When it comes to software license compliance, publishers and end users may not be as far apart as we think. Publishers worry about revenue leakage. End users worry about audits. But for both parties, the ability to document and confirm compliance across an increasingly diverse array of architectures, platforms and devices is the ultimate goal. And guess what? Better, smarter automation may be the key to making both parties happier, and happier with each other.
A strong sense of mutual purpose was the most striking—and surprising—impression I came away with after attending the 2013 Compliance Manager Summit, which took place in San Jose in February. This event brought together software publishers and compliance professionals to discuss trends in software licensing and pricing, and to share best practices and technologies for enforcing license compliance.
As a vendor that focuses on providing license-compliance software to enterprises, I found the conference to be a rare—and very illuminating—opportunity to hear what’s happening on the software publishing side of the fence in an unedited, “no-spin,” no-holds-barred environment that’s refreshingly different from what we generally encounter in the public domain.
The session that interested me the most was a panel made up of end-user companies that had been assembled to discuss their hard-won insights as a result of their ongoing efforts to maintain license compliance and survive vendor audits. The panelists represented a number of high-profile, well-known companies such as Visa, Wells Fargo and Kaiser Permanente. All of them had undergone audits. All were serious about compliance and had made a formal, long-term commitment to managing their compliance issues intelligently and cost-effectively. As a result, each company could bring to the table a highly sophisticated understanding of software licensing and software asset management.
In fact, everyone in the room, including publishers, agreed that these companies were so advanced in their software asset-management (SAM) programs and practices that they represented the elite few. I have taken to labeling these companies the “One Percent”—not just because they are among the very rare enterprises that are ahead of the curve in truly understanding and reaping the benefits of SAM best practices, but also because, unlike the other 99%, they can clearly articulate the value of SAM and will happily shout it from the rooftops. I believe that all of us—end users, publishers and vendors—can learn a great deal from this particular “One Percent” that has gotten it right.
How has this handful of companies been able to distinguish itself from the 99% of companies that continue to struggle mightily with license audits and SAM? Based on the discussion among panel members and the subsequent conversations I had during the conference, here are what I believe are the two main factors that make them stand apart:
• They have learned to avoid full-blown software audits. Upon receipt of the initial audit letter, they provide vendors with accurate, high-level documentation that shows they are, in fact, compliant with the licenses in question. More often than not, vendors accept this and walk away, simple as that. But the sad truth is, most companies currently lack the ability to generate the necessary information quickly and efficiently.
• They continually perform software consumption analysis and optimize their license portfolios, achieving approximately 20% savings in their annual software spending as a result. While many companies may be able to manage their compliance risk reasonably well, most have not yet taken this second step toward full SAM “enlightenment” by embracing regular, systematic software-usage analysis. As a result, they’re absorbing licensing costs for products to go unused—an inefficiency that would make most executives cringe if they knew about it.
I’ve long suspected that vendors whose customers have the ability demonstrate they’re making a good-faith effort at license compliance get favorable treatment from their publishers. But my encounter with the “One Percent” at the Compliance Manager Summit has turned that suspicion into a firm conviction. While most or all of these companies will no doubt continue to receive audit requests, their ability to respond quickly with good documentation has earned them sufficient credibility to gain the trust of their ISVs.
We’ve also known for quite some time now that companies that make a concerted, ongoing effort to track application usage over time will find plenty of opportunities to reduce their software spending. Many of our own customers have told us this anecdotally, but because of competing priorities, they rarely spend time actually documenting those savings. By contrast, the “One Percenters” make a point of documenting their savings on a regular basis as a part of a formal process that provides executives with a fact-based, data-driven justification of their investment in SAM.
What did it take for these companies to find themselves among the “One Percent”? First, all have undergone painful, costly audits in the past. Second, in response to those experiences, their IT departments have been able to garner solid executive support for their SAM initiatives. Third, these companies have invested significant resources in implementing airtight SAM technologies and processes—an investment that appears to have paid off handsomely.
While many of those companies that remain among the 99% have also undergone full-blown audits, for some reason most of them have failed to take the next steps that would help them avoid a repetition of that unpleasant experience. I recently spoke with an asset manager at a very large enterprise who still can’t convince members of the C-suite to make a long-term, strategic investment in software asset management—several months after the company was nailed by Microsoft with more than a million dollars in fines for non-compliance!
I suspect if executive decision-makers understood—or IT managers could more forcefully articulate—that their organizations could potentially avoid software audits (or at least the most disastrous of outcomes), as well as reduce software spending by tens or even hundreds of thousands of dollars, more organizations would truly embrace SAM. And, thankfully, the resulting benefits would be enjoyed by more than just the “One Percent.”
Kris Barker is cofounder and CEO of Express Metrix, which sells software license-management tools.