TECHNOLOGY TO RELY ON

Enterprise Software License

Management Best Practices
A White Paper
12 Steps to Establishing a Complete License
Compliance Solution
Enterprise Software License Management Best Practices:
12 Steps to Establishing a Complete License Compliance Solution
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Software License Management (SLM) is a structured and systematic approach to managing the
full lifecyclefrom purchase to disposalof software licenses in an ongoing, proactive basis.
A complete SLM strategy combines processes, people and appropriate technology systems to
mitigate the risks and cut the associated costs of software license issues.
This white paper introduces the reader to the basic tenets of SLM and the chief problems and
challenges facing enterprises in regards to managing their technology licenses. It also highlights
the benefts of embracing a complete SLM programfrom processes and people, to systems
and 12 critical steps companies can immediately take to establish an enterprise SLM solution.
Enterprises today simply do not know what technology assets they own. Whether hardware or software,
technology solutions have become ubiquitous and critical to the operation of nearly every business, but
this technology explosion often has those companies drowning in the very systems and applications that
deliver so many benefts.
Software license compliance, in particular, has become a most critical problem. One recent survey
revealed that 50 percent of enterprise respondents felt they had a signifcant risk of being out of
compliance with their licenses.
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That may seem a surprisingly high percentage, but a majority of
enterprises would certainly be non-compliant if they were audited today. While the Business Software
Alliance (BSA), a global organization representing the nations leading software manufacturers, estimates
software piracy costs companies more than $30 billion in 2005,
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expenses to businesses that overpay for
unused licenses or are penalized by vendors for non-payment, can be nearly as dramatic.
Software vendors for years have been stepping up their audit processes and according to a 2006 Gartner
study, 35 percent of enterprises were subject to on-site software audits. They expect that trend to
continue, with nearly a third of all companies experiencing at least one audit yearly until 2010.
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It matters
little that many enterprise compliance issues are accidental, as penalties from software vendors and
the Business Software Alliance can reach $150,000 for each software title used illegally. Having just 10
desktops using one out-of-compliance software title can result in $1.5 million in fnes, and the negative
publicity for acting as an intellectual property violator should not be understated. In fact, BSA recently
announced on July 2, 2007 that it will intensify eforts to battle software piracy in the workplace by
increasing its current rewards incentive for piracy whistleblowers from $200,000 to $1 million.
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Moreover,
criminal penalties for violating software and information technology licenses have become a greater
focus worldwide, with many countries, including the U.S., the U.K., China and Russia, stepping up their
enforcement operations.
Companies have therefore realized they must do a better job tracking their software spending and
licensing and can now turn to Software License Management (SLM) solutions to help that cause. SLM is
a structured and systematic approach to managing the full lifecycle of software licenses on an ongoing,
proactive basis. Moving well beyond a technology-only solution, a complete SLM strategy combines
processes, people and appropriate technology systems to mitigate the risks and cut the associated costs
of software license issues.
Problem
Abstract
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Software License Management, as described above, is not a simple plug-and-play operation. But
companies often perceive it as such, and not as the multi-step, pragmatic approach to organizing
enterprise software that it should be. That has lead to a multiplicity of challenges to implementing an all-
encompassing SLM solution.
First, enterprises often approach SLM without clear business objectives in mindinstead theyre
frantically trying to answer pressing questions from their CIO as quickly as possible, or responding to an
upcoming third-party software audit. This haphazard approach, however, undermines both the perceived
and actual benefts of a complete SLM solution, so the entire process is undervalued.
Additionally, like many other problems in need of a quick fx these days, businesses simply throw
technology at their software licensing issues. To be sure, a critical portion of SLM is technology, but that
alone cant be considered a silver bullet. Also, a technological quick fx approach focuses corporations
on the installation of software, whatever it may be, with little functional integration across the entire
enterprise. SLM technology must pull data from multiple sources (HR systems, call centers, software
libraries etc.), and relies chiefy on the data culled from those other systems. Whether grabbing
information from industry leading database systems or home-grown enterprise systems, an SLM solution
is only as good as the data, so a piecemeal approach cant be successful.
At the opposite end of the spectrum, some companies insist on trying to solve all of their licensing woes
in one fell swoop, ultimately biting of much more than they can chew with an enterprise-wide SLM
approach. Companies that do this typically underestimate the cultural changes necessary to solving the
problem.
Its a delicate balance, because taking a narrow approach to SLM can result in little change, while
overreaching will run up against stubborn, possibly decades old operational structures and practices, with
neither approach accomplishing anything worthwhile. There are ways to achieve that balance, however,
and the following best practices can help the enterprise to establish a complete, and manageable SLM
strategy.
