Fair Use vs Revenue Optimisation: Can Software Asset Management help?

According to Snow Software’s Regional Business Manager in APAC, Andreas Stjernstrom, only 50-percent of IT spending in 2020, will be planned. That’s a 33-percent decrease from 83-percent of planned IT spending that happens today.

“There is an exploding ‘flora’ of apps on different devices,” described Stjernstrom when he painted a landscape of unknown and unplanned spending happening in an IT organisation’s environment. It isn’t the unpredictability of spending that has consequences, but the variety of multitudes of technologies and solutions, that also have unintended consequences.

For example, the Truecaller app, helps to identify spam phone calls and block them, which is a very useful feature indeed for the busy individual who values their privacy.

But buried deep within the fine print of the apps’ terms and conditions, lies the admission by the software developer that they would take your phonebook and put it onto a cloud.

This is a large security risk that many organisations are unprepared for, especially when IT departments are not informed beforehand to put the necessary controls and policies in place.

In the dark

The kicker to all this, is that CIOs are still responsible for this environment, despite their controls slowly being eroded by the business and operations spending on IT that the CIO won’t necessarily know about.

“If you can’t bridge the gap (with business) and provide tools (they want to use), they will go outside and create, acquire things that are out of your control,” Stjernstrom said.

To make matters more complex, cloud and virtualisation enters into the mix, further blurring up the IT department’s visibility of what’s happening.

On top of all these complexities, IT still has to be run like a business.

But, while spearheading all the technologies in the organisation, how does the CIO lobby for the resources that are required to fund their initiatives, enable them and execute them?

Snow’s Director, Gary Saw shared a crucial turning point in software development history, which has further complicated matters as well. “In the early days, software was protected by the license key mechanism. But since early 2000s, all these are governed by agreements.”

This method, usually prevalent among enterprise software vendors, is based on a loose understanding that businesses can use what they want, but they just need to be honest about what they have used.

According to Saw, this “went out of hand” and the revenue contribution of a certain software vendor in Australia, was up to 60-percent because of just compliance.

Rafael Yak, Snow’s Territory Sales Manager describes the ideal dynamic as there being two main players in the whole equation: a business customer that wants to be compliant to the agreement, and the software vendor that wants to help them achieve compliance, via audits.

In reality however, there are many more moving parts ie. different parties with different expertise and different objectives to achieve.

Saw said, “For example, the legal side are not trained to look into licensing terms and entitlements.  Legal counsel do not look at specifics of licensing agreements. Also, not many sales personnel from the vendor side, are able to articulate the agreement. They are able to price and sell, but (usually) won’t tell about the pitfalls of the agreement.”

In other words, the oodles and oodles of complex fine print, that are hard to decipher, doesn’t leave CIOs much visibility to execute the deal so that it is the best for the business.

Software licensing trends – gloomy

Snow’s Director, Gary Saw shared 2017 trends that IT organisations need to be aware of and prepare for as they advance further into 2018.

Perhaps, a foremost trend is from the Business Software Alliance (BSA), that expects more software auditing this year. There is now a 68-percent risk of a company being audited by one of the big vendors in the next 12 months.

The reason for this risk, seems to stem from the big software vendors themselves; SAP with Indirect Access licensing, Oracle wanting to close more sales, IBM coming up with potentially disruptive audit rights, Microsoft which has a very high frequency of audits; although Saw does not rule out surprises coming from other vendors.

Snow Software proposes that their software asset management (SAM) solution, can help the IT organisation manage all their investments.

Yak said, “From Snow’s point-of-view, we can inventorise the environment, enable discovery (of exposures), and basically understand what is being used, and match it with what the contract says can be used.”