When software licences attack

Cut down on spending without damaging operations

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It can be a juggling act to curb unnecessary costs on additional software licences while ensuring there are enough licences for all users.

IT departments will often procure more seats than they actually require so users don't run into productivity problems, but that means paying for unused software, said Gareth Doherty, research analyst with Info-Tech Research Group.

"A lot of organisations will buy more resiliency than they need in terms of the software licence," said Doherty.

Negotiating the right software licence agreement is made complicated by the fact that organisations often have no benchmarks with which to compare pricing, said Doherty.

But a "veil of secrecy" maintained by vendors regarding licence agreements makes it difficult to get the standard cost for, say, deploying 30 seats of a latest customer relationship management offering, said Doherty.

It's only when seated at the negotiating table with the sales agent that the dollar amounts are revealed, he said.

"Without having benchmarks, you really don't know if you are getting hosed by a vendor," said Doherty.

Non-disclosure caveats written into licence arrangements mean other organisations won't talk about their contracts either, said Doherty. However, he does suggest consulting an analyst firm that may have amassed that sort of data on different software.

Another myth that affects IT departments, said Doherty, is the belief that there is no wiggle room regarding standard terms and conditions in a licence agreement. With business intelligence applications, for instance, Doherty said, organisations can have options included in the agreement to alter the licence model partway through the contract should conditions change. A young company that initially wants to deploy 10 seats on a seat-based licensing model may need the flexibility to upgrade to a server or site licence model, he said.

But the key issue is that it's very difficult to predict what will happen over the lifecycle of a contract, and even harder to know what will happen when the contract comes up for renewal, said Stewart Buchanan, research director with the IT asset management and procurement group at Gartner.

"Customers' eyes are very much bigger than their stomach," said Buchanan. "They sign up for an all-you-can-eat menu and we find them not consuming as much as expected."

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