As noted in the recent IT Counterpoint article “How to prepare for a software audit”, software audits are on the rise, with 61% of those responding to a recent Gartner survey reporting that they had been audited in the last 12 months. Many software vendors are participating in this auditing trend, including Adobe, IBM, Microsoft, Oracle and SAP. Now is the time for enterprise consumers to ensure software license compliance. It should be a proactive and ongoing activity, not just a reactive and event-based one. These and a few other simple guidelines will prepare an organization for potential audits and establish a foundation for true license optimization.
According to Gartner, the 61% figure “was the highest percentage of any comparable survey. We ask this question annually in surveys, and in 2009 the percentage was 54%; in the prior three years it was between 30% and 35%.” Additionally, there is anecdotal data from some companies that experiencing multiple audits annually is becoming more common. Reasons cited include a lack of “investment in the expertise required to understand and interpret license terms and conditions”, as well as “ever more complex deployment requirements, such as virtualized environments.”
This data is reinforced by results from the 2010 Key Trends in Software Pricing and Licensing Survey. 53% of enterprises responded that at least some of their software license spend is associated with applications that are overused and therefore out of compliance. 71% of enterprises agree that tracking software license usage is important, based on the desire to reduce software costs and ensure license compliance, but more than a quarter of enterprises are dissatisfied with their current software license usage tracking model.
The primary and consistent recommendation is to invest in a software asset management process now. As stated in the Gartner report: “As audits are increasingly likely, if you don't already have asset management processes, procedures, tools and funding available, then now is the time to get them. Organizations must fund IT asset management disciplines or will risk high, unexpected financial liability due to software compliance problems. Having good asset management can reduce the time and pain of a software vendor audit.”
Avoiding the potential issues associated with software license audits includes 5 Best Practices:
- Plan ahead – Don’t wait to be audited. Be proactive and use industry data to support the prioritization of a software asset management initiative within the IT, Procurement and/or Finance departments. Audits generally result in unbudgeted true-up expenses to the organization—an event that should obviously be avoided. Maintain a central repository for software license information and keep it up to date. Keep track of installations, purchases, entitlements and vendor contracts in this central repository.
- Seek continuous license compliance – This should not be just a onetime event around an audit. Use an audit or other project as a lever to get started, but build discipline to keep this an ongoing activity. A mature software asset management (SAM) process and automation are the keys to success. Relying on manual steps will increase the likelihood of errors and will be costly in terms of staff time required to respond to an audit.
- Implement the next generation of software asset management – Go beyond just knowing what is installed, to tying together information on what is actually being used with license entitlements that can reduce license consumption. License optimization is where the real insight and true value lies, providing the fastest return on your software asset management investment.
- Start with the areas of greatest spend and risk – Establish quick wins with the most valuable software assets, based on total spend and greatest software audit liability risk, then expand the program to the next set of applications. Consider the eventual need to address these second and third tier applications when setting up initial processes and technical solutions, to ensure that the solution will scale.
- Take a broad view across the organization – View the software estate holistically, so licensed assets can be leveraged from one department to another. Departments or regions that are over-licensed may be able to share those assets with those that are under-licensed (out of compliance). Additionally, it may also be possible to remix applications licensed from some vendors, trading licenses of specific products or product tiers for others that better suit the needs of the organization.
The increase in software audits strongly signals a gap in the IT industry, a need for additional visibility, control and license management. For the enterprise consumer, next generation software asset management processes and technical solutions can go a long way to closing the gap.