Corporate lay-offs? "Difficult" economy? Get ready for a software audit!

Your chances of being embroiled in a software non compliance—piracy—punitive audit are higher today than at any time in the history of copyright enforcement. Here's how it works: During difficult economic times, or when your company loses personnel, you are opening yourself up to a significantly higher probability of software license enforcement audit scrutiny. In fact, your chances of becoming involved in a software audit could geometrically increase by as much as double for every five employees you let go.

Do you think this perspective is all so much hot air? When you combine the aggressive “Whistle-Blower Reward Programs” fielded by the software publishers and their enforcement industry friends, your level of risk is increasing as the economy becomes ever more unstable. Read on to discover methods for keeping what little corporate money you have – in YOUR enterprise pockets – rather than continuing to pay out more and more to the software and copyright protected products industry players.

Real World – The software industry players have known for a long time that there is an enormous revenue stream to be had in conducting compliance audits – even against enterprises that have a “clean” compliance record. They've been siphoning enormous amounts of cash from their own customers while constantly attempting to ensure that the entire compliance assurance process is as difficult and poorly defined as possible via ever more incomprehensible licensing schemes.

If your enterprises uses any degree of technology, you are an easy audit target. Period. Full stop. Even if you are 100% ethical and careful in your systems controls.

The bottom line is that technology asset management isn't about how much you spend, it's about the value you receive for every single dollar that you invest. When you can very easily enhance the value you gain from your business technologies, while minimizing initial and ongoing costs AND minimizing related risks, these ideas become no-brainers.

The key is this: Every successful asset management initiative begins with the foundation framework established by proactive software asset management. We build on this relatively basic foundation to deliver genuine life cycle value for software, hardware, and related goods, services, and contractual agreements.

At The Institute, our focus is putting that value—that money—back in your pocket...and KEEPING it there. 

Consider the following:

• If / When you look honestly at the current (sad?) state of your country's economy, nearly every business is looking to cut expenses and increase ROI, you'll recognize that managing the technology portfolio is one the most easily value-added programs available to you,
• If / When you realize that, in part due to lower employee numbers in the so-called developed countries, local and global software sales are down,
• Your suppliers are aggressively hunting for additional revenue streams,
• For these people, compliance audits are VERY significant income opportunities,
• If / When you recognize that large numbers of people are discovering that with zero warning they're out of a job,
• And they are NOT happy with you,
• It's easy to sign into the anti-piracy sites to deliver up you and your company for an audit,
• If / When we remind you that the software industry players and their so-called software police / copyright cops are loudly publishing whistle-blower rewards of up to $1,000,000...
• Money for nothing...?
• One of the enforcement audit campaigns was even entitled “Don't Get Mad, Get Even”!
• Does this tell you ANYTHING about enforcement tactics?
• If / Then - In light of these realities, is it any surprise that your audit risk expands by an approximate factor of double for every five employees you upset?
• Oh, yeah... Did we mention that existing—and ethical—employees are also very willing to report your copyright violations?
• Did we also mention that small- to medium-sized businesses are the absolute favorite audit targets?
• Did we mention that American enterprises are carrying the majority of frequency in being audited for licensing issues? (Because American enterprises can “afford” to pay more in fines / penalties. BUT, this locus of focus is changing as other countries expand their use of high risk software products.)
• And last, but not least, did we mention that The Institute for Technology Asset Management is your portal to establishing and maintaining effective business processes that extract maximum value from your IT spending dollars while minimizing costs and risks?
• Did we mention that many of our solutions cost you NOTHING?
• Did we mention that our methodologies meet or exceed ANY existing standards for software portfolio management?
• Did we mention that our software asset management credential programs are substantially more comprehensive that anything currently on the market because they focus on practitioner competencies?

Fines and Penalties – The average cost of a single software piracy audit can—and frequently does—exceed $100,000—for even the smallest company (10 computers). To put this in more basic terms, think $3,000 to $5,000USD per computing device in typical settlement fines.

Invisible Value – The average company gains less than $1 in business value from every $14 it spends on technologies. Those same technologies expose the enterprise to enormous enforcement audit risks.

