Thanks to the software market and the rise of remote working, the IT industry is booming. To be precise, it grew by 8.6% in 2017 and is still peaking due to the unconventional market conditions brought about by the pandemic in 2020. In these times, companies are heavily relying on software more than ever. A company spends about $259 per system, which includes unused software.
According to statistics, companies waste about 37% and approximately $30 billion on unused software. From a CTO’s perspective, this a huge waste of critical funds that could be diverted to other departments especially with the pandemic wreaking havoc on businesses worldwide and forcing them to control spends and revise their budget strategies.BD
It is common to react with a sense of panic when one thinks of being subject to a software audit because we all are aware of how relentless the auditors can be in unearthing noncompliance and poor asset management. What about the wastage of valuable capital, though?
This is where software license management can help. Apart from helping organizations ace a software audit, software license management is also an effective way to reduce the amount a business spends on its IT budget by investing in the software they may never use. One of the best routes for an organization to save on avoidable legal penalties and unused software wastages is to have a robust software management system.
What Is Software License Management?
Software license management is a part of Software Asset Management and helps in reducing, documenting and controlling total IT costs. Simply put, SLM helps an organization monitor and maintain all of the software licenses they have purchased.
Types of Software Licenses
The types of software licenses differ by the nature of the contract between organizations and vendors. The typical types of licenses are:
1) Per device or CPU:
Only meant for a single machine, be it a data center device or end-user.
2) Per User:
Limited to one specific user and needs a log-in id to confirm their identity.
3) Per Network:
Includes all machines in a single network.
4) Per Subscription:
It is managed by a subscription plan for a user or device and has an expiration date.
5) General Public License:
It covers the software that is considered free to use, share, copy, modify and distribute without any charge (freeware).
It is designated to a device but comes with a high-cost, and complex licensing that varies from vendor to vendor.
Benefits of Software License Management
- Software licensing management offers an organization the benefit of saving money by keeping all licenses accounted for.
- The most significant advantage the SLM provides is that it plays an integral role in ensuring all the software purchased and deployed are in compliance with the EULA, thus saving your business from incurring heavy penalties.
Let’s now take a detailed look at two key terms often used in Software Licensing parlance.
1. EULAs And The Challenges They Present
The EULA (also known as a software license agreement) is a legal contract between a vendor and an end-user mentioning what is permissible and what isn’t with the software they have purchased. It is often displayed during the installation of the software where the user is asked to agree to the terms and conditions mentioned in the End User License Agreement. The EULA is put in place to define the rights of the software developing company’s ownership and the restrictions of usage for the end-user. A breach in any of the terms on either party’s account leads to termination of the agreement.
Even though EULAs are an essential aspect of software licensing, they are not free of difficulty in interpretation for the users.
Limitations of interpreting a EULA:
They are incredibly lengthy and filled with technical and legal jargon, which can be impossible for a non-specialist to comprehend.
1) To interpret the terminology used, one will need thorough research, which is an inconvenience.
2) The click-through mechanism of the agreement with a small window that displays “I agree” or “I disagree” at the bottom makes it easy for the user to click on the agreement without understanding what is mentioned in the EULA.
2.The Challenges of Licensing in Virtual Domains
With the boom of cloud technology, virtualization software is used by a vast number of organizations and users. Since server-hosted software can involve several systems in operation, licensing can be a slippery slope. Since the cloud does not conform to physical drives, there is no accurate interpretation of the usage. This paved the way for the per-virtual-machine model of licensing in order to streamline licensing on virtual domains. There are still many challenges of licensing in virtual domains such as:
1) Portability of virtual machine guest files makes it easier to pirate software.
2) The ability to use snapshots of a machine’s state makes it possible to reinstall trial versions of software for usage.
3) Advanced CPU compatibility masking makes it challenging to identify CPUs due to its customization features.
Common Misconceptions Regarding Software Piracy and Licenses
Even though several sources provide great advice, it is vital to address the common misconceptions that need to be filtered to ensure complete control of the organization’s software assets and falling into the grey area of non compliance . We have listed the most common software piracy and licensing misconceptions below.
1) MYTH: A Software Asset Management tool will automatically handle all your software compliance issues.
Reality:A software asset management tool can do a lot of things to keep an organization in compliance with the license rules, but it cannot work on its own. A tool is simply a tool and needs proper directives to do its job. Without the necessary understanding of the data, normalizing it and making a coherent assessment out of it as per the licensing regulations, the data is just bits of information that won’t make sense. A software asset management tool needs to have an “operator” if it needs to be effective.
2) MYTH: You can evade compliance liability by outsourcing a software license management system.
