Software auditors risk becoming “revenue-generating” traffic cops as the recession put pressure on vendors to collect every penny of revenue
Organisations are being put under increasing pressure from software licence audits, with some vendors exploiting technicalities and loopholes in order to meet revenue targets, according to a report by research firm Forrester.
The report, entitled “Surviving A Software License Audit”, reveals that the economic recession has prompted software vendors to crack down on compliance in an attempt to ensure they get every penny of revenue to which they are entitled. Vendors are also delivering an ever-widening list of reasons for alleged non-compliance, according to Forrester analyst Duncan Jones.
While software companies have a right to protect their intellectual property, in some cases managers end up facing unexpected licence bills for anything from excess usage to misinterpretation of contract clauses. Other common problems can be caused by the growth of virtualisation – where licences have not been adjusted to account for virtualised servers – and multiplexing – where software is used by companies indirectly through integrated applications.
“The better vendors are like those traffic police that prevent speeding by being highly visible – they focus on encouraging and supporting good software asset management (SAM),” said Jones. “But others seem to be like the revenue-generating cops who hide with their radar guns in bushes at the bottom of steep hills.”
Microsoft has been criticised for making its licence terms deliberately complex, and in 2009, Steve Ballmer admitted that the Windows licence includes deliberate “gotchas” designed to increase revenue. Others have predicted that new business models such as software as a service (SaaS) will create new licensing issues.
As Jones highlights, abuse of this process can have a detrimental effect on organisations’ client relationships. “Often, compliance teams over-zealously pursue their own revenue targets outside of the main account team’s control, oblivious to how the audit team’s behaviour may be the damaging long-term relationship with that customer,” he explained.
Julian Heathcote Hobbins, General Counsel for the Federation Against Software Theft (FAST), spoke in defence of the software industry protecting its property rights.
“With intellectual property, and copyright is part of that, it’s an asset which you can rent to get revenue. What has happened in years gone by, when times were very good, is that there was a lot of renting going on but perhaps not a lot of rent collection. It was a bit haphazard or people were making their targets without much trouble,” Heathcote Hobbins told eWEEK Europe.
“What tends to happen with the contraction is that, instead of having 10 percent or 20 percent growth in revenue profits, everyone’s going into single figures and people are feeling the pressure. So they are going into the detail and going over their patch to see where revenue can be got. The software industry’s always been like that … If a contract is not legal then I would challenge it.”
He went on to advise organisations to spend some time “really having a look at what the deal is and what you’re buying and what you can use it for,” before signing off on the contract. “The software industry generally is pretty fair, but obviously it’s a commercial operation, and they’re going to do the best they can to protect their revenue,” he added.