Why Accuracy is Crucial for License Compliance & Cost Reduction

Whoever said, “Throw caution to the wind, we will get through it OK” obviously hasn’t met the compliance and audit teams from the biggest global software vendors. It is fair to say that software licensing is a bit of a science in itself or as many senior management teams would say, “… a bit of a Dark Art“, this is due in part to the increasing trends in subscription-based, bundle arrangements, token-based, consumption-led and many other licensing specific models.

Even the most hardened Software Asset Manager can get in a bit of a spin when longstanding Enterprise agreements need to be renegotiated to consumption-based models, as often the data just doesn’t exist to make a suitable forecast estimate. If the estimate is overestimated, the company has paid too much up front, as will the contract allow for underutilized rollovers? If the consumption is underestimated at the renewal meeting the company could be faced with unexpected true-up costs.

It would appear that software vendors are moving away from a focus on software piracy, to a recognition that organizations have the right intentions to license correctly, but simply don’t have the correct processes and oversight in place to ensure they work within their agreed-upon contractual usage.

At TeamEDA we see two common (but avoidable) mistakes that occur regularly in all enterprises, small through to global:

  1. No single view of entitlements & contractual requirements. Companies are run at a much higher velocity than in recent years, the churn of staff in management positions sits at around 1.5-2 years. Which often means, when new licenses are purchased or renewals negotiated, it is a new manager in place who no longer has access to the previous negotiation history of contractual entitlements. Contractual documents, discount agreements, PO’s, payment schedules, geographic entitlements can all sit-in different IT document systems making it difficult to build a complete picture, or worse, be locked/lost when a manager leaves the company.
  2. Estimates are used for usage reporting, strategy trends or chargebacks. Obtaining accurate usage information for Engineering Applications (CAD, FEA, CAx, EDA, ALM, PDM, PLM, MBSE, etc.) is a little more complex than Business Applications as traditional SAM tools do not monitor FlexNet/Port@Host licensing. Therefore analysts may use a combination of the number of users in an Active Directory group cross-referenced with the maximum numbers in a license file. We often hear of Excel spreadsheets used to build an estimated usage profile, based on application managers intuition. More mature companies will use in-house scripts or purchase a solution to monitor the license daemons. Monitoring license servers is a complex business, at TeamEDA we have found in-house scripts and competitor tools interpreting check-out log files incorrectly and overestimating usage by up to 150%. If you estimate data you will overspend or underspend, either way, it is not being cost-efficient.

When faced with the increasing threat of software audits, ensuring you have an accurate compliance overview is essential. You must ensure you understand your license contractual requirements, such as not utilizing geo-located licenses across international borders. Which can often get forgotten, for example, when a German license server has 40 spare licenses and the Indian server is suffering constant denials, sharing licenses from Germany to India would resolve the situation. But this would also lead to a non-compliant license situation, an easy mistake to make at system admin level and an event the auditors will look for immediately.

TeamEDA’s LAMUM (License Asset Management and Usage Monitoring) product is the only industry toolset to combine asset management (tracking vendors, contacts, contractual documents, PO’s, etc) with a proprietary algorithm to ensure a 3 point check on actual license usage providing a holistic view of license assets. This information can then be used to inform decisions for purchases and renewals, often saving our customers over 20% annually.

Software license audits are feared across the industry, but with the right planning and processes in place to ensure you have a live and accurate picture of your license assets and usage, the level of risk is substantially mitigated.

This post was based on this LinkedIn post by Paul Empringham, TeamEDA’s European Sales Director. Paul has over 20 years experience within the Engineering and CAD/PLM software industries. He was a consultant with Siemens PLM working with many of Europe’s most innovative manufacturers. Paul has also held management positions at a number of organizations running Engineering Application teams and delivering large PLM transformation programs. Outside of work, Paul is a Level 2 ECB Cricket sports coach and enjoys skiing whenever the opportunity arises.

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