6 Software Licensing Mistakes to Avoid When Scaling Your IT - Image by Tumisu from PixabayThe rapid transformation of the digital landscape over the past decade has revolutionised the ability of IT departments to provide fast and effective resources to their workforce and customers. This pace of change has only accelerated over the past year due to businesses worldwide adapting to remote working conditions. The opportunity to quickly onboard new SaaS applications and immediately distribute software is vital for businesses. By doing so a business can be agile and productive,  ensuring they are fully supportive of a remote and mobile working culture.

However, time and time again, organisations undergo rapid IT expansions but fail to consider the full implications of this change on their software licence rights and contractual obligations.

Fail to Prepare, Prepare to Fail

Many problems faced by organisations that have rapidly expanded their IT capacity could have been avoided by better planning and preparation in the initial phase of their vendor negotiations. To start on the front foot when negotiating with vendors businesses must:

  • Understand their requirements
  • Understand the technical feasibility of these requirements
  • Be confident in your existing licence position

Most vendor salespeople are incentivised to sell solutions that are in the vendor’s interest, not necessarily aligned to yours. This is particularly true of cloud solutions or all-you-can-eat software contracts.

It is far easier to ensure you have the right licences to begin with, rather than trying to fix this once you are into your long-term contractual agreement.

Factor Growth and Peak-Usage when Planning your Licensing Requirements

When planning for future licensing investments it is essential to factor in growth and peak usage. As an example, a retail business will need to ensure that their data centre software licensing is sufficient to cover peak trading periods when processing volume is likely to be significantly higher.

This is because data centre software is often licensed on maximum usage instead of the moment in time. In a world of virtual servers, containers and public cloud, tracking the dynamic allocation of processing power is a challenge. Customers often neglect it unless they have deployed specific tooling. Similar concepts apply for software licences on peak usage models such as:

  • Maximum concurrent connections
  • Maximum transactions processed
  • Number of clicks or visits (of a webpage) per minute

Plan for Both Growth and Reduction in Capacity

It is important to understand what is temporary and what is permanent. If you are going to increase your software estate to suit a temporary or medium-term requirement, always have a plan to scale back. You can get trapped by letting increases become permanent with no option to scale back down once normal business practices are resumed. A common example of this occurs when businesses increase their processing demands on their cloud provider, spinning up new machines to meet the rise in demand. Long term planning allows businesses to account for peak usage. If cloud capacity is increased without proper governance, especially on a pay-as-you-go basis, businesses often forget to scale this back down once the peak has passed, resulting in them wasting money.

Read contracts carefully and, if required, refer to expert assistance within your own organisation if you have the expertise within your legal or procurement teams. If internal support is not available, external support through licensing experts may be required.

Consider Where in the World Your Software Will be Used

Ensuring your software is allowed for home or remote usage can be a critical factor to ensure the long-term efficiency of your licence management programme. Vendors such as Micro Focus (now including HPE Software Business), sometimes have a site licence which means you need to be in the same building.

Review agreements on a vendor-by-vendor basis as many software licences will allow for the installation of software on both a work and home machine. In which case extra licences are not needed. It is highly likely the new normal of heightened remote and home working will continue. Some organisations may never return to the full office model that has been a steady staple of working life for many decades.

Ensuring flexibility in your licensing is key and will prevent your organisation from running into sticky licensing issues that often result in costly remediation expenses.

Beware of Indirect Access

Most large-scale vendor fines for licence noncompliance are not a result of simply using too many licences. Instead, the multi-million-dollar lawsuits that make the industry news are often caused by misunderstandings of licensing terms or mistakes in the configurations of IT networks.

For many vendors that choose to licence their software on a “per user” or “per account” basis, there is always an inherent risk that multiple users can be accessing the same user account. This in turn can trigger a significantly higher licence liability. There are two common examples of this, the first being users sharing a generic account. Alternatively, integration with a third-party system where hundreds or even thousands of external users can be accessing an application indirectly, via a single integration account or interface.

In some extreme scenarios, vendors like SAP and Oracle have argued that anyone that has “indirectly benefited” from the use of its application shall be licensed, leading to $100million+ compliance claims.

The Rise of Shadow IT

Software as a Service (SaaS) has made it incredibly easy for any staff member with access to a credit card to purchase and install software applications. Whilst this may appear to be a benefit for the end user who can quickly access the software they need; it presents a nightmare for Software Asset Management governance.

Organisations worldwide are discovering that they have thousands of applications accessed from their network for which they have no record. ‘Shadow IT,’ as it is known, is not only risky from a financial control viewpoint it also presents huge data security and compliance risks.

Preparing for Change with Software Asset Management

For any organisation undergoing a rapid scaling of their IT assets, implementing strong licence management governance is recommended. Ensuring thorough preparation in advance of implementing changes will greatly reduce the risk of unpleasant surprises further down the line.      In my experience, the total value of Software Asset Management (cost-avoidance and savings combined) is typically between 20% and 40% of a client’s annual expenditure on software.

It is very rare that organisations are in complete balance and own the exact number of licences needed. An effective Software Asset Management practice minimises unintended software deployment. It also optimises existing software licences, aligning software liability and cost to business value.

Large and fast-growing organisations worldwide work with FisherITS to defend unfair software licence audits and reduce wasted spend on software. FisherITS help businesses increase return on investment by levelling the playing field between big software vendors and customers. The FisherITS team is made up of former software licence auditors and software mega-vendor employees, forming a truly unique group of industry experts with a poacher-turned-gamekeeper approach to software audit defence and licence management.


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