IT spending represents an estimated 25 to 35 percent of a companys entire budget so its little wonder
CIOs and CFOs focus their energies on software spending. SLM, however, must reveal more than
hard monetary numbers. Again, to be successful and overcome the typical challenges of an SLM
implementation, it should encompass business processes, people and technology systems in nearly equal
parts. Heres what that entails:
Business Processes
The frst step to implementing a successful SLM program is establishing new business processes around
software. Organizations must initially analyze and assess their software and licensing needs, what they
know about their licenses already and what questions should be answered with an SLM program. Its
not enough to know whether a piece of software is owned, for example. Companies should know who
or what department has purchased the software, what hardware holds the software, who has access to
that software and more importantly, who is actually using it. Once that software is purchased, does the
organization know the often-complex terms of the licensing agreements, and can it prove compliance in
an audit?
Challenges
Best Practices
Enterprise Software License Management Best Practices:
12 Steps to Establishing a Complete License Compliance Solution
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Answering questions like these when embarking on an SLM program analysis will establish a link between
overall business goals and the processes necessary to make that happen. Next, ongoing standards,
policies and processes around each main software title. For example, an organization with an enterprise
agreement with Microsoft would want to create policies around each installed version of Microsoft
Ofce need to be established. This will lead to a honed, mature process, organized under a master plan or
roadmap to keep the project on track.
While this corporate-wide analysis can give companies a clear view of what they can accomplish with
SLM, projects, at least initially, should remain small. Enterprises implementing a pilot project should
handle only three to fve software titles, and while rolling out a full, enterprise-wide solution, each project
should be rapid and repeatable, scaling across divisions or departments as processes are perfected and
proof-of-concept is validated. This limited scope makes targets realistic and manageable and success
very much attainable. Tested in a controlled environment, success and cost savings can also be quickly
demonstrated with each project, encouraging continued use of the SLM program.
People
Once processes, policies and software licensing standards are established, they must be communicated
to everyone within the organization. Rules around what software can be installed and who may install
it should be clear. Without ofcial, enforceable and communicated policies behind SLM, a program can
quickly stall.
At the same time, employees should be given initial immunity or amnesty for existing compliance issues.
By encouraging freedom to come forward, staf can help capture initial software licensing problems and
get the staf on board with the overall SLM program.
Another step companies can take to establish and help prove it is taking this new SLM process seriously
is to appoint and empower someone as a Software License Manager. A single, powerful point person can
drive the necessary changes needed to establish a successful SLM initiative.
Technology System
It should be quite clear by now that SLM takes more than technology implementation. While
technology is not a driver of SLM, it is a critical enabler, and certainly plays a major role in any successful
rollout. SLM vendors have taken various technology architecture approaches, supporting diferent
underlying technologies and enterprise vendors, so not only does an SLM solution need to support
and meet enterprise processes and procedures, it must also ft within and support a companys current
infrastructure and technology systems. In addition, the following section outlines the functionality in SLM
systems that companies should look for to round out a full-scale solution.
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Perhaps most importantly, SLM technology should provide a single pane or Web portal that gives a
universal view of all software license data critical to the organization, and the capacity to interact with
that information, to anyone responsible for organizing, maintaining and running an SLM program. The
solution should encompass Asset Management, holding software license records and associating them
to hardware, users, locations and workstations; it should consolidate Service Management, allowing
self-service catalogs to complete software purchases, and the IT help desk to see what applications each
user has on their machine. It should also contain Compliance Management capabilities, which allow
for the integration of auto-discovery data, hardware data, purchase order data (i.e. the software vendor,
hardware manufacturer, cost center billed etc.), departments, divisions and corporate locations utilizing
the software, while correlating that information with ongoing company projects.
In order to make each of these modules most efective, they should be integrated through a single
database, drawing information from existing auto discovery tools like Microsoft SMS, procurement
applications, any LDAP directories as well as databases based on open standards. Integrating with these
existing corporate resources allows the technology to exchange and capture information, making
it usable within the new SLM solution. Lastly, a Business Process Management (BPM) module, with this
integration, can allow enterprises to manage the workfow, which is typically a manual process, across applications
and departments to maintain up-to-date software licensing.
An SLM program, skillfully implemented, has numerous obvious and other not so obvious benefts.
First and foremost, with software vendors and associations more aggressively pursuing licensing and
intellectual property compliance30 percent of large enterprises will have at least one software audit
per year until 20103SLM allows companies to avoid software noncompliance penalties. Enterprises can
efciently fnd how many licenses theyve purchased, and how many are being used. This also allows the
enterprise to get quickly prepared for these typically expensive and resource-consuming software audits.
Manpower alone to manually prepare for these audits can be astronomicalone large enterprise spent
more than three months each year prepping with spreadsheetsand SLM provides an ongoing count of
software licenses.
Just as dramatic is the elimination of overspend on software. For example, many companies buy more
licenses than are necessary for their workers in order to avoid compliance issues. Theyd rather spend
what is perceived a small amount up front to avoid large non-compliance fnes, but theres no reason
everyone in an organization needs each and every piece of software. SLM can determine who is actually
using software on their machines over the course of several months, removing under-utilized titles from
circulation and reducing ongoing licensing costs.
