Software License Compliance: Questions and Answers for IT Teams

Published: 20th February 2012
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A new study published by King Research reveals that most of IT administrators aren't sure if their companies can pass software license compliance audit with no doubts. The reason is that they feel that software license policies became more complicated and a number of used software applications is increasing every year. All these factors and new requirements for software inventory and audit influence increased software license compliance violation risks.

Why companies and organizations should care about software license compliance?

Violation of software license terms can create problems for companies and organizations of any size. Each software use for which the company can't produce a valid license is fined up to $150,000. Also there is a personal responsibility for network administrators who knowingly have unlicensed software installed in their networks, that meaning fines, confiscated assets, or even jail time. To combat software piracy software vendors created organizations such as the Business Software Alliance (BSA) and the Software & Information Industry Association (SIIA). These organizations are responsible to find companies and organizations that violate software licensing terms and initiate lawsuits against them. Many lawsuits resulting in payments between $11 million and $13 million, that ruined even large businesses.

Small businesses should also care about software license compliance. One of the main mistakes is to consider that a business will not be audited, because it's small. In fact small businesses that violate license compliance face with the same as large corporations - lawsuits and fines. In all cases the fines incurred from being out of compliance can be many times higher than the time and money spent putting in place the processes and technology to ensure compliance.

Can license overbuying be a quick and easy solution?

Some business owners and managers try to protect a business from license compliance issues by ordering a larger number of licenses that is required. The idea is to create a buffer with a particular amount of unused licenses that can save a company from lawsuits and fines if some of licenses will be detected as overused during a license compliance audit. Of course, this approach can work in some cases, but on practice it can't be used with any type of software. For example, named licenses are issued for a particular staff members and can't be transferred to other users. Even if you have additional licenses a license violation will be detected in case if a software is used by not authorized staff members.

Another reason to avoid license overbuying is a significant license costs savings. License costs for buying unused licenses are usually in many times higher then a budget required for performing internal license audit and keeping accurate software inventory. Even if you hire an external auditor you can significantly save your software budget.

How to perform a software license inventory?

The simplest approach for software asset management and license inventory is a manual audit using spreadsheets. Many small companies rely on this approach, but it can simply go out of control. This approach relies on static data and will fail once the company starts growing. It can only work in really small office when all software installations are performed by a single person. Once other people have rights to install and uninstall software there is no guarantee that manually collected software inventory data are accurate even if software audit was completed yesterday.

The best way to have up-to-date software inventory information is to collect it automatically using a specialized software. Software inventory systems can audit all computers connected to a company network and save a list of applications installed on every computer into a centralized system. It also can send immediate notification to a network administrator if any unapproved software changes will be detected. Collected software inventory information can be compared with information about purchased software. Network administrators should be responsible for storing invoices and software license agreements for all licensed software in a centralized storage, so it will be known how many copies of every software item is allowed and on which computers software can be installed. This information can be compared with actual software audit information collected from company computers in order to find and resolve any violations.

If you are interested in the topic discussed in this article, you can learn more on a specialized website dedicated to software inventory.

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