The Hidden Cost of Enterprise Software – 10 Key Steps to Successful Software Compliance

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by | May 9, 2016

Vincent Smyth Flexera SoftwareBy Vincent Smyth, General Manager, EMEA, Flexera Software

Software wastage is on the agenda for many organisations, as awareness of Software Asset Management and its benefits widens. Indeed a recent report into the key trends in software licencing highlighted yet again why SAM is critically important. With 85% or respondents reporting that at least some of their licence spend was associated with software applications that were out of compliance – the statistics speak for themselves. And software vendors are hot on the heels of those businesses with less than adequate SAM practices – with audits consequently on the rise.  In the last 18 months our annual audit report found that 63% of businesses surveyed were audited. The report also found that a worrying 56% of organisations were charged £1m or more in ‘true-up’ or balancing costs after their audit for non-compliance.

So why is this waste occurring and what can organisations do about it?

Tracking software as an asset within a business is difficult, and as software increasingly takes centre stage the complexity in managing the costs related to it have become more problematic. There are several reasons for this:

  • Licensing agreements that govern the hundreds or thousands of software applications that run within the enterprise contain dense and complex terms, which are known more commonly as Product Use Rights. These Rights need to be tracked, managed and understood and if usage exceeds agreed terms, then businesses are out of compliance and often face a penalty or ‘true-up’ fee as a result.
  • In comparison, Products Use Rights that aren’t fully being utilised cost businesses daily. Unused software that sits idle is one of the major causes of software wastage and continues to grow.
  • As technological innovation gathers pace, the impact on the business increases in complexity – new technologies like cloud, Bring Your Own Device (BYOD) and virtualisation can all have a detrimental effect on managing an already complex licencing position.
  • Mergers and acquisitions, change in personnel or reduction in hardware can also play a significant part in licence management challenges.

With this in mind, we’ve highlighted the 10 key steps organisations can take to ensure minimal out of compliance costs:

  1. Avoid making ad hoc purchases, lack of controls over purchases is common, even when made under a Volume Agreement.
  2. Make sure to track all installation and use – by tracking installations of software and its usage, organisations may be able to substantially reduce ongoing maintenance payments.
  3. Build a central repository – this holds proof of software licences, making them more easily accessible for review. It means organisations can quickly comply with software vendor audit requests that can save both time and money.
  4. Track renewal dates – failing to track Software Licence Agreements and renewal dates leaves businesses vulnerable.
  5. Optimise spend on software by leveraging Product Use Rights – this can drastically reduce licence consumption.
  6. Communication – IT operations must work closely with procurement to ensure any software installed is used in compliance with respective licence agreements.
  7. Managing strategic requirements – determining what is available before making a purchase decision on new software licences is crucial in managing software spend.
  8. Don’t assume licensing rules won’t change – they frequently do, and failure to follow these changes can result in lack of compliance.
  9. Accurately time purchasing maintenance – the best time to purchase maintenance is when enterprises are looking to upgrade.  If maintenance is bought before a release is announced, the price is often significantly lower and can mean eligibility for the next upgrade.
  10. Automate the process – an optimized, automated software licence environment can’t be achieved without people, processes and automation. SAM/ Software License Optimization offerings give organisations the ability to collate the necessary data and apply the relevant licence entitlement rules to help ensure continual compliance and optimisation.

Financial waste and corporate risk is a continuing sign of the times, organisations must do more to automate the process of software licence management if they’re to reduce the unnecessary cost of being out of compliance.


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