When embarking on digital transformation projects, CIOs often look to adopt the latest and greatest innovations. While technologies such as the IoT and cloud computing undoubtedly increase business agility, those tasked with overseeing digital transformation can often overlook the basics – such as ensuring the software estate is correctly licensed. This exposes companies to hefty compliance penalties and can be a major cybersecurity risk.
Research revealed that by 2020, an entire generation will have grown up in a digital world – used to being connected at all times. How will this brave new world affect software licensing? In a nutshell, new technologies add a whole new layer of complexity to enterprise IT. Consider that today there are 14,000 software vendors with more than 800,000 software releases, and it’s not hard to see why licensing has become such a significant management challenge.
A web of their own making
When it licensing, the complexity is two-fold. Firstly, organisations are under increasing pressure to quickly develop new services for both employees and customers, while the delivery models for digital services continue to change rapidly – with ‘on-demand’ services growing in popularity. Further difficulty stems from the need to satisfy increasingly complicated governance and compliance requirements. Against this backdrop, managing software assets can becomes a tick-box exercise, leaving organisations unsure about their licensing position.
Secondly, software licensing agreements are notoriously complex. As a result, understanding how changes to the IT environment impact licensing can be very hard. This isn’t helped by the fact that often licensing agreements haven’t been updated to take into account cloud computing, and were created when the majority of deployments were on-premise. As companies’ IT needs change, so too must licensing agreements; organisations need to know how moving from on-premise to cloud will affect their licensing status. This is essential due to the ever-present threat of an audit from a vendor. A comprehensive and robust software license management strategy is therefore crucial in coping with this complexity.
Untangling the knots
Integral to robust license management is understanding what software is in use. Organisations need real-time visibility into their software estate to pinpoint which applications are installed and how are they are licensed. Granular visibility also helps organisations spot opportunities to reduce costs by optimising licensing – a practice that save up to 30% on software costs, according to Gartner. This could include, for instance, ‘bundling’ licenses from a single vendor, recovering and reusing unused license rights, or cancelling surplus maintenance and support contracts.
To achieve this deep visibility, organisations can to install a software management ‘layer’ that helps unpick the knots of the current estate. With this degree of transparency across the software portfolio, CIOs can make informed and confident decisions on software use, as well as generate data for use in future contract negotiations. This information helps build a solid business case, so CIOs can make evidence-based decisions, and ensure software investments deliver value back to the business.
New questions for the digital age
In addition to the impact of trends such as the cloud, platforms such as the IoT are set to grow in influence – according to Frost & Sullivan, there will be over 45 billion connected devices by 2023. This will only increase the complexity of IT estates, and is justifiably raising many questions about licensing. One issue is around ‘indirect licensing’ – with the possibility that every connected device reporting to a database via an API, of which there could be millions, could be identified as single user and consequently in need of an appropriate license. This could result in a huge spike in licensing costs for many organisations. Uncertainty continues to surround the question of licensing in the age of IoT – despite its resolution being critical to both organisations and software vendors. #
What is certain, however, is that as the industrial IoT and connected workplaces become the norm – new issues around licensing will continue to arise, alongside the entrenched problems of inflexibility and complexity. Despite these unanswered questions in relation to the adoption of new technologies and their impact on licensing, one thing remains clear – software licensing can no longer be an afterthought, and instead needs to remain high on the agendas of CIOs pursuing digital transformation projects.
