What:

Flexera Software’s annual “Key Trends in Software Pricing & Licensing Survey” is now live and open to executives at enterprises, independent software vendors (ISV’s) and intelligent device manufacturing companies. The survey is part of an industry-wide effort to gather valuable insight into how software producers, intelligent device manufacturers and enterprises view software licensing and pricing issues. Those interested in taking the survey can access it at the following links:

• Survey for software producer & intelligent-device manufacturer executives
• Survey for enterprise professionals

Why:

Emerging trends such as the Cloud and virtualization are changing the way software producers and intelligent device manufacturers must monetize, license and entitle their products in order to meet changing customer needs. These trends also impact how enterprises pay for and use software and intelligent devices. The 2011 Key Trends in Software Pricing & Licensing survey will provide valuable insights into these current and future industry developments impacting software vendors, intelligent device manufacturers and enterprises.

When:

Survey results will be presented by Amy Konary – Research Vice President – Software Licensing & Provisioning, IDC at the 2011 SoftSummit conference and will be made available to the industry at large after the conference.

All those who participate and provide contact information will receive an executive summary of the results and will be entered into a drawing for an Apple iPad 2.

By Steve Schmidt

As noted in the recent IT Counterpoint article “How to prepare for a software audit”, software audits are on the rise, with 61% of those responding to a recent Gartner survey reporting that they had been audited in the last 12 months. Many software vendors are participating in this auditing trend, including Adobe, IBM, Microsoft, Oracle and SAP. Now is the time for enterprise consumers to ensure software license compliance. It should be a proactive and ongoing activity, not just a reactive and event-based one. These and a few other simple guidelines will prepare an organization for potential audits and establish a foundation for true license optimization.

According to Gartner, the 61% figure “was the highest percentage of any comparable survey. We ask this question annually in surveys, and in 2009 the percentage was 54%; in the prior three years it was between 30% and 35%.” Additionally, there is anecdotal data from some companies that experiencing multiple audits annually is becoming more common. Reasons cited include a lack of “investment in the expertise required to understand and interpret license terms and conditions”, as well as “ever more complex deployment requirements, such as virtualized environments.”

This data is reinforced by results from the 2010 Key Trends in Software Pricing and Licensing Survey. 53% of enterprises responded that at least some of their software license spend is associated with applications that are overused and therefore out of compliance. 71% of enterprises agree that tracking software license usage is important, based on the desire to reduce software costs and ensure license compliance, but more than a quarter of enterprises are dissatisfied with their current software license usage tracking model.
The primary and consistent recommendation is to invest in a software asset management process now. As stated in the Gartner report: “As audits are increasingly likely, if you don’t already have asset management processes, procedures, tools and funding available, then now is the time to get them. Organizations must fund IT asset management disciplines or will risk high, unexpected financial liability due to software compliance problems. Having good asset management can reduce the time and pain of a software vendor audit.”

Avoiding the potential issues associated with software license audits includes 5 Best Practices:

Plan ahead – Don’t wait to be audited. Be proactive and use industry data to support the prioritization of a software asset management initiative within the IT, Procurement and/or Finance departments. Audits generally result in unbudgeted true-up expenses to the organization—an event that should obviously be avoided. Maintain a central repository for software license information and keep it up to date. Keep track of installations, purchases, entitlements and vendor contracts in this central repository.

Seek continuous license compliance – This should not be just a onetime event around an audit. Use an audit or other project as a lever to get started, but build discipline to keep this an ongoing activity. A mature software asset management (SAM) process and automation are the keys to success. Relying on manual steps will increase the likelihood of errors and will be costly in terms of staff time required to respond to an audit.

Implement the next generation of software asset management – Go beyond just knowing what is installed, to tying together information on what is actually being used with license entitlements that can reduce license consumption. License optimization is where the real insight and true value lies, providing the fastest return on your software asset management investment.

Start with the areas of greatest spend and risk – Establish quick wins with the most valuable software assets, based on total spend and greatest software audit liability risk, then expand the program to the next set of applications. Consider the eventual need to address these second and third tier applications when setting up initial processes and technical solutions, to ensure that the solution will scale.

