Software license compliance has always been a challenge for companies. But with new technology like virtualization and cloud computing adding to the complexity, organizations are struggling even more.
While some organizations get in trouble because they knowingly use unlicensed software, many others get tripped up accidentally.
A growing number of businesses are aware that they may be violating software licenses, according to a recent IDC report. Among the 101 businesses surveyed, 38% said that more than 10% of their applications are being overused in violation of their licensing agreements.
That was up from 26% that said the same thing the previous year.
And as more companies fall out of compliance, software vendors are getting aggressive in finding organizations that break the agreements. The majority (64%) of the companies surveyed had been audited by a vendor at least once in the previous two years. Those audits often result in big pay-ups from companies.
Even beyond the costs of failing to comply with software license terms, businesses also lose money because of surprise costs hidden in their licensing agreements.
These are the top software license pitfalls that often hurt a business’s bottom line:
1. Employee misuse
One common reason companies overuse their software licenses is that employees install software on their own while knowingly or unknowingly failing to comply with licensing rules.
That can include employees who download software on their own, those who intentionally work with pirated software, and those who share copies of software without knowing it might put the organization out of compliance.
To help avoid that, companies should make sure they have policies regarding unauthorized software installations and make sure that the policy is distributed to all employees and their supervisors.
2. Virtual licenses
One of the biggest factors software license compliance has become so complex is that more companies are using virtualization for their servers or desktops. In fact, half of the companies surveyed said they will have to change their approach to license management because of virtualization.
Much of the problem stems from the fact that vendors often have their own unique rules regarding when their software is used in a virtual environment.
To minimize the risks, companies should take stock of all the software they’re using and carefully read the licenses’ rules on virtualization. Then when the company virtualizes a segment of its infrastructure, the appropriate licenses can be quickly reviewed to see if any changes need to be made.
3. Cloud computing
Software license compliance is also becoming more difficult as businesses move applications to the cloud.
Cloud computing transitions more power from the IT department and gives it to end users — who aren’t always aware of strict licensing restrictions. One way they might get the company in trouble: sharing log-in information with co-workers.
Nearly half (42%) of users admit that they have shared usernames and passwords for cloud services with other people inside their organization, according to a 2012 survey from the Business Software Alliance (BSA).
In many cases, that’s not a problem. Some cloud computing service agreements allow organizations to share accounts among multiple people, and many cloud services are paid for based on the resources that are consumed — for example, how much storage space is used — rather than the number of user accounts.
However, for other services, sharing accounts may not be allowed by service agreements and doing so could be considered a form of software piracy, the BSA said.
Among businesses surveyed by IDC, 47% said they’ll have to change their approach to licensing because of an increased use of mobile devices.
One of the challenges is that many users are bringing in personal devices and accessing cloud-based applications. Many companies may not have the licenses in place for all the devices that are being used.
That’s why companies must control and track which personal devices connect to the network and what applications they get access to.
5. Lack of oversight
No matter what devices software is used on or what type of environment the company is running, organizations can’t ensure compliance with software license terms if they aren’t keeping track of their software use and license inventory.
Experts recommend conducting regular audits to catch any mistakes before a vendor does. However, less than half (42%) of the businesses surveyed by IDC conduct self-audits at least once per year.
There’s not only a risk of violating agreements by not having enough licenses. Since compliance is so complicated, many organizations spend more than they need to in order to get extra licenses, just so they can be more confident that they’ll be in compliance.
In fact, more than half (56%) of the organizations surveyed by IDC say that more than 10% of their software spending goes toward licenses that aren’t used. While violating licenses can be expensive, the costs of unnecessary licenses can also add up over time.