applications such as anti-virus and firewall software. It soon mounts up and can be a real headache to manage. In addition, there is the need for upgrades and bringing in new users, and you are looking at licensing meltdown if it is not managed properly.

Some help is at hand in the form of the BSA. According to Siobhan Carroll, regional manager of BSA Europe, "The sheer variation of licences can be daunting for resellers, but it needn't be." The BSA's licensing guide can be downloaded from its web site.

The BSA also has a guide to software asset management that resellers may find of interest. After all, resellers are better placed than anyone to sort out the mess, and they also can reap the benefits from an under-licensed business that needs to start buying.

The complexity of software licensing is both a hindrance and a help to resellers. For those resellers that can get on top of it, there are huge benefits in repeat revenues as well as tying up a closer relationship with customers.

Axel Lagerborg, head of software and licensing at Ingram Micro, believes many resellers are missing a trick.

"Software licensing is very complex and is becoming more so," Lagerborg says. "It is a classic example of knowledge capital and value-add. Resellers fall into two camps: those that invest in human resources to capture knowledge capital and those that do not.

"The resellers that tend to [invest] have specialist sales personnel and administration staff. This can give them an advantage in articulating the most cost-effective options for an end-user. The same applies to end-users. The ones that do not invest in specialist knowledge run the risk of over-buying."

This supports Carroll's view that, "while the mechanics of licensing software are relatively simple, some of the less obvious pitfalls are usually related to control of procurement and maintaining a good software asset management programme".

But are customers really falling foul of under- and over-licensing, or is this just a roundabout way of drumming up some easy business while helping to reduce some potential piracy figures?

"Our customers tend to be both over- and under-licensed," says Alan Cross, head of software asset management at software reseller Grey Matter. "It's fairly typical to find a lot of under-licensed legacy applications. But this often comes down to not being able to prove there is an appropriate licence rather than not having bought one in the first place."

Cross points out that it is here, in the management of the licences that most businesses slip up. In particular it is the OEM software that comes with hardware that is often thrown away or lost.

"While this may be done with the best intentions, there is no proof that an IT manager has not run off with it to the nearest car boot sale," Cross says.

Such a scenario would, of course, make a business liable for software that ended up being pirated and circulated.

"In the old days of Microsoft the approach was one of pure auditing: look at a list of customers, audit their software, get them to license properly and charge heavily," Hilton says.

"Now we are trying to move away from that approach. We want to help businesses manage their assets. It's a friendlier licensing face now, but it says to customers there are more benefits in managing their software assets better, especially in terms of cost savings."

Cross supports Microsoft's new approach to helping resellers and their customers, and says other vendors have embraced the same tactics.

"We get a lot of help from vendors, not pressure to stamp down on licensing. The biggest change in this industry is not about compliance and getting heavy over it, but about vendors being willing to work with a business to help make them compliant," he says.

While some businesses may have let their licensing requirements slip, an increasing number of companies are actually over-licensed. This costs them thousands in annual overheads. It is this scenario that is the most intriguing for resellers. It is not a hard concept to sell; they are offering to save the business money.

"We have found that over-licensing is on the increase, mainly as a result of mergers and acquisitions, or businesses downsizing," says Tony Fisher, managing director of SAM Partners.

It is a situation that has attracted the interest of the analysts, too. Gartner claims that enterprises which initiate a SAM system will see up to a 30 per cent reduction in cost-per-asset in the first year. This will continue to fall in subsequent years, resulting in a cost reduction of five to 10 per cent per asset.

The first port of call should really be distribution and vendor partners. It is in their interests to ensure resellers are up to scratch on licensing and helping the vendor or distributor ensure corporate UK is properly licensed and not fuelling the software piracy industry, intentionally or otherwise.

There are also other third parties to partner with, as well as specialist SAM tool companies such as Macrovision with its FLEXNet platform. While some resellers, such as Grey Matter and SAM Partners, have developed their own set of SAM tools for managing customer assets, others may not have the resources to develop their own or even buy a platform. And this is where the help comes in.

"We appreciate that it is not feasible for all resellers to invest in the specialist skills required," Lagerborg says. "As such, we provide specialist support in this area. We have created a human knowledge base outside the general sales environment. A pre-sales function helps resellers configure the most appropriate and cost-effective licensing configuration.

"A post-sales function ensures that once the reseller has obtained the business from the end-user everything runs smoothly. This includes checking the paperwork, ordering, distributing the licence details and dealing with any queries amendments or returns that may arise in the future."

Lagerborg adds that Ingram achieves this in a "ring-fenced environment". The nature of licensing makes it very different to the movement of physical goods and it is too much to ask a general sales person to keep up-to-date with the ongoing changes to licensing schemes, he says.

"If we did this, our knowledge capital would be diluted and therefore so would our value-add to the reseller," he adds.

Microsoft's intended SAM partner programme will go some way to helping solve reseller problems, especially because the programme will be tiered to take on resellers with various levels of competency. Part of this process will be the use of SAM tools supplied by Microsoft in partnership with Centennial Software.

"Tools are just one piece of the SAM jigsaw," Hilton says. "The next piece is putting procedures in place to manage and maintain future acquisitions. Businesses can't just buy software on an ad hoc basis anymore. It has to be a controlled process."

Hilton has a point. This is about total software management, including software on mobile devices, as well as on desktops and servers. It is about getting more than just a foot in the customer door. This is a process that could lead to software management outsourcing, and that means procurement, too.

Ultimately, the message from both vendors and distributors is that SAM can save businesses money. For large IT buyers such as the NHS, the savings are massive. It claims to have saved £330m on its software licensing costs through a nine-year deal with Microsoft and three of its large account resellers, TrustMarque, Civica and SCC.

The NHS is perhaps not representative of most UK businesses, but it is an example of how licensing can be used to help resellers provide an on-going service to customers and maintain a relationship through SAM and upgrade services. While not everyone may be able to demand the same level of discount through a Microsoft volume licensing agreement, there is money to be saved.

Vendors, analysts, distributors and even resellers already working in this space think so. Of course, vendors have their own agenda on subjects such as software tracking and subscription-based licensing proposals.

There are other issues that are also worth considering. Software licensing is slowly moving from a fixed-rate model to a subscription model. While this may be good news for recurring revenues, it will become more complex for resellers, especially as the nature of business today is towards increased mobility and deploying software on a range of devices.

Microsoft has taken the decision not to charge additional licences for multi-core technology, while there are noises - from Oracle's Larry Ellison in particular - of licensing per employee at a set fee, with discounts for larger numbers, and not charging per CPU. Whichever way the licensing goes, it will not be simplified because of the very nature of software and business.

Given this scenario it is practically impossible for a business to keep up with its software licensing without employing a licensing specialist, and there is little reason why that specialist should not be a reseller.

CONTACTS

BSA (020) 7245 0304
www.bsa.org/uk

Centennial Software (01793) 344 055
www.centennial.co.uk

Grey Matter (08703) 665 566
www.greymatter.com

Ingram Micro (0870) 166 0160
www.ingrammicro.co.uk

Macrovision (0870) 871 1111
www.macrovision.com

Microsoft (0870) 601 0100
www.microsoft.com/uk/

SAM Partners (07000) 247 365
www.sampartners.com

Tally Systems (020) 7872 5460
www.tallysystems.com