Avoiding The High Costs And Consequences Of Software License Non-Compliance

Software Licensing Fine

As organisations grow, the daunting task of accurately tracking software assets for usage and licensing is an ongoing dilemma for IT departments. Most software packages have complex licensing structures and come in dozens of different names and dot versions, making it difficult to accurately track usage and licensing. Market changes, such as mergers, acquisitions and product EOLs, also make it difficult to consolidate support costs and manage software compliance.

Besides the inherent difficulties in monitoring compliance on traditional systems, another layer of complexity is added by the increasing trend of virtualisation. For example, users run multiple virtual operating systems on the same hardware infrastructure, like Windows mode on Mac and XP mode on Windows 7. All this makes license compliance ever more challenging and important.

The proliferation of software and the lack of a reliable way to track it drives many organisations to take a “best guess” approach, resulting in either overspending on unused licenses or being out of compliance by using more than what was licensed, resulting in exposure to hefty fines and penalties. According to a survey conducted by IDC, 38 percent of organisations reported that at least 11 percent of their application spend was associated with out-of-compliance use, while 56 percent of organisations said 11 percent or more of their application spend was for under-used software.

Software products are protected by copyright laws that make it illegal to pirate them, make more copies than stipulated or distribute unauthorised copies. Organisations are responsible for enforcing adherence to these copyright laws and are held liable if found in violation. Large companies are at higher risk of being targeted for software license compliance audits just due to their size and the difficulty in inventorying usage. Although many organisations implement software license compliance tools, they typically are complex and designed for the largest of organisations, which may leave smaller companies more at risk.

According to the Business Software Alliance, a leading software auditing firm, software audits are increasing annually. The virtualisation of systems, proliferation of software packages and mergers of organisations have resulted in the completion of a comprehensive software audit becoming increasing difficult. Software companies understand this, which is why the number of audits has increased every year.

In reality, a small flaw in software licensing may not be a priority in the grand scheme of IT compliance, but even a minor miscue can cost your company thousands of dollars or perhaps you your job. Non-compliance, intentional or not, has expensive consequences, as organisations that are found using unlicensed software usually must pay a fine and then are required to purchase – at full list price – sufficient licenses to make them whole.

This is why having highly reliable, accurate reporting on all software licenses is critical for organisations of all sizes. Having the capability to track software assets reliably and accurately enables organisations not only to eliminate the cost of unnecessary software spend, but also avoid non-compliance penalties.

So, what can be done to achieve and maintain compliance and avoid unnecessary license costs? One way is to develop internal licensing strategies that help your organisation track all software licenses, adhere to copyright laws and reduce the spend on under-used software. Paired with good preparation work, the following best practices can help your organisation successfully achieve software license optimisation and compliance:

1. Strong Software Asset Management Processes

Develop strong software asset management processes to reliably track all software assets for both licensing and usage, so you can avoid non-compliance and make sure usage is optimal. It’s important to be able to interface with a database containing the most popular applications, including version and name variations, purchase information, market intelligence and other information required, to accurately identify and track software usage and licensing. Additionally, it’s helpful to automatically map dot versions to the parent package to enable tracking of licensing and usage across dot versions.

2. Automated Data Gathering

Perform automated tracking and management of software licenses, including version numbers, and store them in one place so you know exactly what is on all machines across the network. With automated metering, organisations get a more accurate view of software usage, by allowing IT administrators to see usage information based on when an application actually runs, so they can better ensure license compliance.

3. Re-Evaluate Software Product Use

Organisations purchase software licenses in bulk, but a significant portion of those licenses are unused or under-utilised because most organisations don’t have the ability to accurately track software utilisation. It’s essential to accurately track usage so you can save money by harvesting and re-allocating unused or under-utilised assets.

A side-effect of the inability to accurately track software licensing and usage is the possibility that malware will find its way into your system on software that is unsupported or prohibited by IT. This potentially exposes a company’s entire IT infrastructure. Such an event only adds to the millions of dollars that organisations lose every year due to non-compliance and unused or under-utilised software licenses. While many companies are eager to comply with software copyright laws, they lack the right tools to enable full compliance, so they remain exposed to litigation, security risks and stiff penalties. Organisations that can reliably and accurately track software usage and licensing will reap the rewards of improved efficiency and money saved through optimised usage and compliance.

Ken Drachnik

Ken Drachnik is Endpoint Systems Manager at Dell Software.