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Got enterprise software? You're probably due for an audit

Katherine Noyes | Jan. 27, 2016
Vendors are turning up the heat to boost their revenue, licensing experts warn.

"They claim great adoption of new cloud products, but actually it's coming from these audit threats," Jones said.

Many licensing and audit groups are siloed off from the rest of the vendor, too, so they don't see the damage their efforts can inflict on customers' long-term relationships with the company, Jones said.

Vendors may like the revenue boost they get from audits, but in the long run, "it can kill off opportunity," he said. "I've heard from a customer that had been buying from IBM for 50 years, and they said, 'No more.'"

Vendors' legal threats in this area aren't likely to stand up in court, but few companies have been willing to take the chance, Jones said.

So what's an enterprise to do?

"Companies need to take their software licensing seriously," Guarente said.

Guarente's firm asks clients to think hard about three things: "What do you own, what are you using, and what's the difference?"

Small companies can get by tracking their license compliance manually, but "if you have more than a handful of software agreements, it’s probably money well spent to invest in some sort of software asset management system," Scavo said.

It can also make sense to have a third party come in periodically to audit your compliance, especially if you are planning to defect from a vendor, he said.

Vendors tend to have the "home field advantage" through their intimate familiarity with contract terms, so customers need to learn how to refocus the conversation on the long-term relationship, Forrester's Jones said.

"If customers collectively stand up to software companies," he added, "they may have a stronger position than they imagine."

Oracle, SAP and IBM could not immediately be reached for comment.

 

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