Take a broad view across the organization – View the software estate holistically, so licensed assets can be leveraged from one department to another. Departments or regions that are over-licensed may be able to share those assets with those that are under-licensed (out of compliance). Additionally, it may also be possible to remix applications licensed from some vendors, trading licenses of specific products or product tiers for others that better suit the needs of the organization.

The increase in software audits strongly signals a gap in the IT industry, a need for additional visibility, control and license management. For the enterprise consumer, next generation software asset management processes and technical solutions can go a long way to closing the gap.

1E and AppClarity integrate to provide comprehensive applications management including self service software provisioning and complete license visibility and control.

AppClarity offers an immediate reduction in software costs by intelligently helping organizations to reduce, reclaim and recycle their software assets. AppClarity financially quantifies software waste by presenting a rationalized inventory of installed applications, license cost and where installations are unused.

Watch an introductory video to learn more about AppClarity.

By John Emmitt

A recent article published by industry analyst R “Ray” Wang of Software Insider and Constellation Research Group shows that software audits have risen dramatically over the past 3 years. But you probably already knew that if you are responsible for license compliance in your organization. In the Q1 2011 Software Licensing and Pricing Trends Survey, 58.9% of respondents had been audited in the past year. This was up from 26.6% in the 2008 survey. The primary reasons that major software vendors gave for audits were- to keep customers in compliance and to drive incremental license sales as well as find opportunities for new deals. So, as might be expected, audits are mostly about generating revenue for ISVs.

The article also alludes to the “pain and agony” of a vendor audit and then provides some sound advice for enterprises to help them be better prepared for a software audit or license review. Software audits are costly not only in terms of potential unbudgeted license true-up fees, but also from the standpoint of the time spent collecting the data for the auditors. One customer of ours, a large financial institution, was able to respond to a Microsoft license review in less than 2 weeks time. Another bank of similar size was audited by the same third party audit firm, and required a full year for a similar exercise. There are a lot of dollars attached to an audit process that takes your IT staff a year to complete. You need better software asset management processes and tools in place to minimize this time and expense.

In fact, deploying software license management tools is one of the recommendations in the Ray Wang article. Having the proper processes and tools in place can help you avoid software audits altogether, since vendors generally go after only those companies that they believe to be out of license compliance. That’s why audit ROI is typically very high—the software vendor is fairly certain that there is a compliance problem before they knock on your door. And by high ROI, I mean in the 1000’s of percent in some cases! They do database analysis to check for licensing anomalies that are indicators of non-compliance. For example, if a company has 5000 employees but only 3500 Office CALs, that might trigger a review. Merger and acquisition activity is another common audit event trigger.

Of course, an optimized license management program pays many more dividends than just those discussed here in relation to software audits. Software spend management and ongoing cost reduction are key benefits of optimized license management. So, even if your organization is in the 41.1% minority, and you’re not facing any software audits, there are still planty of reasons why you should implement a software asset and license management program.

Andy Ellwood, iQuate
By correctly interpreting the complexity surrounding Oracle usage and licensing, iQSonar delivers accurate information relating to ALL aspects of an Oracle deployment.
This was illustrated by an engagement with a large Irish financial institution, in which iQSonar scanned Oracle on several hundred Solaris machines. One of the servers running Oracle Enterprise Edition had a single Sun UltraSPARC-T2 quad core processor. Each of the 4 cores had 8 threads. Under Oracle licensing policy this type of processor has a core factor of 1, so it requires 4 processor licenses. At current Oracle list price a one processor license for Enterprise Edition is $47,000, so the correct list price for Oracle on this server is $190,000.
The manual audit performed by the customer had stated that the server had 32 processors (as indeed did the CPU Highwater recorded in the Oracle database). Licensing for 32, rather than the required 4 license would represent a list license cost of $1.71m.
On another occasion, Oracle License Management Services were engaged with a UK Law Enforcement agency with unique security and operational requirements.
Owing to this complexity – and the size of the network (over 10,000 network devices) – various manual and agent based automated attempts to identify their Oracle deployment had not been successful. This increased the risk of non-compliance and of inefficient utilization of purchased licenses. These issues had also delayed the submission of complete audit data to Oracle by several months.
iQuate completed the audit in just five days without any network, performance or security issues. The customer now has an accurate view of their Oracle usage and was able to report their position back to Oracle LMS.
Finally, after performing a successful Oracle scan for a US based multi-national petroleum organisation across their global WAN network, iQuate was asked to use iQSonar to check some additional operational issues.
As part of their SOX-compliance guidelines, no default or “obvious” Oracle passwords were to be used across the organisation as this represented a significant security issue. iQSonar was able to quickly discover that non-compliant passwords were in use on 12% of Oracle instances.
iQSonar is the only third party tool verified by Oracle as providing accurate and definitive Oracle deployment and usage data

