SOFTWARE MUST BE TREATED as a revenue-generating asset and not simply as a cost to the business. If companies take the management of their software seriously then they will not only save themselves the embarrassment and financial cost of being fined by an IT vendor or the Business Software Alliance for non-compliance, but also save an average of 20% a year on software costs.
So what are the most common software licencing mistakes companies make?
• Assuming software licences are simple: Software licences come in many shapes and sizes. Some are licenced by end-users, devices, virtual machines or even processor cores.
• Underestimating the limitations of Original Equipment Manufacturer (OEM) licences: These are the licences for software that comes pre-installed on a piece of hardware, such as a copy of Windows on a new PC. These licences are highly limited as they are tied to the device they come on, so if you install them on another machine (even if you have the activation key and the original machine is decommissioned) you are using an invalidated licence and are vulnerable in a software audit.
• Paying too much for Enterprise Agreements: Enterprise Agreements (EAs) are often viewed as the licencing equivalent to an all-you-can-eat buffet, in so much as they cover you for all required licences during the course of a year for an agreed annual fee. However, they must be ‘trued up' at the end of each year. Most companies over-estimate their needs and over-pay, simply because they don't know how much they're really using.
• Remote access: Logging into a work computer from another device (e.g. a laptop or tablet) often requires an additional licence. This catches a lot of people out.
• Virtualisation: This is a software licencing minefield. Each instance of a piece of software on a virtual machine must be licenced separately, so if you run four virtual machines on a single server then you need four licences. However, since virtualisation's appeal lies in the flexibility it offers in booting up and shutting down machines as required, known as ‘dynamic provisioning', it becomes a lot harder to say how many machines you really need licences for.
Proactive management of software can help companies stay on top of these complexities while also ensuring IT expenditure doesn't run away from itself.
This is achieved by a number of means, such as: improving record-keeping and centralising all contracts (ensuring no licences are lost or double counted and the information is in one place when you're audited); helping to define standard software builds (this limits the risk of licencing confusion as software is packaged into bundles which are tracked); automatically reconciling software entitlements (e.g. licences) against use (immediately flagging any shortfalls or over-spend; allowing you to re-harvest or retire unused licences; and putting you in a much better position when it comes to negotiating costs with vendors.
If you don't know how much you're using, how can you negotiate from a position of strength? Through the proactive management of software, companies can begin to treat software as a revenue-generating corporate asset rather than a liability to be written off, as it is most commonly treated today. By doing so not only will companies have the peace of mind of knowing the asset is well managed, but save the company as much as 20% on a sizeable expense every year.
Sign up for Financial Director email alerts
Please enter your email below to receive your profile link
Search by job title, salary, or location - we only list senior financial roles
1830, 12 Mar 2013
Now in their second year, these prestigious awards recognise those in finance that have demonstrated success and innovation over the last 12 months. Entries are now open!
3pm, 28 Nov 2013
Join Financial Director for this informative web-seminar on how to use communication technology as a way to improve productivity, profits and reduce costs
Send to a friend