Reality:There is nobody else to blame or eliminate the responsibility in case of a compliance violation. If it comes to licensing compliance breaches, the onus lands at the organization’s door. Even when the software license management system is outsourced to a commendable third-party solution provider, all accountability belongs to the organization since they are the ones using the software and owners of the license.
3) MYTH: The BSA and software vendors only typically audit large organizations.
Reality:While it can’t be denied that all eyes are on the “big fish” enterprises, the BSA and software vendors do not turn a blind eye to the small and medium-sized organizations. To contradict the myth, the BSA and Software & Information Industry Association (SIIA) put a lot of efforts to shine the light on small and mid-sized organizations audits. Research by these authorities has found that most of the violations in licensing come from small businesses.
4) MYTH: Inexpensive software is not copied.
Reality:Software that is free to individual users and private citizens is chargeable for industrial use. It so happens that many organizations are not informed that their business use of such software attracts a purchase licensing obligation because they skip reading the agreement or play it by ear. There are several accounting and utility software which are chargeable to enterprises but free for personal use.
5) MYTH: Software copy protection can hinder a legitimate user.
Reality:Technological advancements have ensured to debunk the myth in question. The very purpose of software copy protection is to safeguard legitimate users and the software’s performance while ensuring that the software is not manipulated in any form.
6) MYTH: Software copy protection is one of the reasons why software is more expensive.
Reality:If the software is appropriately protected, the developers do not need to raise its prices.
7) MYTH: Software piracy is a crime that has no victims
Reality:Software piracy has a massive impact on the funds for developers and organizations that create software. These funds are used for research and development to improve the technological strides in the market, and piracy can deter such developers from bringing the best to the table.
According to the BSA, about 19% of all business software is pirated. If we were to reduce this number to 10%, there would be a place for over 25,000 high tech job opportunities, approximately $38 billion worth new market activity and $6.1 billion tax revenues in four years!
What to Do During A Software Audit
1) Survey the software:Make sure you research your potential software licenses well before jumping into a contract with the vendor. The advent of competitive technology has led to changes at the speed of light, which makes it harder to read the fine print. These are a few good questions to review:
- Do the licenses run on a per-device or per-user form?
- Is your data stored in the cloud, or do your servers possess multiple processors?
- Do your employees prefer to work on their own devices while travelling or off-site days?
- Do you require licenses for virtual environments?
The factors mentioned above can be a handful, especially while managing several licenses and systems. Hence the best solution is to establish a comprehensive software licensing management system and strategy.
2) Assign an audit response team:When you get a notification for an incoming audit, never panic. Instead, find out the scope of the audit and let the audit response team with pre-assigned duties take over their responsibilities. With a specialized software asset management solution, you also need the right professionals to guide the organization through the audit and emerge unscathed.
3) Revamp your strategy:If you survived the audit and escaped significant penalties, it is now time to learn from your mistakes! Adjust your plan to gear up for the next round. If you don’t have the time to implement changes, let professional software license management solution providers take over for you.
What Not To Do During A Software Audit
1) Facing a software audit alone:Considering software audits are legal processes, hire a professional to be backed up one hundred per cent.
2) Being truculent:Being defensive is the easiest way of delaying and prolonging the process. Cooperate with the auditors bearing your best interests to avoid harsh scrutiny.
3) Not enforcing a non disclosure agreement:Insist on signing an NDA as it can put a crimp on the auditor’s powers during an audit.
4) Admitting or denying allegations regarding noncompliance.
5) Signing documents that haven’t been reviewed and approved by the organization’s lawyer.
6) Buying additional software to compensate for, or correct discrepancies:The auditors will notice any noncompliance, and see through your software purchase spree!
How Can You Create A Fail-Proof Software License Management Policy?
The prerequisites of setting up an effective software license management policy are:
- A software license management tool: How to store and manage information related to your software and their licenses can make or break your policy. Having a software license management tool makes the entire process of record-keeping easier.
- Asset Inventory: Having a proper account of the number of systems and the owner of each system in your network is necessary before you step into software license management. Asset inventory records the name of every system, and the person to be held accountable for software installations.
- Compliance Process: Hiring expert software licensing consultants is necessary to keep the software licensing policy running like a well-oiled machine. These professionals will ensure that the organization stays a step ahead of the license expiration dates through the complexities of your operations.
Here are the four steps to establishing a fail-proof software license management policy:
1) Identify and record the details of your license: To create a concrete software license management policy, you need to catalogue the details of the software you have legally acquired for your organization. Be mindful that this process may be lengthy since several types of licenses will form part of the said catalogue, as discussed earlier.