Here's why you need to be concerned: First of all, any business owner or manager should be well aware that former employees very frequently have an ax to grind.  According to research published by the software anti piracy enforcement industry, the majority of whistle-blowers are current or former technology workers or management-level personnel. Who, in your company, knows the most about the products loaded on every one of the computing devices you possess? In polite terms, these are the folks you need to manage. They're also NOT the ones who should be fully responsible for direct oversight of your technology assets.

Here's what you can do: The number one entry barrier to optimizing value in your corporate technology portfolio is to become honestly aware of the realities and issues. As long as your enterprise operates on theory and verbal assurances of compliance and effective life cycle management you will not be capable of delivering value. Theory does not contribute to the bottom line – only quantifiable factual evidence of both compliance and life cycle controls.

Enterprise management—at the highest level—must become aware of, and clearly support, close scrutiny of the entire life cycle of ALL technology-related investments. Failure to do so only perpetuates the existing ineffective practices and procedures. Interestingly enough, failure of upper management to actively support the initiative has statistically, and consistently, been the root cause of a majority of ineffective asset management initiatives.

NEXT: If you have any interest in reducing costs and risks, begin a serious technology asset management program right now—today. Your first step should be to stonewall the software enforcement industry auditors. Since audits are the most immediate and costly threat to any enterprise using today’s technologies, merely eliminating high risk software titles from your exposure field is an enormous step to ongoing savings and improved ROI.

The process is simple: Establish a trusted review team and ensure that all copyright protected products loaded on any computer—or electronic media—are fully and correctly licensed. This is all a matter of brain-work. Cost so far? Nothing but a little of your time. No new products or services to buy…

Do you want more? More details? More ideas? Let us know. The Institute for Technology Asset Management staff is ready and willing to help you learn to take back control of your IT investment dollars.

How Does Your Carefully Negotiated Software License Become a Complete Waste of Time?

This topic is covered in-depth in The Institute's self-paced, online, professional development modules as part of our Competency-Based SAM Credentials. Institute Credentials are open source, with hundreds of Internet learning opportunities. We never limit you to a single training option.

Your negotiated software license is useless when it's been superseded by that shrinkwrap or clickwrap license your employees never read. We constantly warn professional software asset managers and their companies to steer clear of acquiring either shrinkwrap or clickwrap licenses for any purpose. (Let's call them SCLs.) Read on to discover just one more reason to avoid these common software license scams.

Shrinkwrap & Clickwrap are the most costly & onerous licenses your company can possibly buy or use. And the suppliers would dearly love it if you accidentally locked yourself into one—or more.

This brief review covers a little-known risk of SCLs. Below are the methods used to bind you to hidden clauses within the unread license—clauses that can spell disaster for your company. Even worse, the powerful lobbying interests of the software industry have managed to ensure that this SCL binds you to a license you were never able to read and it's 100% legal.

You should be feeling concerned…

Simple Answer to Our Title Question: Either of these licenses could easily void every previous license you own—including those that you invested a great deal of time and money in carefully negotiating beneficial terms and conditions.

Here's How They Get You: When one of your employees, or a contractor, or a consultant, or any other individual with access to your computers, decides to download an unauthorized product, they can immediately bind you—legally—to the unread virtual license. Within the SCL—the licenses that copyright holders are perfectly aware you will never read—is a clause that automatically voids all previous licenses when the SCL becomes active. The next several clauses in the license will further limit your use and rights in relation to the new product—even support & maintenance coverage—as well as all preceding releases or versions of the product.

Real World: For many software applications, every time you update, patch, or fix there is a carefully hidden check-box that installs a new software product. The default for the box is “accept”. Only by consciously denying that check-box can you eliminate the unauthorized download. Failure to do so places a literally invisible software audit threat on the device.

Instant Solutions: From today forward, EVERY license and agreement you make with every technology supplier must contain a clause that very specifically and very clearly states that the agreement will NOT be superseded by any subsequent agreement or license. You can permit future modifications but only upon activating a clearly written agreement that must be mutually approved and signed by both parties.

Next, you absolutely must ensure that anyone with access to any of your systems is well aware that they are not authorized to acquire and or install any products covered by shrinkwrap or clickwrap agreements—period. This includes the necessity of informing (in written form) all suppliers of software-related goods that THESE are your rules of engagement. If they choose not to comply, they should also be choosing not to provide goods and services to your company and will be removed from your vendor list.

