Software compliance is increasingly important. Major software companies are increasingly auditing customers to check that usage falls within their license contracts, and quite often, it doesn’t. Falling foul of your contract can lead to unexpected and potentially sizeable penalties and disrupt your operations. I want to help you avoid both of these.
I have been involved in enterprise software for decades and have seen my fair share of audits and contract negotiations. As an OpenText partner, I interact closely with them and my many enterprise customers. This has given me a good understanding of how these processes work from both sides of the table.
Today, I offer three easy steps that any business can take to ensure compliance and minimise the potential repercussions if you realise you’ve fallen foul.
Examples of where you can find yourself non-compliant
The following are typical examples of non-compliance that could result in a penalty.
It’s worth noting that non-compliance situations often arise when software was bought many years ago, and global and cloud use was not a consideration.
- Using site licences in the wrong location: Have you moved office or now have more than one office?
- Using regional licences globally: You may have planned to use the software in a single country or region but have offshore teams or are using it in additional regions or globally.
- Overuse of uncontrolled licences: some older licences do not have licence keys, so they can be installed on whatever machines you want. You may find it has been installed on more machines than you have licences for.
- Hosting in the cloud: Many are moving licences to the cloud. However, software providers are highly likely to view this as moving to global use, and if your licence agreement is not global, it will be a breach.
- Use by other companies: Have you been involved in a merger or acquisition? Allowing other companies to use your licences or you using theirs can be a breach.
- Using the software to deliver a service: If you are a consultancy or service provider using your licences to deliver a service, this is likely to be a breach.
- New staff not aware of restrictions: New staff are often unaware of your arrangements and can use licences in ways that can cause an inadvertent breach.
- Using Community (free) licences in production: These are typically limited to evaluation and demonstration use only.
Software License Compliance in 3 Easy Steps
Step 1: Understanding Licenses Is Key to Compliance
Software license agreements aren’t always straightforward; a simple misunderstanding can cause problems.
Here are some useful licensing concepts that could help you stay compliant or help you get back on track:
- License Limitations: Many software products are limited by the license type. For instance, some are country or region-specific, and using them outside the designated area is a breach. Specific tools, like LoadRunner and ALM/Quality Center, come with strict license guidelines that, if misunderstood, can result in unintentional violations.
- Global vs. Local Licenses: Some licenses have a global reach, while others are confined to specific countries or regions. Allowing software use across countries/regions without appropriate permissions can quickly lead to compliance issues.
- Locked vs Open Licenses: Some licenses are locked, preventing overuse, while others rely on the users to report usage, which could lead to inadvertent breaches. If you’re on open licenses, it’s up to you to understand your usage and stay within compliance.
- Historical vs. Modern Licenses: Often, older licenses were issued with fewer control mechanisms, leading to unintentional violations, while contemporary licenses often come with stringent, built-in compliance systems. As with open licenses, these older licenses put the onus on the user to understand and stay within the rules.
Step 2: Whether You’re Big or Small, Conduct Internal Audits
I’ve seen first-hand that software audits are becoming more frequent. Interestingly, these audits are no longer limited to large corporations.
These days, audits are sophisticated and use software to find current use or previous use of licenced software.
Small and medium-sized businesses are also on the radar. Just because you’re not a huge enterprise, don’t think you won’t be audited.
Experiencing an external audit can be even more disruptive for businesses with smaller resource pools and without dedicated teams to address the issues and negotiate with the vendor.
All businesses must be vigilant and regularly check and reassess their software usage. Regular internal audits ensure you stay on top of licenses and within usage parameters.
Step 3: Honest Communication With Vendors
Breaches can occur both knowingly and unknowingly. When faced with non-compliance, identifying and rectifying specific areas is crucial.
I strongly recommend a proactive approach if you realise you have been outside of compliance. Implement changes where you can and approach your software provider to let them know the situation.
Honest communication can often result in reduced penalties, especially if the breach was unintentional. I know of a customer who received a penalty of over £1m for breaches. They thought they were compliant and had nothing to hide. Big companies have been known to levy substantial fines for violations, so it’s essential to be proactive to minimise the chances of fiscal punishment.
Conclusion: Act Early, Be Proactive
Software compliance is intricate, but with careful consideration and understanding of licensing agreements, businesses can avoid potential pitfalls. However, not every situation will trigger a penalty if handled correctly.
If you have licences from OpenText and are not sure if you are compliant, we can help.
It’s better to be safe than sorry.
Taking proactive steps and ensuring alignment with licensing terms can save money, hassle and reputation.
Regular internal audits, honest communication with vendors, and a clear grasp of license types can go a long way in ensuring a compliant and smooth operational environment.
