Ask any CIO for their thoughts on managing software licences in today's IT environment, and their answer will be more appropriate to a Hollywood relationship than an office environment: "It's complicated."
Software licensing models have changed, the business environment has changed and the IT environment has definitely changed.
According to an article published in CIO Insight magazine, titled 'CIOs face new challenges with software licensing': "Cloud computing, virtualisation, mobility and an array of other trends - including Bring Your Own Device (BYOD) - have transformed the way organisations use and manage applications.
"What's more, software-licensing models have changed radically over the last decade. For organisations that fail to comply with increasingly complex - some might say Byzantine - rules, the fallout can be substantial. Audits and fines can lead to penalties that reach well into the millions of dollars."
With cloud services taking software off-site and the BYOD trend bringing new software on-site, little wonder CIOs are describing software licensing as complicated. We spoke to three South African CIOs about how their departments manage this challenging aspect of corporate IT.
Create a framework
Carol Thomas, CIO of Avbob, says it's definitely getting increasingly difficult to manage software licensing because of the enormous variety of devices that people want to use in the workplace.
"What we've done is tried to create a governance structure in which the business can do things in line with the standards that we're trying to adhere to," she says. "If what they want to do complies with the framework, then they can do it."
This framework states rules for how new software gets purchased through Avbob's procurement department. "We have the mechanism, but it doesn't always work. The things that slip through are generally smaller items."
She says that, particularly for an organisation that deals with the confidential information of so many customers, it's very tricky to find a solution for the plethora of mobile devices in use. "We're still trying to find that winning formula, but we haven't yet," she says.
Riaan Lucas, the group ICT manager at the Bidvest Magnum Group, says the biggest problem he experiences with software licensing models is flexibility - or lack thereof. "One device, one licence is hampering business growth," he says. "It becomes too much of an administration and financial burden to manage these licences."
He adds that the same applies for 'named user' licensing models. "In today's fast-moving world, companies don't want to be hampered by managing these sorts of licences."
He believes the answer lies in centralised, user-specific licensing solutions. "Big companies made huge money through their licensing modules for years. They need to realise those days are over. The faster users are moving towards cloud-based solutions, the faster these companies will have to realign their licensing models to assist - not hamper - the user in doing so."
He says that in his mind, the companies that introduce more flexible models will benefit the most in the long run. "Big companies will have to adapt their licensing models to suit the customers or users going forward, not their bottom line."
Simon Hudson, services director at ECS, lists the following challenges facing CIOs with software licensing: cost and complexity, BYOD, stealth IT, keeping track of software in use, defending the value of the licences to finance, and tracking the licences.
"Software licences, like any other asset a business has, cost money to manage and they need to be managed, tracked, maintained, reviewed and upgraded and replaced like any other tool," he says.
As a solution to some of these challenges, he recommends that for a large enough organisation, there should be a full-time employee focused on the task of software licence management, and the entire licensing lifecycle should be considered. He adds that if the organisation is not large enough, outside expert assistance should be contracted.
"Vendor management is also key to ensuring that the maximum benefit from each licence is derived and the vendor is under no illusions as to the value that the assets hold - or don't - to the organisation," he says.
Big companies made huge money through their licensing modules for years. They need to realise those days are over.
Riaan Lucas, Bidvest Magnum Group
He also believes that as most large businesses - and smaller ones too - are reliant on their IT systems, business heads, particularly finance, should be made aware of the value of licences. "Finance needs to be made aware of the larger impact of a licence and be required to measure software from a value perspective rather than just cost and allow for the fact that a licence is an asset like any other and requires ongoing management.
"CIOs should familiarise themselves with the ins and outs of their licensing agreements in order to derive maximum benefit from them or they should engage the services of an expert in the area to assist with the entire licensing lifecycle, including but not limited to needs identification, vendor negotiation, utilisation maximisation, renewal strategies and financial management of the licence estate."
As Avbob's Thomas points out, there's no silver bullet for managing the increasingly complex scenario of software licensing. While every CIO may put in place strategies and be aware of best practice, for the present at least, it seems there's no way to efficiently cut through the complexity.
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