10 Tips to Taking the Sting—and Penalties—Out of a Software License Audit

 
 
By Chris Preimesberger  |  Posted 2015-08-03
 
 
 
 
 
 
 
 
 
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    1 - 10 Tips to Taking the Sting—and Penalties—Out of a Software License Audit
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    10 Tips to Taking the Sting—and Penalties—Out of a Software License Audit

    More and more companies are being audited by their software vendors—and the penalties can be costly. This list of to-do's will help firms avoid such audits.
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    2 - Don't Boil the Ocean
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    Don't Boil the Ocean

    The 80/20 rule applies, especially to software license management. There are usually a handful of software vendors that provide critical (and usually expensive) software for your organization. Even within a given vendor's software portfolio, it is generally a subset of their products that demand the majority of focus. So when setting up software license management processes, tools and systems, focus on the "high rollers." The "me too" applications can be addressed later.
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    3 - Build License Management Into the Fabric of Your Business
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    Build License Management Into the Fabric of Your Business

    Unless license management is part of your normal business processes, it will not be considered. License management highlights the difference between important and urgent; it is always the former but seldom the latter (unless you are facing an unbudgeted seven-figure software audit liability). Left unattended, it will largely be ignored. Therefore, license management must be included within signed-off procedures to ensure license compliance is maintained and software costs are controlled.
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    4 - Let Each Vendor Know You Are Serious About License Compliance
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    Let Each Vendor Know You Are Serious About License Compliance

    One of the most disruptive activities for any organization is to be audited by a software vendor. You can capitalize on the work you put into license management by letting the vendor know how seriously you are taking the subject and demonstrating that you have control of your software estate. Organizations that implement best-practice software asset management and license optimization processes and have the tools in place to help automate these processes are in the best position to defend themselves against a software audit and in many cases avoid them altogether.
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    5 - Adopt a 'Continuous Compliance' Strategy
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    Adopt a 'Continuous Compliance' Strategy

    Too often enterprises don't look closely enough at their compliance position unless they are faced with a vendor audit. By this time, it is often too late because already there will have been one if not several instances uncovered in which the organization fell out of compliance. It's these infractions that lead to unbudgeted penalty fees. Best practices dictate that organizations should always be audit-ready; they can accomplish this by adopting a "Continuous Compliance" strategy. See the next slide for details.
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    6 - Defining 'Continuous Compliance'
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    Defining 'Continuous Compliance'

    This involves putting into place the necessary people, processes and automation capable of tracking software license inventory, usage data and contract terms—and reconciling this data—to provide an ongoing license compliance position. A software license optimization solution, for example, can present this compliance report within a management dashboard that will show compliance positions and areas of risk on a continual basis. Achieving continual compliance is the only way organizations can take the surprise and sting out of inevitable vendor audits.
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    7 - Involve Senior Management
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    Involve Senior Management

    You will need cooperation from numerous parts of the organization to implement an effective license management program. Unless you have the "buy-in" from senior management, you run the risk of having to implement a flawed process due to lack of cooperation from certain areas.
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    8 - Centralize License Management
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    Centralize License Management

    There are many business processes and so much data associated with license management that it is imperative that contract negotiation (and monitoring) is carried out in the most centralized fashion. The single characteristic that differentiates the best-in-class enterprises in this space is that they have consolidated and centralized their enterprise-wide licensing activities.
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    9 - Start Early
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    Start Early

    Don't wait until the last minute to begin preparations for a contract negotiation with a major vendor. The key to a successful negotiation is to be prepared, be informed and be clear on desired outcomes. Mobilizing a cross-functional team, gathering information for a fact-based discussion and defining a strategy that will meet business objectives can often take several months of careful, detailed work.
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    10 - Track Progress
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    Track Progress

    As noted already, it can be easy for license management to lose priority and focus in your organization. So unless you start with a baseline and track your results, you will be unable to demonstrate the cost savings, cost avoidance and license compliance risk reduction that accrue from these activities.
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    11 - Publicize Wins
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    Publicize Wins

    Publicizing your successes will help build the credibility of your software asset and license management program, motivate others and align their efforts. This is an important part of building a mature program over time. The most mature license management programs have the greatest return on investment.
 

IRS and state/federal regulatory audits aren't the only background checks about which enterprises need to worry. Increasingly, auditors are dropping by for a friendly chat and using familiar calling cards from companies such as Microsoft, IBM, Adobe, Oracle and SAP, to name a few. According to a recent IDC industry report, 63 percent of enterprises were audited by their software vendors in the last 18 to 24 months to determine whether they were out of compliance with their software contracts. The penalties—and these are usually unbudgeted—extracted from companies as a result of a contract issue can be costly as well as problematic. According to that report, 56 percent of organizations end up writing checks to send the auditor on his way—and 21 percent of the time those payments are $1 million or more. How can this be possible, and what can CIOs do to take the sting out of the auditor's tail? In this slide show, using eWEEK archives, the IDC report and industry advice from Flexera Software, we offer a list of to-do's to solve this problem.

 
 
 
 
 
 
 
 
 
 
 

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