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Two Truths and a Lie about Enterprise Software Compliance

1. License compliance for most enterprise software is basically on the honor system.

2. It is critical to understand your enterprise software publisher’s distribution model.

3. Licensing compliance is a straightforward, timely process with minimal business disruptions.

 

Okay, we all know that last one is the lie. The BIG lie.

Let’s talk truths.

Know Where You Stand

Enterprise software licensing is incredibly complex, changes constantly, and comes in an array of confusing bundles.

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For example, some software publishers like Oracle, Microsoft, SAP, Workday, post their software online, readily downloadable by anyone. It doesn’t require license keys, may be installed and used at any volume, and it doesn’t prompt or alert you when expensive options are selected and/or utilized. It’s good to know that ahead of time.

Or imagine that you bought SQL Server licenses five years ago but didn’t maintain Software Assurance (SA)—it currently may or may not be licensed correctly for deployment in a virtual environment. Windows Server Standard licensing once required mapping to hardware attributes, but a policy change (made in Oct 2022!) can free up many licenses. Did you also know that Microsoft 365 subscriptions purchased in an Enterprise Agreement (EA) have different rights than those purchased through a Cloud Solution Provider (CSP).

Compounding this complexity is timing. Many publisher licensing structures change more frequently than others, with some usage rights updated quarterly versus annually. Furthermore, their policy documents may be labeled “for educational purposes only”, but they still expect you to fully adhere to the guidelines within. How’s that for confusing?

Finally, if your organization has been with a software publisher for a long time, it can be difficult to work out the usage rights that differ from what you had purchased years ago, leaving you at risk of exposure.

If you know where you stand, you will know the value of your software and put the negotiating power back in your hand.

You Did Not Intend to Use Unlicensed Software!

Of course, the vast majority of companies running enterprise software have no intention of stealing it. Nor are we advocating that companies run unlicensed software. However, that said, license compliance is exceedingly difficult and Oracle, SAP, Microsoft, VMware, IBM, and other major publishers utilize audits to build undue financial leverage.

Software audits occur every one to two years and it is compulsory for clients to submit the information to their publisher’s as stipulated in the EULA. While these are simple and focused on Direct Access, some publishers now conduct extended audits driven by a License auditor.

A publisher’s formal audits cover both Direct and Indirect Access, as is the case with SAP HANA Runtime compliance analysis. Indirect Access is especially vital to assess and mitigate risk.

Be Prepared

Microsoft, Oracle, and SAP are a few of the companies that make their software publicly available online.  Some do not require license keys as we’ve said, and some automatically install premium features without notification. Then they employ legions of salespeople and auditors—armed with revenue-driving policy—to follow up and extend order documents for software that is deemed installed whether it is actually running or adding value.

While some software publishers require their customer to perform a self-audit through the annual declaration process, this is not a comprehensive review of entitlements versus usage. This process can give organizations a false sense of security when it comes to compliance.

Enterprise clients are further misled by terms like “perpetual licensing” and “unlimited licenses.” In reality, perpetual licenses don’t typically include access to future updates, new features, or support indefinitely. “Unlimited licenses” often come with hidden constraints in the terms and conditions, such as restrictions on the number of users, the scope of usage, or the features available to each user.

These misperceptions can catch clients off guard and often lead companies to overestimate their licensed usage and inadvertently violate terms, facing unexpected penalties or additional costs upon closer scrutiny or audits by the vendor.

It is critical to understand your entitlements to mitigate any compliance exposure before submitting your annual declaration data to any provider to avoid triggering an extended audit.

You might want an expert.

Licensing Management is a mission-critical part of any Technology Expense Management or Business Process Lifecycle, but it can also be a tough slog and can quickly overwhelm staff and internal resources even for the largest, most successful organizations.

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An expert partner scrutinizes how licenses are applied to the environment to establish current- and optimized-state views that benefit you. Their aim is to help you be right-licensed without overspending based on your criteria, your desired state, and your future plans.

An expert partner has the tools, expertise, confidence to prepare and advise on an honorable and defensible license position as well as how much you should be spending.

An expert partner uses reporting, software discovery, and inventory data to create a detailed picture of your environment. They then apply decades of expertise and industry-insider knowledge to analyze licensing models, programs, and usage rights to help you determine what you really need.

Whether you decide to enlist the help of an expert partner like Intelligent Bills or admirably, take on the task of licensing compliance and management on your own, we hope this information is helpful.

 

If you’d like to know more about Intelligent Bills Advisory Services for Software Licensing, click here.

Contact Us to find out how you can save 30% or more on your annual spend.

 

Disclaimer: Adobe, Oracle, Microsoft, SAP, and other named publishers are registered trademarks of their respective organizations and/or its affiliates. Intelligent Bills is an independent firm and not associated with these publishers. Intelligent Bills is not a law firm and does not provide legal advice.