You say software licenses give you migraines? Talk to David Fenrich. The senior asset manager at Cingular Wireless oversees more than 700 software licenses for the telecom giant’s 42,000 desktops, workstations, and servers. Just doing the annual “true-up” — inventorying apps and making sure Cingular has the right number of licenses for its users — was largely a manual task requiring more than 200 people.
Today, Fenrich does the job with Peregrine Systems’ Desktop Inventory and Network Discovery appliances, using a single administrator and just seven machines. Fenrich says that Cingular has saved millions of dollars on unneeded licenses and has reduced potential liability for unintentionally using more licenses than the company has bought.
Cingular’s experience illustrates the benefit of getting software licenses in line. Although apps such as Peregrine Systems’ AssetCenter, Altiris’s Compliance Suite, and Sassafras Software’s KeyServer, among others (see chart, page
40) make it easier to manage existing licenses, they can’t keep you from agreeing to a bad deal.
Software licensing agreements are rife with pitfalls. The wrong pricing model, usurious maintenance fees, vague language, limited warranties, and failure to plan for change can cost you big over the long haul. Here’s how to avoid the most common licensing mistakes.
Shelfware: Use It or Lose It
The biggest licensing “gotcha” is well-known but hard to avoid: Companies are often paying for software that just gathers dust on a shelf, and many aren’t even aware they’re doing it.
“Most customers aren’t taking full advantage of the software they’ve purchased,” says IDC analyst Amy Mizoras Konary. In a recent IDC survey, only 14 percent of executives of large companies said they were getting full use of the software they had licensed.
Unfortunately, many enterprises have so many different applications, each with its own licensing policies and terms, that it’s hard to keep track of what they have and who is using it.
“This is an area where people don’t know what they don’t know,” agrees Mark Gamis, executive consultant at Compass Consultants. “If everything isn’t managed under one financial umbrella, you can’t see duplication, so you don’t know whether you’re paying for two different products that do the same thing.”
The first step is to carefully inventory the apps you’ve licensed and track how they’re being used. But don’t expect vendors to give you any refunds on shelfware, says Frank DeSalvo, a research director at Gartner. “Why should a vendor give up revenue because you made a mistake? We advise clients to never buy more than they can implement within a 12-month period.”
It’s not always a total loss. You might be able to trade unused licenses for new software from the same vendor or reduce annual maintenance fees, which can run as high as 30 percent of the original purchase price. More than a third of Cingular’s $230 million IT budget goes to maintenance agreements, Fenrich says. When Cingular discovered that many of its licenses were going unused, they renegotiated the maintenance deals, trimming costs by $2.4 million since November 2003.