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Software Asset Management Blog

The Increasing Complexity of Software Licensing Agreements – How to Best Manage the Corporate License Asset

by: Brent Pietrzak

I was recently reading a blog post from Mark Brewer (http://brewerma.wordpress.com/2010/03/08/licensing-challenges) that laments the difficulty in managing licenses as a corporate asset and the increasing complexity of software license agreements. With the pace of technology related acquisitions, disruptive licensing technologies (virtualisation, mobile computing, “smart” computing, etc.), I expect the licensing of software to become more complicated, not less.
Software vendors are struggling to rationalise the software licensing options available to customers because:

• Every acquisition introduces new software licensing models and challenges

• Software vendors are unsure of how to monetise virtualisation

• Supporting SaaS and perpetually licensed models is becoming more commonplace and challenging

• The improvement in capabilities of “smart” devices and platforms is causing some vendors to add new clauses to software licensing agreements, rather than taking a holistic approach to the challenges associated with devices
I agree with Mark’s sentiment that software vendors will be more successful and build longer term customer relationships if they take a strategic approach to software licensing and engage with customers to develop software license models that simplify in administration. As I don’t expect this to happen across the industry in a rapid fashion, I can share what some of our clients are doing to address the complexity of software license models.

At a high-level, many our clients are taking an approach of:

• Identifying the software applications making up the majority of the IT spend (ORACLE, SAP, Microsoft, IBM, etc.)

• Putting in place a software license management program office for these key technologies

• Embarking on a process of continual software license optimisation and rationalisation across these software providers; many organisations look at the problem of software licensing only when a compelling event occurs (e.g. vendor audit or renegotiation)—mature organisations address this problem via continuous enterprise license optimisation and management

• Contracting with domain specific license experts across the key technologies – in an ideal world, this would not be necessary but today’s complicated environments makes this essential for managing millions of dollars of spend for any one investment

In taking an approach that focuses on the high-value, high-spend applications, organisations can quickly gain control of the most valuable license assets. This can also establish a framework from which software license management can evolve over time to include software license assets that are worth proactively managing.

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This entry was posted on Wednesday, April 28th, 2010 at 10:13 am and is filed under Software Asset Management.