While Sir Francis Bacon wasnt thinking of software at the time he said it, knowledge is power. In this case,
negotiating power is now in the hands of the customer over vendorsits quite amazing what can be
accomplished if a company actually knows what it owns and whats actually used. By learning enterprise-
wide usage patterns, it becomes easier to negotiate new contracts and defend previous purchases.
This leads to nearly immediate ROI, seen as a result of purchase avoidance, license re-use, and compliance
from tighter management of just one or two software titles. This is also why enterprises should tackle just
a couple software titles initially, proving quick ROI to the management team.
Benefits
Enterprise Software License Management Best Practices:
12 Steps to Establishing a Complete License Compliance Solution
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The fnal benefts of a complete SLM process revolve around enterprise security and stability. Once
processes, policies and software licensing standards are established and communicated, the organization
can maintain a handle on what is installed on machines. Help desk support improves because the IT desk
need only know a handful of applications on the desktop, while at the same time it becomes easier to
manage the rollout of security patches and application updates.
As an enterprise adopts more SLM programs, ROI in turn improves. The key, however, is the
implementation of an SLM solution in short, manageable phases with measurable goals and obvious
savings.
Cost Savings
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While enterprise SLM at a world-class level contributes the most to a companys bottom line, smaller,
incremental steps can quickly lead to ROI. The following are 12 immediate steps that can lead to the
establishment of a full and efective SLM program:
1. Appoint and empower a Software License Manager
Hiring or handing power to a single point person can drive the necessary changes that establish a
successful SLM initiative.
2. Make SLM every employees responsibility
Clearly communicate SLM initiatives and requirements and provide immunity to all staf for any
existing license compliance issues.
3. Centralize software agreements, media and authorization keys
Software licenses are legal contracts; treat them as such by organizing proof of purchase, electronic
authorization keys and paperwork in a single, secure location.
4. Standardize software agreements
Maintaining similar language across software vendor contracts leads to more efcient management
and understanding of those licenses.
5. Defne standards, policies and processes that map clearly to business benefts
Once established, communicate and enforce these across the enterprise.
6. Tackle the top three to fve vendors in a pilot SLM project
Simplifying SLM rollout can demonstrate the most rapid ROI and grab management attention.
7. Enable self service requests and automate approval routing
Establish a single purchasing solution within SLM to automate software acquisition and approval,
allowing employees to purchase the applications they need.
8. Leverage an enterprise IT Asset Management (ITAM) solution
Use ITAM to discover what hardware exists within the enterprise.
9. Integrate SLM with the ITAM solution
Without accounting for hardware, enterprises cant account for the software on those machines.
10. Integrate SLM with Microsoft SMS and other auto-discovery tools
Existing tools enable rapid software and hardware discovery.
11. Integrate SLM with IT procurement
Tying these systems together gives enterprises instant and ongoing insight into new software and
hardware purchases.
12. Integrate SLM with the Enterprise Service Desk
Giving the IT support desk hardware and software information allows for efcient upgrades, problem
fxes and distribution of new applications and tools.
First 12 Steps
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ASG-Enterprise_Software_License_Mgmt_White_Paper_20120725en
Many enterprises are drowning in technology hardware and software and are often unable to keep
track of their rightful property and license terms. As software vendors in particular step up their contract
enforcement and auditing, companies are poised to be hit by licensing fnes that can reach above
$150,000 per incident. At the same time, they often overpay for software licenses that for months on end
go unused and unnoticed.
Enterprise Software License Management (SLM) allows companies to mitigate these very real risks.
SLM should be a systematic approach to licensing that combines processes, people and appropriate
technology systems, implemented in a manageable, step-by-step manner. These SLM systems allow
enterprises to gain a handle on their licensing agreements, quickly prepare for software audits, avoid
compliance penalties, reduce spending on unused software and quickly demonstrate ROI.
This white paper describes where to begin with Software License Management and the frst 12 steps
enterprises can take to immediately lay the groundwork for a complete enterprise SLM solution.
References
1 Ortiz Jr., Sixto Ensuring Software Compliance.Processor. January 27, 2006: Vol.28 Issue 4.
http://www.processor.com/editorial/article.asp?article=articles/P2804/30p04/30p04.asp&guid
2 Business Software Alliance. Third Annual BSA and IDC Global Software Piracy Study.
May 2006.
3 Bona, Alexa and Disbrow, Jane B. Gartner Survey Shows Increases in Software License Audits.Gartner Research. December 20,
2006: ID Number: G00145226.
4 Business Software Alliance. Software Group to Reward Individuals Up To $1 Million for Qualifed Reports of Copyright
Infringement.Press Release -July, 2, 2007.
Conclusion