How to Win the Software Licensing Game

Are your software licenses keeping up with the times? Probably not -- and that can cost you big time

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Assignments: Anticipate changeIn today's economic client, the only constant is change. Companies acquire and become acquired; they downsize divisions and spin off subsidiaries; they contract or expand to new markets. Don't assume your licensing agreements are flexible enough to weather all the changes.

"We recently worked with a major U.S. media company that decided to expand its North American online publishing arm to Europe and Asia," says Rosenberg. "There was no merger or acquisition. The company had assumed its Oracle Unlimited License Agreement meant that any usage by the company was covered. However, the Terms and Conditions limited the media company's use of its Oracle products to North America."

The solution? The company revised its licensing agreement by adding the new regions, as well as the option to assign up to 10 new regions within a specific time period.

Besides inserting assignment or transfers in case of purchases or acquisitions, Muscarella suggests build more flexibility into the agreement for unforeseen circumstances -- like the ability to extend usage rights to subsidiaries or new acquisitions at a discount, or a transition period where no additional charges are incurred.

Money talksThe good news is that most software companies are hungry for your business and are willing to be flexible -- and the bigger the deal, the more flexible they get.

If you're unhappy with your current licenses, you'll have a better chance of improving them when there's new money on the table, says AMR's Shepherd.

"We tell our clients that each time they go back to buy more seats or services, or add more products, to think about renegotiating their license agreements, because that's when you have leverage," he says.

You can keep your leverage strong by avoiding long-term agreements that lock you in, adds Muscarella. "It's important to make sure you don't have an out-of-date vendor agreement," he says. "Every few years take a look at the agreements from vendors that may afford different rights that may be more beneficial."

But there's no substitute for doing your homework. The most successful companies know exactly what they need the software to do -- now and in the future -- and are deeply versed in all their licensing options. Those are things you'll need to know before you sign on the dotted line.

"Many companies believe that they have self-audited by simply keeping their software deployments updated on a nicely detailed spreadsheet," says Rosenberg. "However, this is only part of the equation. Your enterprise's software deployments must still be reconciled to the license entitlements delineated in your contract. Most organizations fail to complete this reconciliation. Simply put, you can't manage what you don't know."

This article, "How to win the software licensing game," was originally published at InfoWorld.com.

This story, "How to Win the Software Licensing Game" was originally published by InfoWorld.

Copyright © 2009 IDG Communications, Inc.

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