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Software Licensing: What You Should Know (Part 3 of 3)

Part 3 of 3

by Scott Lewis

The Software Alliance (BSA) is composed of most of the major software vendors and midmajor software vendors. The purpose of the alliance is to enforce the vendors’ software agreements and aggressively pursue people who willfully violate an agreement.

You have to look at it from the software vendor’s perspective: If you are violating software licensing, you are stealing the work product and intellectual knowledge of another company. Then you’re using that stolen property to make a profit for your business. I think any legitimate business would legally pursue anyone who was stealing its intellectual property or work product and then using that to make a profit without properly paying for the tools used to make that profit.

How does this process work? Typically it will start with them requesting that you do a self-audit of the software you have installed and provide the purchasing proof that you actually own the software you are claiming. In most cases it will end there if there is enough proof that you are making a good-faith effort to manage, document and enforce your software agreements on your own.

“Good-faith effort.” What does that actually mean when it comes to a software audit? Basically it comes down to having solid policies and procedures that help you manage the software you own and having a process that everyone goes through in order to purchase new software.

What is the process your business goes through to request new software or an upgrade to existing software? Is it a well-documented process or more ad hoc? How is that software installed, and do you have proper documentation on who has the software and when it was loaded? Documentation is always key. You need copies of the agreements, licensing for key management and purchase history – who purchased it and when?

Enforcement. This is the tough one. All employees think they are key, the future of your company, and when it comes to software, they can be expensive. Workstations and laptops should be locked down so that end users can’t load software, and this is where the tough part comes in – owners and managers have to have the fortitude to say no! You can’t say yes just because it is easy or you don’t want to hear about it.

Software licensing is one of the hardest things to keep track of, and when you get behind, catching up is difficult and expensive. Violators of your company’s software licenses should be dealt with just as if they had violated any other company policy – verbally disciplined, disciplined in writing or terminated. It is tough and owners and managers have to stick to their guns, put on their big-kid pants and enforce their own policies because, at the end of the day, who is writing the check for the violations? Not the employee.

One of the most common questions I get about the BSA is: Should I take the audit seriously? The answer to that is yes, remember that you have already agreed to the terms of use and in some cases you have already agreed to the penalty. In the case of software agreements, it is a matter of simple contract law – both parties have already agreed to the terms, so now it is simply a matter of deciding whether and how any violations are handled.

There are lots of tools to help manage your software compliance to ensure that you know what is loaded on your system and also let you know when someone loads something that is outside of your authorized software list so it can be removed in a timely fashion.

One cautionary item: There are companies that will sell you, for example, Microsoft Office 2013, for $100 when the retail price is $459. These are not legitimate and legal licenses of the software, and the BSA is likely to reject these purchases as legal. So, be careful when you are purchasing software. A rule of thumb is that since in most cases the retail price is set by the software manufacturer, there really isn’t much wiggle room, and finding the software at a higher price would not be uncommon, but finding it significantly lower should set off an alarm that the licensing is not legitimate.

What is an SPLA (services provider licensing agreement)? Because of the popularity of cloud-based computing, Microsoft and other software manufacturers have developed a licensing model for independent cloud providers and independent software providers to offer customized licensing programs to their clients. This is related to one of the core cloud principles: paying for what you are using so you don’t have dead licenses. Dead licenses are those that may or may not be of current versions that you bought in a package deal but never used or activated – simply put, wasted dollars.

SPLA licensing allows cloud vendors and software vendors to license what you need. If you need seven, you can buy seven. If that changes and you need 25, you can buy 25. The number can go up or down on a monthly basis depending the growth and contraction of your business.

One advantage of an SPLA licensing model versus the traditional licensing models is your provider’s ability to give you customized licensing. Keep in mind that an SPLA applies only to cloud-based technologies, not to in-house systems.

Because of the flexibility of an SPLA, your provider can deliver to you exactly the number of licenses you need for the products you choose to host. There are no up-front costs with an SPLA and no long-term commitments, which means you can adjust your licensing based on the specific needs of your business or your individual needs on a monthly basis.

One of the huge advantages to SPLA is version control, which means that as manufacturers upgrade their software, you can upgrade at will or on your own specific timeline and, again, it is all part of your monthly fee. One of the features of the SPLA model is that since you pay by the month, you can try out many of the software packages offered by SPLAmanufacturers and if you don’t like one, then you simply don’t renew it for the next month.

Software licensing continues to be one of the most confusing and costly aspects of running and managing an IT department. However, it is worth taking the time to learn about it and putting processes in place to ensure that you remain compliant. Regardless of whether your strategy is to remain in-house or go to the cloud, licensing costs are going to be a huge part of your recurring budget and the time-consuming process to manage them is simply now a cost of doing business. However, if you do things correctly, you can manage those costs, reduce your exposure and risk on a compliancy level, and still get the software you need to grow your business in a productive manner.

Scott Lewis is the president and CEO of Winning Technologies Group of Companies. Scott has more than 30 years of experience in the technology industry and is a nationally recognized speaker and author on technology subjects. Scott has worked with large and small businesses to empower them to use technology to improve work processes, increase productivity and reduce costs. Scott has designed thousands of systems for large, medium and small companies. Winning Technologies’ goal is to work with companies on the selection, implementation, management and support of technology resources. Learn more about Winning Technologies at or call 877-379-8279.

Submitted 5 years 279 days ago
Categories: categoryTechnology
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