This survey discusses a range of software compliance issues covering audits, software asset management processes, and client satisfaction.
Ernst & Young’s software asset management survey reveals that most vendors and customers are actively addressing the issue of license compliance, but also identifies some gaps on both sides.
Faced with increasingly complex IT estates and software contracts, companies are not always keeping track of all their software deployment. This could mean they’re less prepared for vendor reviews and may reduce opportunities to save money by transferring available licenses to new users.
Meanwhile a majority of vendors feel that IT compliance is not always high enough on their customers’ agendas, with insufficient use of monitoring tools.
With numbers of customer audits on the rise, the responses show that many vendors may need a more globally consistent approach, with clearer revenue and coverage targets. Audits could also affect the harmony of the client/customer relationship, with users expressing some dissatisfaction over the quality of the work and the time taken.
The survey results confirm that software audits are increasingly becoming a way of life for both customers and vendors. Faced with the challenge of doing more audits, vendors need to establish formal programs which are conducted efficiently and in a transparent manner which does not damage the relationship. End users need to get a grip on their software estate so as to minimize the time and resources dedicated to audits and any subsequent penalties for non-compliance.
Ernst & Young interviewed eight major software vendors and ten customers. The user clients included both private and public sector organizations from a variety of sectors, and had on average over 10,000 PCs and 800 servers.
This is part one of a two-part series. Part two will appear in Wednesday's Mid-Day Report.
Organizations’ IT estates are becoming ever more complex, with a range of vendors supplying multiple software packages, which are employed across many different sites nationally and globally.
New developments such as cloud computing, software as a service (SaaS) and virtualization make it even harder to monitor exactly what’s being used and where.
Software vendors are understandably keen to ensure that customers are complying with their contracts and paying for what they’re using. Consequently customer audits have become commonplace, in some cases revealing over-usage to the tune of millions of pounds. Such discrepancies are often inadvertent, as businesses don’t realize they’re exceeding the terms of their licenses. Some users are even unwittingly buying counterfeit
software, which could cause a security risk.
Should disclosure of non-compliance become public, businesses may suffer adverse media coverage that could damage their reputation.
Software audits typically lead to settlements between the customer and its IT vendor and/or a renegotiated contract.
Analysts Gartner report that such audits are on the rise, with a recent poll showing that half of their clients had been audited by at least one software vendor in the previous twelve months. Vendors also commonly see such reviews as an opportunity to educate their customers on the need for compliance.
Audits represent a significant and growing cost to both parties, and some users proactively set up internal tracking processes, as well as bringing in external parties to carry out independent audits. These provide a more accurate picture of software usage, indicating where contract terms are being exceeded and where management processes may be improved. They can also identify unused licenses or redundant packages.
Crucially, such audits may well be accepted by vendors (with validation), saving them the time and money spent on carrying out such checks themselves.
While eager to maximize revenue and protect intellectual property, vendors are also wary of harming client relationships through overzealous searches. Customers, on the other hand, want to better understand their overall software assets, enabling them to budget accordingly, be prepared for vendor audits and avoid sudden nasty surprises. Through greater awareness of their position, users are better placed to negotiate with suppliers.
To find out more about how the market is coping with this pressing issue, Ernst & Young spoke to eight major software vendors and ten large end-user organizations. The responses give a valuable insight into the current state of software compliance, as well as providing useful guidance on how both parties could manage this to their mutual benefit going forward.
Given the commercial importance of licenses, it’s no real surprise that all the vendors taking part in the survey confirm that they operate an IT compliance program, although some only apply this on an ad hoc basis. These programs appear to be taken very seriously, with 88% saying they have a high level of executive sponsorship.
Although the single biggest reason for such activity is to generate revenue, software suppliers also want to protect their intellectual property rights. In addition, they’re often looking beyond the immediate audit and hoping to use the process and subsequent results to help customers better manage their software assets in future.
According to the respondents, vendors’ compliance teams are homing in on customers with internal inconsistencies in their purchasing patterns, as this can indicate unauthorized usage of software. Those companies that have a prior history of poor compliance to their licenses are understandably under greater scrutiny and stand more chance of receiving an audit.
Customers are also taking compliance seriously
User organizations are concerned about incurring significant additional costs through an audit, so are increasingly embracing software asset management, to take greater control over the use of software around their businesses. The survey shows that they’re particularly keen to save money and reduce the risk of non-compliance.
Software asset management tools help users identify software in use, reconcile licenses with actual usage and identify any gaps. All the organizations involved in the survey employ some kind of tool, and half use three or more, although no single tool appears to dominate, with over 20 separate titles in operation.
The desire of customers to better manage their IT estate is also evident in the responses: 90% of companies surveyed have a formal software asset management policy in place and a similar percentage have a software inventory, while 80% have a software asset manager.
Many organizations are attempting to manage their IT assets more effectively, but there are still barriers to be overcome.
Three quarters of vendors say that inadequate management tools are a cause of non-compliance and half believe that customers’ management don’t pay sufficient attention to the whole issue of compliance.
Both suppliers and customers are critical of the over-complex nature of many software contracts. 70% of users believe this to be a barrier to effective compliance. Customers also feel that their own decentralized structures often make it harder to keep track of usage around the organization — as does their increasingly complicated suite of IT packages.
The survey also reveals further inconsistencies in the way customers manage their software. When licenses become available for use by other individuals, a majority of respondents do seek to reassign these rather than buy new ones. However, not all customers are systematically scanning the business to ensure that every available license is fully utilized, which could push up costs unnecessarily.
And few of the organizations we spoke to actually measure the benefits of identifying unused software or re-using software.