By Patrick Gunn
Recent research findings from FAST in the UK revealed that one software supplier audited 50% more businesses in 2009 than in the previous year. I believe this to be a reaction to the difficult economic times. Most software vendors have intensified their efforts to ensure software license compliance as a means to preserve their revenue during the downturn.
The larger the software publisher, the higher the risk of a software license audit. In fact, the result of an audit can potentially be one of the largest unbudgeted expenses for an enterprise. Unless organisations have their own optimised software asset management solution, they are pretty much at the mercy of software vendors when the auditors come knocking.
An Adobe software audit at a multi-national company is a case in point. This company was able to eliminate a large seat-count Adobe license liability worth over $3.8 million by using a next generation software asset management tool to accurately recognise installed software. The company proved to the Adobe auditors that it actually had a free Flash Player installed as opposed to the several hundred dollar Flash Professional.
When defending against an Adobe audit, pay special attention to the following:
• Inventory and asset recognition:
Collect and analyse inventory for all computers to accurately list all the installed Adobe products. You should include all versions and editions of the different products too. For example, if you have three versions of Adobe Acrobat installed, then the inventory analysis must accurately report all of these versions.
In addition, you must be able to accurately determine the versions and editions of Adobe suites installed versus the component products. This can have significant cost implications for you – Adobe suites cost less than the individual components. Not recognising the Adobe suites can therefore affect your software license liability.
• License management:
The common Adobe volume license agreement is Cumulative Licensing Program (CLP). The product use rights (PURs) for each Adobe product purchased under CLP can differ, from product to product and version to version. For example, Acrobat 6.0, 7.0 and 8.0 may all be installed on the same computer and it will only consume one license. However, this is not the case for the older versions of Acrobat, where each installation consumes a license. Hence, the importance of accurately reckoning installations and applying use rights correctly.
With an enterprise license optimisation program in place, your organisation will be ready the next time the auditors come knocking.

Gartner reports strong rise in software audits

September 11th, 2009 by Matt Fisher

According to a recent report from Gartner (”Gartner Polls & Surveys Show an Increase in Software License Audits”, 31 July 2009), more than 50 percent of organizations it talked to say they have been audited by at least one software vendor in the last 12 months. In research undertaken between February and June 2009, 56 percent of respondents said they had been audited, compared with 30-35 percent for the same study in 2008.

When filtering the results to show only EMEA-based organizations, the result is even higher, with 63 percent of respondents reporting at least one audit request.

According to a variety of sources from both the software vendor and Software Asset Management (SAM) communities, the overall rise in audits is largely not due to an increased level of activity from vendors that already had active compliance programs in place, but instead due to a number of other vendors introducing compliance programs for the first time.

While Adobe, Microsoft, Oracle and IBM were cited as the most ‘prolific’ auditors, survey respondents also reported audit requests from no fewer than 18 other software vendors, including BMC, CA, HP, SAP and Symantec.

As the report states, “On-site audits aren’t pleasant”, and Gartner strongly advises that end user organizations adopt Software Asset Management and License Management practices and technologies well in advance of any audit, so that the company is better prepared to react in a timely fashion and without causing major disruption to normal business activities.