How to Get Software Licensing Under Control

IT managers may not spend much time dwelling on software licenses, but chances are good that one day a leading software maker will come calling to perform an audit. Technology researcher Gartner found that 65 percent of its clients had to undergo a software audit last year, up from 4 percent in 2010.

Software audits can be as unpleasant as an IRS inspection for similar reasons — even if a company’s activities are completely legal, the time and expense of compiling the documentation needed to prove compliance can drain a company’s resources. Of course, things get worse if the audit results in fines for noncompliance. Even otherwise law-abiding companies may find themselves in this situation, considering the dynamic nature of their business, where software needs constantly change to accommodate a growing workforce.

The result is that companies may inadvertently have fewer licenses than they need to support all their employees or, conversely, are paying for more licenses than they need or are automatically renewing licenses for software that is no longer being used.

Fortunately, SMBs have more options than ever to ease software asset management and reduce overspending. These four suggestions can help companies practice savvy software licensing.

1. Tap Outside Expertise.

Businesses large and small grapple with intricacies and constant changes in their licensing needs. These complexities became especially challenging for Masy Systems, a Massachusetts company that provides calibration, validation and storage services, as well as equipment rentals and sales for the pharmaceutical, biotech and medical device industries. Masy’s attention to customer service, quality and competitive pricing have led to strong growth — since 2008, the company’s staff has doubled, to 60 people.

IT Manager Greg Masiello responded by adding servers, a new enterprise resource planning system and desktop virtualization, but there was one area in which he realized he needed help — managing the complicated mix of business software licenses. “I went looking for advice and ended up working with CDW,” he says.

A CDW software licensing expert steered Masy to Microsoft’s Windows Virtual Desktop Access, which gave staff members access to applications via their virtualized workstations. Next, CDW worked with VMware to establish appropriate VMware View licensing to connect users with back-end servers. Masy and CDW now partner to keep licensing under control and up to date.

“Instead of me having to assign a person just to keep track of licenses, my CDW rep keeps track of our licenses by working off our purchase orders,” Masiello says. “He calls me a couple times a week to keep me updated and lets me know what’s going on.”

2. Install a Software Management Application.

Many SMBs try to do software management on the cheap — typically, by using a spreadsheet to track individual licenses, usage levels and costs. But the compliance requirements of a growing company can quickly overwhelm this approach.

Joseph Talamantez learned this firsthand. As IT director of Cannon Design, an architectural, engineering and design firm headquartered in Buffalo, N.Y., Talamantez tried a spreadsheet for tracking all the general business and specialized engineering applications used by Cannon’s diverse staff, but problems emerged. For example, the firm found itself constantly adding licenses for an expensive application that converted engineering drawings into a file format used for printing and distribution. “We were continually running out of licenses for the application, and that was driving everyone nuts. I kept thinking, ‘This can’t be right,’” he recalls.

Eventually, Cannon replaced its spreadsheet with Express Metrix, an IT asset management tool. The solution documents where each application is installed, the version numbers, how many people are using each program, and the individual cost of the licenses.

Talamantez used the tool to analyze how the company was using the specialized program that never seemed to have enough licenses. “We were able to pinpoint that a number of people had downloaded the software who didn’t actually need that product,” he says. Cannon uninstalled it from about 200 desktops without affecting staff performance. As a result of better license management, Cannon now spends less for the high-end application.

3. Purchase the Right Licenses.

Many companies acquire software on an ad hoc basis; for example, when they buy a notebook for a new sales rep, they automatically purchase a copy of Microsoft Office. But Steve Brasen, research director for Enterprise Management Associates, advises IT buyers to explore other options. “You may see great cost savings using volume software licenses and concurrent licenses,” he says.

Terms for volume software licenses differ by vendor, but buyers may see discounts for popular packages when they purchase as few as five seats at a time. Concurrent licenses help organizations right-size their contracts. Controls are in place to enforce the usage limits.

4. Consider the Cloud.

IT managers have another option for easing license-management headaches: Send them to the cloud. A growing number of software as a service solutions are now available with SMB-friendly fees. Like their onsite asset management counterparts, these cloud applications track licenses in the customer’s primary environment and create reports about usage levels. This enables IT managers to sync seats with demand and stay compliant. “Because customers pay on a subscription basis, they don’t have to build out any additional infrastructure to make this work,” Brasen says. “And that’s very helpful to the budgets of smaller organizations.”