Finally? Enforce the rules—now—and ensure that they continue to be enforced. No exceptions. Not you. Not your CIO. Not your mom. Nobody. Sorry folks, but this is business and you are a prime target for sharp practices that could cost you enormous sums of cold hard cash.

But don't listen to us. It's neither our job, nor our intent, to provide either legal or accounting advice. You pay good money to professionals in those fields. Our task is merely to make you aware of some of these costly little minor details so you can check them out.

If you need any additional information, let us know. The Institute for Technology Asset Management is here to help you cut the costs and risks of business technologies—not to ensure that you pay even more.

I’ll bet I can cut your software costs by ¼ with one briefing…

Does your company have a formal step-by-step process for identifying, sourcing, testing, negotiating, and evaluating the functionality of a new software package?

Do you blindly purchase any product that the software industry dubs “standard”?

Do you purchase hardware that the hardware builder has arbitrarily loaded up with software?

Do you carefully control and monitor the entire acquisition process to ensure a good investment and positive business value return?

Read on for a 20+ point checklist that an effective asset manager can follow to maximize the quality of a given IT purchase. The idea, here, is to SAVE money--not spend more on non-solutions. Our goal for this program is to put more cash IN your pocket, not take more out.

Using this (highly) simplified phased approach for acquisition, you could increase the business value of a software (or any other technology) purchase while reducing costs:

• Do you establish a very clear business value to every software purchase?
• Do you have a process in place for measuring the delivery of that specific business value?
• Do you set very clear and measurable functionality requirements for all acquisitions?
• Do you have a process in place for measuring the delivery of that specific functionality?
• Do you select at least two viable alternative products as BATNAs for every purchase?
• Do you actually have the ability to fall back on that BATNA? (Don’t know what a BATNA is?)
• Do you conduct effective bench testing of product before the purchase?
• Does your bench testing match your requirements to actual product functionality?
• Do you establish a clear and strategic value you are willing to place on technical support and/or ongoing maintenance?
• Do you have two clear sets of contractual terms and conditions relating to this type of purchase?
• Establish one set of "must have" clauses and one set of "will not accept" clauses.
• Do you follow a formal strategic negotiations plan for this acquisition?
• Do you check the product that you receive to ensure it is what you ordered and in the quantity or quality that you ordered?
• Do you review all paperwork that accompanies (or doesn’t accompany) the product?
• Do you bench test the product you actually receive to ensure that it still matches the functionality that governed the purchase? (Don’t be surprised if this value has changed. It happens - A Lot.)
• Do you ensure that the product has been effectively implemented according to the agreed parameters?
• Do you follow up on the product within the warranty period to determine if it is fully functioning according to requirements?
• Do you ensure that warranty & support costs are actually applied via the warranty, or are you being billed for warranty services?
• Do you follow up on the actual technical support and/or maintenance services delivered by the provider?
• Do you check all invoices to ensure they are correct, cover delivered products/services, and do not represent double (or even triple) billing?
• Do you go back to the re-seller or provider with solid evidence of failure should failure occur? (Or do you just eat your losses and move on?)
• Do you clearly document this entire process?

Can I prove to you that any of these issues can bring a wide range of ROIC value to the enterprise?

Absolutely. Virtually every software asset manager or technology asset manager that I have worked with over the past six years has agreed that these steps represent the very tip of the IT and software cost reduction iceberg. However, in the majority of companies out there in the wild neither the software asset manager nor the technology asset manager is actually permitted to genuinely organize or control the acquisition , distribution, and utilization processes.

Unfortunately, even the basic steps we just listed are either not considered or they are fragmented across the enterprise to the extent that very little control is exerted on the purchase. Instead, in many enterprises, maximum control is exerted on nothing more complex than distributed silo ownership. In terms of the average technology purchase, if you do not have a centralized and very solid acquisition process in place, you will consistently lose money due to functionality, over-purchasing, ineffective implementation, pricing, and duplication of services.

So? Based on this information, the average company has a couple of major problems that prevent any realistic reduction in IT financial waste. First, there is essentially no meaningful, centralized, or knowledgeable control over the life cycle of technology assets. And second, executive management has literally no idea that their company is leaking IT dollars through a money sieve with hundreds of tiny but highly significant holes. So far, we’re only discussing the workflow of a relatively simple acquisition process.

Want more? Agree? Disagree? Don’t care? Let us know & we’ll follow up.