Member Article

Outsourcing Software Licence Compliance

By Andy Fisher, New Business Development Director

It is generally accepted that the global financial crisis is affecting the revenues of all commercial companies, including all the largest software authors. Consequently, industry analysts predict a significant increase in vendor driven audits during 2012. Customer feedback and the rise in vendor required compliance consultancy seen over the last six months certainly seems to confirm these predictions.

So what are the risks of non-compliance and how do customers find themselves in a position where they are being reported as under licenced?

For most organisations, the financial risk from non-compliance will be secondary to the adverse publicity and damage to their hard earned reputation. However, the financial risks should not be under-estimated as fines can average around £1000 (*1) for each unlicensed software installation, and considering the increasing activity of the software authors and their enforcement agencies, there is bound to be adverse publicity. Considering the increasing complexity of software licensing schemes and the associated links to hardware type or user type options, it is understandable for organisations to get it wrong; but caveat emptor applies as the software authors seek to protect their investment and retain revenues. For these reasons alone, perhaps all organisations should consider prioritising the management of true software compliance in 2012?

(*1 Figure based on software costs plus a compensation element)

What else, besides avoiding fines, can an organisation expect to gain by initiating a true compliance commitment? It’s important to understand that it isn’t just a simple matter of ordering enough licences to cover your entire enterprise. Current installs need to be determined, followed by optimisation and re-allocation, as there is always the possibility of over-licensing. Knowledge is paramount in determining exactly what needs to be purchased, upgraded, transferred, removed or simply recorded throughout the life of any compliance commitment. Software Asset Management (SAM) service providers help clients optimise their software licence position and implement more effective management processes, reducing costs and increasing ROI.

Experience alone will not guarantee achievement of an acceptable compliance position as success also requires access to dedicated SAM tools. Partnering with an experienced SAM service provider to outsource the software licence compliance element of the SAM process can be very cost effective, with some service providers being able to leverage global resources (experienced consultants, private cloud technology, universal software libraries and mature software licence compliance / management tools) Each service element should offer stand-alone benefits or dove-tail into the next to allow maximum flexibility. Finally, costs should be directly related to device and data volumes to ensure predictable budgetary controls. As an example, SAM specialists BCS, provide a fully managed compliance service which charges an average of £5 per device per annum. After initial consultations, the service continues to identify and track all installed software, including internally written applications if required, an option which can prove extremely useful where service cross-charging applies.

There are numerous other advantages to working with an experienced partner including:

Use of existing tools and data –Investing in SAM tools alone generally fails to meet expectations: the implementation is poor due to lack of qualified resource, resulting in supportive SAM processes not being implemented; leading to frustrations and a failure to deliver expected results. However, specialist managed service providers have the experience, knowledge and resource to leverage those existing tools and provide the perceived value and ROI that the user originally expected.

Reduction in internal resource requirements –Often in-experienced internal staff are seconded to SAM projects, and they end up consumed by the complexity and legal terminology within software contracts, whilst attempting to establish and document the various licensing rules. Upgrades, downgrades and cross grades come to mind! The reality of SAM and software licence compliance is that there are many disciplines that are required to participate in a successful implementation; procurement, infrastructure, legal, HR, helpdesk, internal audit and most of all, senior management. Outsourcing software compliance reporting ensures that internal resources are free to concentrate on their core duties.

Joining up and implementing effective SAM Processes –The most important factor in the success of any software compliance project is to ensure that the correct processes are identified, implemented and ‘joined up’. When an external specialist provider implements a compliance service they will know exactly what is required to complete their actions, often removing previously undetected disconnects not apparent to the untrained eye, by initiating a single coherent rolling process or re-connect.

Conclusion

The outsourcing of a high profile deliverable such as software compliance could be seen as high risk, however, given the fact that most organisations have a very low level of SAM / licence compliance maturity, the risks associated with not engaging an experienced managed service provider to actually deliver what most organisations cannot do internally, could be much greater; remember the prediction from industry analysts for 2012?

An updated version of this article has been published on Computer Weekly

This was posted in Bdaily's Members' News section by Andy Fisher .