Hosted payment, regulatory compliance on agenda at software licensing talkfest

At the recent SoftSummit conference, attendees debated the merits of subsciption-based licensing and said new regulations are making it vital to be up to date with licences. Linda Leung reports

Less than one-third of user organisations polled in a recent licensing survey said they're satisfied with their vendor's pricing and licensing strategy.

In August and September, licensing management tools company Macrovision, in association wiht the US Software and Information Industry Association and the user group Celug (the centralised Electronic Licensing User Group) surveyed 232 senior IT executives and 252 software vendors.

The report found that 53% of user organisations strongly favour the concurrent-user licensing model, in which products are licensed based on how many users access the software simultaneously.

In terms of pricing, the report notes that vendors are "moving aggressively towards subscription-based licensing models" in which users pay for licensing with a recurring fee. The number of vendors offering this method increased 7% from last year, to 40% and is expected to increase to 60% in 2007. The report suggests that while the majority of users prefer to purchase software through perpetual licensing, they seem to be softening their resistance to subscription pricing, with 43% now preferring that method, an increase of 7% over last year.

At the recent SoftSummit software licensing conference in the US, several CIOs took part in a user panel. Sateesh Lele, a former CIO at several multinational companies and now chairman of Global Data Systems, said he found concurrent-user licensing easier to administer. "I'm open to other [licensing models] if only I pay for what I use," he said.

At one organization where he was CIO, Lele said he discovered that the difference between the number of Microsoft software licenses the company had and the number that was actually being used was 75%.

In her keynote address, Nora Denzel, senior vice president of HP Adaptive Enterprise, said government regulations are prompting organisations to ensure they are compliant with vendors' software licenses. "It used to be a cat-and-mouse game; now customers want to be in compliance rather than [vendors using] strong-arm tactics," she said.

Being in compliance with vendors' software licensing agreements is a requirement of Sarbanes-Oxley, said Dan Griffith, a manager at Freescale Semiconductor, a former Motorola subsidiary. Griffith is a manager of Freescale's Comprehensive Software Asset Management team, which is responsible for distributing electronic design automation (EDA) software licenses to all Freescale design centres worldwide from central license servers in the US. He said among the requirements is the ability to confirm that organisations have licenses for the software, that the software is installed, is being used and is being used effectively. He says centralising software licenses has enabled the company to better ensure regulatory compliance. "If software is managed by dispersed groups they'd all need to be aware of the terms," he said.

Griffith said single-site sharing of EDA software has enabled Freescale to reduce software costs by 20% in the US and by 35% worldwide.

Despite regulatory requirements to track license compliance, the survey found that 72% of organizations either manually track license compliance or don't track it at all. "Since manual methods tend to be error-ridden and non-scalable in large enterprises, a large number of enterprises are likely to be out of compliance with their vendors," the report says.

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