September 13, 2017
Tomás O'Leary

In the grand scheme of running business, software licensing tends to be fairly low on the C-Suite’s list of priorities. As a result, the software asset manager typically struggles to secure the funding needed to maintain the correct level of licence coverage – or the tools needed to simplify the management process.

1. Emphasise the penalties

Just as there are many different types of software licenses, so too exists a broad range of penalties for compliance failures. Every penalty has two common elements however.

First, failure to maintain the correct license count for installed applications carries a stiff financial penalty. At the very least your business will be expected to pay the balance between the number of licenses held, and the number of instances installed. This fine increases further when IBM® (or other OEM) apply their own charges and costs on top.

The second element of the penalty involves “naming and shaming”, publicising the names of businesses found to be non-compliant. Such negative publicity has a serious effect on the reputation of your business, and could affect future sales and profitability. This would in turn compound the costs associated with licensing non-compliance.


2. Outline the realities

The threat of audits is very real – they do happen with alarming regularity. One Gartner survey found that 61% of respondents had been audited in the previous 12 months. This marked a 7% increase on the number of audits carried out two years earlier.

For organisations reliant on IBM® software, the risk of audit is even higher. 41% of reported license audits were conducted by IBM® – the highest rate of all vendors mentioned. With this in mind, the audit question becomes “when?” rather than “if”.

Your business cannot continue to hope that IBM® won’t pay a visit.


3. Put a price on everything

Nothing speaks to the C-suite as clearly as money – after all, these senior executives are charged with ensuring the business continues to turn a profit for its shareholders. So when it comes to trying to help the board understand the importance of software licensing, it must be couched in terms of cold hard cash.

Obviously quantifying the cost of “missing” licenses is relatively straightforward – but as another capital spend, don’t expect the board to be too interested. In order to convince them of the need to invest in licenses – and licensing management tools and services – you will have to clarify the costs of non-compliance.

Obviously this will mean researching cases at other businesses to create an accurate estimate of the fines and related costs associated with non-compliance. You should try to gather as much detail as possible, including the secondary costs to the business through damage to reputation, lost contracts and audit-related productivity losses.

You can then prove that the cost of purchasing additional licenses is far lower than the cost of failing an audit.


4. Solving shortages and production bottlenecks

When you are managing licenses effectively, applications are removed from systems where they are not required. However, even a basic change of desk could leave employees unproductive while they wait for applications to be redeployed. The time spent waiting for installation is effectively time wasted.

Obviously the software asset manager needs to ensure that they are not maintaining a massive surplus of licenses. But they do need the authority and budget to purchase additional licenses as and when required.

Again the key to a successful pitch will be by converting lost/reduced productivity to a monetary value. You may need help from the HR department to quantify losses based on employee salary – but don’t forget to factor in the knock-on costs of lost productivity throughout the rest of the supply chain too.


5. Achieve compliance targets

Shareholders expect your business to operate responsibly – and in compliance with any legislation and operating agreements. Which means that even if your organisation doesn’t have codified compliance targets relating to software licensing, you are still expected to maintain standards.

Your own licensing inventory will help to identify shortfalls, immediately showing where compliance targets are not being met. Taken in isolation, those figures are unlikely to sway the C-Suite – but they could add weight to the arguments you have already presented using tips 1 to 4.


Get some help

Finally, you should consider securing outside help. Origina can not only help audit your different types of software licenses, but we can also provide advice about your next steps. And as part of that guidance, we can help prepare you for your next meeting with senior management.



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