2) Identify where your licenses are deployed: Once you have established a better grip on the knowledge of all the licenses that the organization owns, you can easily find where each of these licenses has been deployed. A software license management tool will be of great help during this process.
3) Carefully compare your license data: Now that you have recorded the details of all the licenses and their areas of deployment, you will be able to evaluate the position of your organization in compliance matters. To assess whether your organization complies with all the rules of the license, compare all the purchased licenses with the ones that are operational throughout your organization.
4) Uninstall illegal software or purchase licenses: If you come across any breach in compliance once you have thoroughly implemented your software management license policy, act upon it without further delays. Any unauthorized or illegally purchased license needs to be uninstalled immediately and its traces removed.
Best Practices for Software License Management
1) Create Strong Policies: Having a firm software management policy that explicitly defines all the clauses gives you better clarity and the control required to manage your software assets effectively while handling common slip-ups.
2) Set Clear Controls: You must enforce precise controls about software use within the organization. Define stringent guidelines as to who has the authority to purchase or install software for the organization. It would be effective to “guard the entrance” by establishing digital storefronts to manage users’ ability to download and install the software. A common risk to the organization is the revolutionary progress in handheld devices and end-user-based app stores.
3) Automated Discovery: Keep a check on the hardware and software present in your network environments. Conduct regular internal audits on all the software present on your employee’s systems. It is necessary to involve physical audits to improve the process of discovery and aid automation.
4) Manage Your Asset System and CMDB: Effectively managing the lifecycle of your software and hardware assets will add to your method of automated discovery. Having a robust data model for your asset and CMDB systems that caters to all your software and hardware is another good practice.
5) Automated Audits and Provisioning: Ensure routine checks and keep up with the latest software updates.
6) Reclaim Unused Hardware and software: After the designated period, make sure that all unused hardware and software are returned to your inventory automatically to be reused.
7) Track Application Usage and Authority: Knowledge about the usage of your applications and the individuals authorized to use them is essential. Consider integrating usage with the on-boarding and off-boarding procedures.
8) Revisit Your Contract Bases: Understanding the kinds of licenses, their quantity and expiration dates will help you stay on top of things when it comes to compliance matters. Revisit your contractual database regularly to keep up with licensing records.
9) Automation: Embrace automation to optimize license management by considering employing the services of a Software License Management expert. The expertise of such professionals will involve an elaborate experience in software vendor licensing profiles and an impressive product catalogue. This can put you a step or two ahead of your software vendor by avoiding the process of manual reconciliation of your license position with your installed software. By avoiding manual labour and the additional costs of a significant software true-up, you can save capital and benefit from optimization.
10) Gauge Your Progress: Set practical goals and measure your outcomes in comparison to your license cost-saving targets.
Rythium’s Solution to Smooth Software Asset Management
Rythium boasts of a stellar team of certified and technical experts who are well-versed with the complexities that Software Audit Management brings about. We can help organizations lessen the burden of licensing, compliance and everything in between by offering solutions tailor-made as per their demands. Our services are cost-effective, which allows every client to make the best of our unique features that only our Software Asset Management solutions provide.
When you choose the Rythium experience, you’re backed by:
- Soft Asset Management Experts: Our team of experts are adept at going through the intricacies of your licences to provide a fine-tuned reconciliation service, so you better understand what usually is lost in translation. Expect to be guided through the most efficient integration of software asset management best practices into your day-to-day operations.
- Licensing Account Specialists: Our licensing account specialists will attend technological and on-site meetings to assess your system’s environment.
- Presales Expert Engineers: The engineers aboard our team are experts at answering any query related to technical questions regarding software and licensing.
Step-By-Step Tailor-Made Solutions for Every Unique Client:
Rythium offers software asset management solutions in the form of full-feature SAM application with automated software inventory, contract management and automated ELP generation with product-specific licensing rules.
Our systematic approach involves tracing the steps mentioned below:
- Understanding the unique demands, goals and budget of individual clients through an initial assessment.
- Scoping the IT environment already in action and noting project demands.
- Making detailed reports regarding the recommended solution, environment design with suitable proof.
- Integration of the solution from procurement to its deployment.
- Routine telephonic support throughout the product lifecycle.
We hope this article clarified your Software Audit Management and Licensing queries in-depth and helps you emerge victorious in audit battles. We aim to arm you with all the solutions necessary to be audit-ready and adhere to all compliances by using our Software License Management tools and services. Rythium helps organizations run through the details of their software license contract with a fine-toothed comb to avoid any shake-ups during audits.
To get personalized solutions and advisory services, reach out to us on email@example.com!