Reclaim Control of the Licensing Jungle – Digitizing the Complexity of Licensing History

By Peter Wesche

The Problem

One of the most common problems in ITAM is the lack of consistency and sustainability of management efforts. In Software Asset Management, the variety of vendors, audit methodologies and strategic focus has developed into a zoo of practices making it especially difficult to answer the question: Are we compliant in our use of software licenses?

While most SAM tools address the issue of discovering and describing the use of software in a company environment, the remaining headache has its roots in licensing rules, procurement history and changing terms and conditions over time. To boost their revenue, software vendors have not invested much in providing user organizations with controls of the licensing jungle, i.e. for better understanding of how to ensure compliance. For every mega-vendor, like Microsoft, IBM, Oracle or SAP, you must have highly skilled people that should be able to deal with more than 1000 pages of price lists, use rights, product definitions and promotional activities. With that, you can build a correct inventory of license entitlements and create robust evidence of compliance manually.

The fact that 85% of licenses today refer to perpetual rights seems to be one barrier to higher license revenue for vendors. That’s why new cloud models are proposed or become mandatory, like the Adobe announcement. Typically, marketing managers have created license models, product groups, conversion rights, product re-naming and re-bundling that make it hard to cut through the jungle. As a result, existing entitlements are at risk to diminish, be replaced or ignored. Millions of invested dollars are at risk. Inside companies, you will find little expertise and focus to deal with this threat; as a result, many of the problems are re-iterated at the bargain table in an opportunistic attitude far away from any systemic approach. It may create the next “great deal,” but in reality, it turns out to be nothing but a costly “gotcha.”

Automating the Paperwork

What’s required is a contract-based service that can automatically cut through the paperwork and establish a sound software license inventory including the specific entitlements, if regularly granted or by exception. This means scanning the document’s content and comparing it with genuine vendor information in order to hold on to perpetual rights. Any new proposal requires this diligence to avoid a conversion that may not be in the licensee’s interest. For larger vendors, this means a lot of work to give a complete licensing history. The effort involved can only be funded by huge corporations or by a community effort via a web-based service.

Such service is no substitute for sound legal advice, but it can lay a foundation for protecting the company’s investments. More so, it provides them with a company-specific reference inventory that can be used as auditable input to their own SAM tools: no more key-in of license procurement data, no more outdated spreadsheet-snapshots that cannot be validated. No more searching for the explicit entitlements associated with each license item.

How does it work? First, you must scan the contracts, including a semantic search, to populate the license inventory repository. Second, you must provide some quality assurance service to make sure the scan was complete and provided correct data. Third, you must provide a browser for everyone involved in software management so that their decisions build on such data. Fourth, you need to feed your compliance tools with such undisputed data.

Build a Closed Loop

While the first three steps are accomplished via established SaaS providers, the last activity needs to be mapped to the licensee’s ambitions and environment. Depending on size, organizational spread and vendor relations, companies address software compliance with the good old 80/20-rule: focus on high-value, strategic vendors and on vendors that can be potentially nasty with audits. While this attitude can be risky (you can never be sure of the gotchas!), it allows companies to allocate costs on the fly and adjust when needed. But, CIOs are getting increasingly nervous about not knowing what they don’t know!

What it takes is a clear commitment to process-oriented administration. Think about the power-houses in your organization and answer the question: who will benefit from a real-time accurate software inventory? Discuss the matter with financially-oriented staff. It should not be difficult to recruit the proper executive sponsor.

To build the closed loop, the SaaS provider should allow you to download the license repository at any time. You can then convert the data for your various tools that you have implemented for SAM. The most important element here is to establish the right identifiers for products in your discovery. Another question is how to implement a trigger. Depending on your information requirements, you might build a trigger with every new software procurement order for a set of pre-selected vendors. Or you might want the SaaS provider to initialize the trigger.

Features for a Digitalization Tool

Other additional features that are worth considering include:

  • Having all licenses in your repository benchmarked against the market place so that you get an understanding of your pricing compared to your peers in the industry, region or size-group. This can provide valuable input for improving the last offer
  • Receiving good turn-around times for the repository (such as one work day)
  • Finding proposal functionality such as monitoring proposals over time including all versions or including proposal quantities in the inventory for self-audits
  • Implementing either centrally and confederated, with a variety of features such as defining access groups or setting up different accounts to segregate duties

Implementation success comes from leveraging one contract conversion tool across the entire organization and ramping up by department or vendor.

Establishing proper data input for license management from software procurement requires accuracy and focus on your discovery requirements. Building a robust software license inventory database by automated conversion of your contracts has become easier and generally is available as a SaaS solution. Now, there is a switch to bring light to your licensing jungle!

About the Author

Peter Wesche is the Analyst for Software Licensing for Doctor-License GbR.