Licence Management as the Secret to Success: Save Money, Resources and Reduce Risks

The Gartner Group has been drawing attention to the importance of accurate software asset management for more than 20 years. Proper management of licences and contracts ensures legal certainty, protects against the payment of additional fees and serves as a planning aid for cost-optimised investment decisions.

Nevertheless, not everyone is embracing these calls with open arms. While a 2003 study found cost reductions of up to 50%, Gartner still came to almost the same shocking conclusion a few years ago:

• “According to Gartner, companies overspend up to 60% on software because of inadequate licence management.”*

Another figure is astounding:

• Around 38% of purchased software licences are believed to be gathering dust in the licence documents and are never used.

It does not have to be this way. With professional software licence management, you can actively reduce IT costs, monitor the product life cycle of IT systems, optimise procurement decisions and comply with legal regulations more easily.

Large Companies Use Sam Tools

While most large companies have now professionalised their licence inventories with SAM tools, small and medium-sized companies and many startups often lack clear documentation structures.

This disorganisation can ...

• cost money,
• tie up a lot of manpower,
• create risks which may prove to be expensive.

The problem often starts with disorganised procurement channels and installation processes and then culminates in the absence of central archiving for all contract documents.

Unused licences are often not well distributed or systematically sold. If the software manufacturers also announce an audit, the consequences of poor licence management can quickly become painful.

Do Not Underestimate the Importance of Software Compliance

Software licence compliance is not expensive once you have a good system in place and use it consistently.

The SAM tools offered by various vendors today are all about making it as easy as possible for you to reconcile your licence inventory and installations at any time.

In addition, the tools must ensure that the licences for all installations are

• transparent
• and the use is covered by contract clauses.

Otherwise, there is the risk of having to pay high additional fees if an audit uncovers under-licensing. Because very quickly you will not only have to pay any outstanding licence fees, but you will also pay a lot more. The reason for this is the 5% clause, which is included in the standard terms and conditions of most software manufacturers.

It typically states the following: if an audit reveals under-licensing of more than 5 percent, you will generally be required to pay all the fees and costs associated with such an audit in addition to the underpaid licence amount.

Make Software Asset Management Easier With the Right Sam Tool

With an SAM tool, you can systematically record all existing licences in a database. The database will then always quickly and precisely display:

1. licences that are currently in use,
2. unused licences,
3. installations without an assigned licence,
4. and, depending on the tool, other points that are important for licence managers.

Over-licensing or under-licensing can thus be detected without the need for time-consuming inventory due diligence.

Eliminate Under-Licensing at a Reasonable Price

If you want to clear any discrepancies, we will be happy to help you at very reasonable terms. We are typically also in a position to offer you a large number of used software licences at short notice.

Our used licences often come from surplus stocks of other companies and are cheaper than new goods, but just as audit-ready as they will pass software audits. This is what our 100% audit readiness means.

And in the event you’ve determined you’re over-licensed, we are always here for you and happy to take over your surplus licences – all at a price that works for your company.

At What Point Should Your Company Have a Licence Manager?

This question is well-covered in a book by Torsten Groll, 1×1 des Lizenzmanagers (“Licence Manager’s 101”), and we rely on it here as well. The author makes it clear: the job of the licence manager is complex. They need to have broad software knowledge as well as copyright law expertise and detailed knowledge of the many types of product and licensing rights.

The work of the licence manager is based on precise knowledge of the type and number of software licences available in the company. The larger the company, the more difficult it is to keep track of everything. At the same time, this is extremely important. This is because the audit pass or fail will largely depend on the know-how of the licence manager.

There is no formula that would indicate that a company should have a licence manager if it has a certain number of employees. We recommend to smaller companies that they have at least one employee responsible for licence management, who will become the company’s in-house expert. Every company should start using an SAM tool as early as possible to make it easier to keep track of their software inventory.

It Departments Should Be Able to Answer These Questions at Any Time

• Is the current inventory of PCs, servers and other IT equipment directly accessible?
• Are you familiar with the legal licensing relationships that apply to the virtual environments that the company operates?
• Is the licence used still a good fit from the licensing perspective?
• How many different software applications are there in the company and are they all in use?
• Who procures the software centrally or locally?
• Are the contract documents managed at a central location?
• What happens to the software that is no longer in use or uninstalled?
• Are contracts regularly adjusted to reflect changes in uses?
• Can employees install software without permission?
• Does your company have guidelines for dealing with software and are these monitored?

There are concrete reasons why it is important to know the answers to these questions: before an audit, it is still possible to eliminate any under-licensing and mislicensing issues at low cost. One of the options is, for example, to purchase tested used software from PREO. These are used, audit-ready licences that have been thoroughly checked by PREO’s legal department.

The advantage: PREO delivers true transparency and discloses the rights chain. For all our transfers, this includes documentation of the type of contract from which the software originates (including contract numbers), who the previous owners of the software were, whether they have properly uninstalled the software, and the update history details. Licence managers can also view this information online on our licence portal for customers.


Sources

Ernst Tiemeyer: Kosteneinsparungen durch Software-Lizenzmanagement, (ADV Arbeitsgemeinschaft für Datenverarbeitung)

Management Update: IT Asset Management Stages Form the Stairway to Success, 10 September 2003, author: Patricia Adams IGG-09102003-01

Groll, Torsten: 1×1 des Lizenzmanagements. Praxisleitfaden für Lizenzmanager. 3. Auflage. Hanser, München, 2016, S. 6.