By Martin Callinan, Country Manager, Express Metrix

Software licence management has always been something of a dark art, and with a raft of different licensing options and complex vendor agreements, it’s easy to lose track. For smaller businesses that invariably have tight budgets and finite resources, licence management often falls to the bottom of the priorities list. However, failure to address the licence issue could be opening companies up to legal and financial exposure that cost significantly more in the long-run. The time for small businesses to ignore the risks related to software licensing has to be over, with recent research showing that vendors are targeting small- to mid-size enterprises (SMEs) with greater frequency.

Software audits can prove very costly for the unprepared. Audits can come at any time and if a company is unable to prove it has the right to use the software that is deployed, vendors can demand that any shortfall is quickly rectified, which creates unexpected costs. In the event of non-compliance, vendors can also hand out hefty fines ranging from £10,000 to £100,000s. In such instances, reputation can also be put on the line as these fines are often reported in the press.

Yet it is not only compliance that companies should be concerned about. On average, software spending accounts for around 30% of an organisation’s annual IT budget, but many businesses have no visibility into how, where or why this software is being used. Without this information, companies cannot be sure they are obtaining true value from their software investments and could be spending money on software they do not need. Software Asset Management (SAM) is a set of processes, tools and principles that can help companies track and manage their software licences, and protect themselves against non-compliance. Here are five key characteristics of a successful SAM programme:

1. Automating your software inventory: Many businesses take an inventory of their software licenses by physically visiting all the desktops in the business and documenting the hardware configurations and software licenses on each machine using spreadsheets. Needless to say, this is a time-consuming, error-prone process that needs to be repeated frequently to ensure the software inventory is up to date. Businesses should implement automated inventory technology to cut out the human errors that occur when using manual processes and to ensure all their software licences are being tracked on an ongoing basis. Here is a free tool that can help SMEs to do this.

2. Understanding your usage: By tracking software usage, companies can quickly identify areas of waste. For example, if some users have a certain application installed but rarely or never use it, these licences could be reallocated to users who truly need them, or retired when they come up for renewal. Additionally, by having detailed information on usage, companies are in a stronger position to negotiate software agreements which reflect actual levels of use – which can save significant amounts of money. Tracking software usage can also identify the use of unauthorised applications, allowing corrective action to be taken. For example, employees may have downloaded an application for personal use which could be exposing the company to security risk or regulatory violations. Many automated inventory tools also offer software usage tracking, and the savings generated from this capability will almost always offset the cost of the tool.

3. Revisiting your software licence agreements: Revisiting your software contracts on an annual basis with your vendors can help small businesses determine whether their software purchases are suitable for their organisation's needs. With rapidly evolving IT infrastructures and the proliferation of virtualisation, enterprise app stores and mobile devices, licensing options should be regularly examined to ensure license agreements are structured in such a way as to permit optimal usage, while at the same time minimising costs. Ideally, licence agreements should have the flexibility built in to allow for a range of possible scenarios and anticipated changes.

4. Planning software upgrades: Upgrading software can be a complicated process for small businesses. Firstly, they have to ensure that they have a clear idea of which upgrades are needed. Without this knowledge, there is the possibility of overspending on software. Secondly, small organisations need to find out whether their existing desktops are capable of upgrading to new software. Investing in new hardware might have to be an option in order for SMEs to make the smooth transition to newer software. By having visibility of IT and hardware assets, planning such upgrades can be a much more effective and speedy process.

5. Investing in licensing training: Licensing training can help asset managers develop a firm understanding of the types of licenses they have purchased, and correctly interpret the nuances within their unique environments. Once employees acquire this knowledge, it is much easier for them to adhere to and manage license agreements, ensuring all software is deployed and used correctly, and avoiding costly mistakes.

A SAM programme should always be treated as an ongoing process, marrying both action and technology to ensure that licences are managed effectively. SMEs that have a clear understanding of their software assets and how they are used will be well-equipped to remain compliant, and in the future make better informed choices. If SMEs treat SAM as a one-time project and do not invest the time and resources into it, it could prove very costly down the line.