By John Lipsey
According to the 2012 Software Pricing and Licensing Survey published recently by IDC and Flexera Software, software vendors are availing themselves more frequently of their rights to audit their customers’ software use, and of their right to exact “true-up” penalties if that use exceeds licensing agreement terms and is found to be “non-compliant.”
According to the survey the problem can be traced back to organizations’ challenges tracking and managing software license use, and aligning that use to ensure compliance with the complex software licensing terms found in each of the dozens, hundreds or even thousands of licensing agreements to which organizations are legally bound. One third of enterprises surveyed said they are either dissatisfied or very dissatisfied with their current method for managing software licenses and usage.
The reasons for that dissatisfaction are clear:
- 38% of enterprises indicated that 11% or more of their application spend is associated with applications that are overused, and therefore out of compliance, up from 26% one year ago.
- 64% of enterprises reported that they have been audited over the last 18-24 months… large enterprises – those greater than $1B in revenue – were significantly more likely to be audited three times or more in the last 18-24 months
- 24% of enterprises said their total true-up paid over the past year was $1 million or more
Finally, the survey revealed that the major software vendors – those that typically account for a significant portion of most organizations enterprise application spend – are also the most aggressive auditors. Enterprises reported that over the last year, they’ve been audited most frequently by Microsoft (51%), followed by Oracle (27%), IBM (24%), SAP (22%) and Adobe (19%).
Amy Konary, research vice president - software licensing and provisioning at IDC summed it up this way:
“Software usage that exceeds the negotiated license terms can represent significant lost revenue for software vendors,” said Amy Konary, research vice president - software licensing and provisioning at IDC. “There are many factors that make license compliance difficult, including license and IT environment complexity, lack of automation, and decentralized IT. IDC expects that vendors will continue to enforce their license agreements with audits, and advises enterprises to pro-actively track and manage usage of their software license assets.”
The need for Software License Optimization for the enterprise organization has never been more stark. Enterprises face tremendous challenges tracking and managing software licenses and reconciling that use against their software license agreements. If existing license management strategies aren’t significantly reducing or eliminating painful software true up penalties – optimizing the software license estate often eliminates or significantly reduces that risk exposure.
Read the full Software License Compliance Audits and True Ups report.