Sunday, July 1, 2007


Low-risk. High-reward.

You’re an organization that’s lost count of your desktops, servers, and other IT equipment. Sounds familiar? Most organizations are in that situation.

This is a low-risk, high-reward activity. Be legally compliant. Most software publishers do not litigate. Instead, many use the results of auditing reviews as a basis for “true-up” deals. “True-up” refers to the process of buying more licenses.

Two examples illustrate:

  1. You have 150 licenses of software X. The audit reveals that 180 licenses were deployed and that all 180 are being used simultaneously. You will be required to pay for 180 licenses. This is true-up.
  2. You purchased 300 licenses of software Y. You installed it on 300 desktops. The audit reveals that only 250 instances of software Y are being used. Come renewal time, you pay for only 250 licenses. Let’s refer to this as “true-down.”

The auditing process can collect more useful information. And you should take advantage of that. Since you’re checking every desktop and server (and other IT equipment, but we won’t include that here) anyway, you might as well gather the additional information.

Learn the configuration of each machine.
  • Desktop 56 runs the G/L of the accounting module of SAP Business All-in-One on Windows 2000.
Identify the user of each machine and confirm the appropriateness of that role to the machine.
  • Desktop 56 is assigned to Tom, a cost accountant.
Determine whether the correct software is installed on a particular machine.
  • You discover the accounting module would run faster if more RAM was added to Desktop 56.

While it is true that many users use unlicensed software, a good number of them do so unwittingly. How does this come about?

Confusion that arise from vague, complex, and ever-changing licensing rules.
Software publishers frequently change user licenses. About half the time, they do it during the active life of the product. Case in point: Microsoft. It changed significant parts of its Client Access License (CAL) three times during the three years of Microsoft Windows 2000’s marketing life.
Changes in the user IT environment.
In the data center, servers are inevitably upgraded to newer, more powerful models. Software licenses recognize this and permit software to be installed in the replacement. The process isn’t complete, however, until the same software is removed from the old server that was replaced. In many instances, this part is overlooked. Result: one licensed and one unlicensed deployment.
Mergers & Acquisitions.
It may surprise you but this isn’t a subset of the preceding reason. Why? Many software licenses do not automatically transfer licensee rights to another party unless it’s stated explicitly. More often than not, after one company acquires another, the acquirer takes control over the assets of the acquired. In theory, the acquirer has the responsibility of checking this provision. In reality, lawyers on both sides are busy dealing with other larger issues.
Misunderstanding between IT and Procurement.
This is related to the first reason, namely the confusion that arise from vague, complex, and ever-changing licensing rules. In theory, either IT or Procurement should know how many and what kind of licenses should be acquired. In reality, this often falls between the cracks. Result: under- or over-purchases of appropriate or inappropriate licenses. Two examples: (1) a license is deployed on a server that has more CPUs than the license allows, and (2) widespread access is allowed for software that has a limited-user license.

Is non-compliance a serious problem?

It is. Most software publishers deal with offenders—especially first-timers—in an understanding and lenient manner. Publishers realize that they can lose customers and antagonize entire user groups if they act with a heavy hand. To be fair, publishers deserve the revenue from unlicensed deployments. Bottom line: I think the relative laxity stems from practical reasons of customer relations as well as the recognition by the software industry of the vague, complex, and ever-changing rules of their products. Result: many publishers will settle for true-up deals.

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