Top 5 Causes of Software License Non-Compliance

PricewaterhouseCoopers recently conducted research to determine the top 5 causes of software license non-compliance for companies.  The findings were:

1. Complexity of software licensing agreements.   As software vendors grow to support broader customer bases with varying needs and acquire other software companies that had their own software license agreements and policies, complexity grows substantially.  Many companies have complex agreements with many vendors and they all contain varying software licensing models and policies.  Making matters worse, software license agreements are written and negotiated by lawyers but software license compliance needs to be managed by non-lawyers who frequently don’t understand some of the nuances in the contractual language.

2. Inadvertent Misuse.  In many companies, policies are in place to centralize procurement and try to be compliance with software license agreements, but “stuff happens” and inadvertent misuse creeps in.  Events like mergers & acquisitions and divestitures complicate this further.  Many companies lack the processes and systems to truly manage their software assets and find that after one of these events they are immediately in a non-compliance situation.

3. Lack of software asset management processes and tools.  Most organizations don’t have a defined and institutionalized software asset management program supported by the appropriate tools to manage an increasingly growing software estate.  Surprisingly, many CIOs don’t see the value (and risk) associated with not having such programs in place.  Despite the fact that software spend has continued to grow and software increasingly is a strategic asset running the business, there are no programs in place to strategically manage application usage.  And, if tools are in place, they only offer traditional software asset management capabilities that count what you have (software installtions) rather than what you are using, or what you are entitled to use (license entitlements such as Product Use Rights).

4. Lack of education.  Related to several of the points already mentioned (e.g., complexity of software license agreements and their legalese, lack of a well-defined software asset management program), many organizations simply lack the understanding of the issues and, thus, fail to establish proper processes and programs to proactively manage software assets, their spend and their usage.  Industry standards (e.g. ISO 19770-1) and associations (e.g. IAITAM, IBSMA)  exist that can be leveraged to help, but many do not take advantage of these resources.

5. Intentional misuse.  Most companies are honest and want to be in license compliance.  It is very rare for companies to intentionally misuse their software to create a non-compliance situation, but it does exist.

It is because so many organizations are out of license compliance that software companies conduct software audits.  In fact, PwC research indicates that an out of compliance situation is found in 80% of all software audits.

If you don’t have a software asset management program in place, you need to.  To most businesses, software no longer just aids the business, it runs it.  A strategic asset of this magnitude should have a strategic solution to manage it.  You can watch our 4-part webinar series to learn how to get started: