Why Noncompliance in Software License Asset Management Happens & How to Fix it

A software license is a legally-binding agreement that grants an entity rights to use a software program within specific terms and conditions. There are two categories for software licenses under copyright law, Proprietary Software and Free and Open-Source Software (FOSS). Proprietary Software, or Closed Source Software, leases software to end-users but intellectual property rights lie with software owners. In proprietary software, the source code is hidden and inaccessible, unlike FOSS. FOSS grants users access to the software program and source code for modification.

In today’s world, software has become a necessity in business operations; it is the heart of technology. As computer software dependency rises, so does the impending need to monitor the corresponding license agreements to ensure compliance. Merriam-Webster dictionary defines compliance as the act or process of complying to a desire, demand, proposal or regimen or to coercion.

Noncompliance happens for a multiple of reasons in a virtual license environment; license overuse, complex software license agreements, account sharing, etc., all of which will be discussed further in this documentation. Failing to be compliant results in unexpected fees, timely audits, reputational risks and security breach dangers.

Reasons for Noncompliance

License Overuse

License overuse can happen frequently in an organization. Often concurrent use of software licenses and assets are not monitored or measured properly, leading to unexpected costly fees towards the end of the contract period. Sharing of user accounts, using an application on more devices than allotted, installations on virtual machines (VMs) or installations on CPUs (Core Processing Unit) that are not in the license agreement, and more, all lead to license overuse.

Complexity of Software License Contracts

As we move towards a cloud-based or virtual environment, software license contracts terms and conditions get more complicated and ambiguous. Software vendors often sell per-CPU core, but what happens once you install in a virtual environment, can it move? Are you billed by the number of cores that the software could run on or the cores that are running it? Software license agreements often require extreme attention to detail because of their complex nature.

Challenges Related to a Virtual Environment

Cloud is the future, let’s face it. Virtual environments related to software licensing are a challenge, let’s face that too. Hardware ownership provisions, licensing models, software license transition to the cloud, and many more, all create friction between your company and compliance in a virtual environment. Due to the complex nature of software license agreements and the inability to sometimes navigate contracts, companies fall into traps set by software companies leading to license overuse, unexpected fees and timely audits.

Sharing of User Accounts & Multiple Logins

User account sharing is a very common occurrence during the first implementation and through the beginning stages of new software adjustment. However, after this period, if account sharing continues, it can lead to non-compliance. This can cost the company unexpected fees, time loss and more.

No Comprehensive View of Software Assets

The ability to access a single, comprehensive view of all network entitlements—hardware, software and service/support—for an entire entity, is a major challenge in license software management. Often companies do not have the time, resources or technology to build this cohesive view. It is more important than ever, with vendor audits and unexpected fees leering, to manage software license entitlements and track who has the rights to use them.

How to Create a Proactive Software License Strategy

  • Understand your contract terms & conditions
  • Understand the penalties of noncompliance
  • Know the medium of how your licenses are counted
  • Keep concurrent, accurate records and hold the data for three years at a minimum
  • Invest in software asset management solutions (SAM); in today’s world, this is not a luxury, it is a necessity
  • Be proactive in creating reports; perform your own audit to be prepared for vendor audits
  • Don’t forget to ask for help. Your company may need a legal expert to navigate the contract, and that is okay.

Regardless of reason for software license noncompliance, there are technological resources available to help companies create and maintain a proactive license compliance strategy. This is where ethosIQ comes in. ethosIQ offers a software asset management solution called License Resource Manager. It helps companies create a proactive strategy for license compliance by monitoring concurrent license usage and in one comprehensive report. Learn more about the solution here.