11th January 2010
Roundtable experts discuss issue of liability in software
ownership
• Virtualisation, SaaS and Cloud Computing make it harder
for organisations to keep track of IT estates – especially when it
comes to outsourcing and M&A
• Experts agree organisations need to forward plan and have
better understanding of software ownership and liability.
FAST Ltd, a leading UK authority on Software Asset Management
and IT Compliance, providing software, education, consulting and
managed services, hosted a roundtable of industry licensing
specialists recently, the results of which were illuminating.
The experts gathered together to give their views on software
ownership and the issue of liability following outsourcing and
M&A activity.
There is no doubt that over the past year, CIOs and IT managers
have been under pressure. Demonstrating good cost control
continues to be critical and in an attempt to achieve this, many
organisations have outsourced the problem or are looking at new
pricing models and ways of procuring technology. Participants
reported that the with the need to react to economic downturn plus
growing complexity in licensing and technology, a new types of
technology such as Cloud Computing, Virtualisation and SaaS and new
revenue models being tabled, keeping track of IT estates and who
owns what, in regards to software ownership and liability, is
actually very difficult. Even more so when it comes to a
major outsourcing programme and /or a new merger or acquisition
(M&A).
The roundtable event, ‘Where Does The Ownership Lie’, part of
the CEO Series was hosted by FAST Ltd and included software vendor
Symantec, together with sponsor LANDesk, Webroot, Rocela, The UK
Oracle User Group, Bytes Technology Group, ConnectSphere, Flexera
Software, Regent Partners International, Beachcroft LLP, FAST
customers LeaseDrive Velo and Lloyds Register, and a representative
from industry analyst Quocirca.
A key driver for the discussion was the current confusion around
the software ownership landscape and how it’s multiplied when you
add M&A to the mix. Clive Longbottom at Quocirca said the
situation is confusing for businesses. “Originally organisations
went for the very old style of ‘thou shalt pay’ and thou shalt pay
on a yearly basis when it came to licensing their software.
However, now there are a lot of organisations that are moving
towards subscription-based software as they don’t want the
responsibility or liability when it comes to licences. But,
the reality is that they still aren’t reading the contracts and
don’t realise they are responsible for counting licences, so
ultimately they are back to square one.
“And when you add M&A into the mix, these problems are
multiplied three-fold. The amount of stress being put on
organisations to conclude the deal quickly is immense and
businesses are waking up to the fact that their IT is in a real
mess and are therefore looking for ways out of it.”
Tim Pollard, Director Enterprise Sales at Symantec agreed and
said that he’s seen an increase in tier 1 vendors introducing and
offering more flexible licensing packages. “There are more
and more ‘all you can eat’ licences, and we tier 1 vendors need to
work with the customer to figure out what is right for them, but
also what makes commercial sense for us. More organisations
are looking to outsourcing and functional computing, and we’re
seeing more clauses being drawn into our contracts.”
Head of Customer Services at FAST, Paul Clements said that he
has seen an increase in organisations affected by ownership
concerns and software licensing, and who are looking to cut
costs. “One of the biggest issues a lot of our customers are
facing is that they are being told to outsource as a result of the
economy. We have to explain that although you can outsource
projects, you can’t outsource the liability.”
Peter Rowell from Regent Partners International agreed and added
that it’s a whole new story when M&A is added to the mix.
“In the past year Regent has tracked over 300 acquisitions of
European software companies and there have been three times the
acquisitions of software companies today than there were nine years
ago. Generally when a company makes an acquisition it’s not
because of the IT, it’s because it’s a strategic business decision
for them. Therefore IT is overlooked at the beginning of the
process which really shouldn’t be the case, and this is where due
diligence comes in.”
When asked why this happens, Robin Fry from Beachcroft LLP
commented: “Secrecy during an M&A is one of the biggest
challenges. “Businesses simply aren’t going to go to their software
vendor to discuss their future licensing before they tell
investors, staff and the Stock Exchange. It's a huge risk with the
relevant enterprise likely to be unlicensed the day after the deal
closes, and companies are continuously taking this risk.”
Martin Mutch Chief Executive at Rocela added: “Most clients we
deal with want to know the complexities and the implications of
their licensing. However they struggle to understand the impact an
acquisition will have on this. We encourage clients to ‘embrace it,
control it and manage it’ to ensure they are controlling their
costs more effectively.”
All participants agreed that managing IT assets through
effective Software Asset Management and utilising ITIL best
practice is important to ensuring that if and when a merger or
acquisition happens organisations won’t get stung with large
penalties.
“It’s surprising that there are a lot of companies that just
don’t have a clue - when it comes to physical IT assets and
also their software,” said roundtable sponsor, Andy King at
LANDesk.
“A merger or acquisition will merely highlight existing
inefficiencies within an organisation’s software and licensing,”
said Michelle Hales, Training Director at ConnectSphere.
“Organisations need to have good Service Portfolio Management –
they need a good understanding of the end-to-end process and an
overall plan for the future.”
Asked on whether SaaS will solve licensing and ownership
problems, Ian Moyse at Webroot added: “There are benefits to SaaS
and it does solve deployment issues of companies coming together in
M&A. However it’s not a one size fits all, and it doesn’t solve
all of the problems of M&A and licensing.”
Lloyd’s Register’s Mark Duffy welcomes SaaS, but believes more
work needs to be done to convince him of its Widespread
suitability: “Where we utilise SaaS solutions at the moment, life
is certainly easier in regard to licensing who can use what, where,
when and how. Part of me would like to see more of this style of
licensing across the board. However pricing models in this space
need to be more flexible in order to gain the true benefit of using
such a service.
“Buyer Beware is key,” said Ronan Miles, Chairman of the UK
Oracle User Group. “You need to understand what your company
may be doing now, what it may plan to do in the future, and what
will happen if that happens. This will make all of the
conversations that you have afterwards a darn sight easier.”
Paul Clements at FAST Ltd concluded: “Software licensing won’t
go away. And in the current auditing climate, companies are more at
risk of being pursued for non-compliance. Where licensing has been
put on the back burner because companies have said, ‘Let’s just get
the business going for the next 12 months’, there should be an
effort now to start catching up and trying to put things right,
because vendors audits are not going to go away in 2010.”
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