Member Article

How to reduce software licencing costs by 20%

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 a software vendor or the Business Software Alliance for non-compliance, but also save them an average of 20% a year on their software costs.

So what are the most common software licencing mistakes that 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 OEM or ‘Original Equipment Manufacturer’ licences: These are the licences for software that comes pre-installed on a piece of hardware, such as the 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) then you are using an invalidated licence and are vulnerable in a software audit.
• Paying too much for Enterprise Agreements: Enterprise Agreements or ‘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 overpay, 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 via software asset management can help companies stay on top of these complexities while also ensuring that software 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 that no licences are lost or double counted and that the information is there 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 that are tracked together), automatically reconciling software entitlements (e.g. licences) against software use (immediately flagging any shortfalls or overspend - the true power of software asset management), allowing you to re-harvest or retire unused software altogether and finally, putting you in a much better position when it comes to negotiating costs with software 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 revenuegenerating corporate asset (which it is) 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 that the asset is well managed, but save the company 20% on a sizeable expense every year.

This was posted in Bdaily's Members' News section by Licence Dashboard .