The world as we know it has changed

Compliance revenue now makes up a significant % of most

publishers revenue

Compliance

In some cases Sales Professionals are expected to make compliance as part of

their quota

Compliance

In fact, they are trained to listen for triggers

• Site License

• Concurrent

• Virtualization

• Server based

• Standard Image

And incentives are provided for successful conclusion of

compliance business

Publishers have geared up with compliance teams

Compliance business is low hanging fruit

This makes large corporations easy targets

Statistics

• The majority of respondents said the use of unlicensed software impacts their companies’ revenue by at least 10 %

• 90% said their software license compliance program is a source of revenue and nearly 50% indicated compliance-related recoveries provide 4 % or more of their annual revenue

• 52% said sales or sales operations lead their compliance programs (up from 33% in its 2007 survey)

• 70% said sales receives commissions for compliance revenue

• The vast majority of executives say their company is more interested in addressing customer noncompliance in a forward looking sales process than in trying to assess penalties or interest for over- deployment

In October 2013 KPMG surveyed 31 software companies representing more than 50% of the revenue of the software industry from February to April 2013.

Publishers use various techniques to reap the most revenue from

compliance engagements

• Product release dates• Extrapolation• Standard List Pricing• High pre-judgment

interest rates• Maintenance programs

The Audit Cycle Trigger Letter requesting audit Response Initial kick off call NDA’s signed Data gathering by you or 3rd party Presentation of findings Extrapolation of data based on coverage Review of applicable SLA’s / EULA’s Comparison of findings vs. Entitlement Negotiation to resolution Agreement on resolution Conclusion / Order issue

The Audit Cycle Trigger Letter requesting audit Response Initial kick off call NDA’s signed Data gathering by you or 3rd party Presentation of findings Extrapolation of data based on coverage Review of applicable SLA’s / EULA’s Comparison of findings vs. Entitlement Negotiation to resolution Agreement on resolution Conclusion / Order issue

• Audits last 3 months on average

• End result of failure: financial loss, disruption, reputational damage, and (ironically) more frequent future audits

What can go wrong? Trigger

Publishers have geared themselves to capture triggers.They have tools that track suspicious activity

Reports are generated for phrases such as: How do I uninstall XXY? How do I set up XYZ on a server? How do I set up XXZ in a virtual environment?

Their technical support engineers are also trained to listen for triggers: We have this installed as part of our desktop image You’d better respond quickly because our whole dept. uses this product We are rolling this out to … We’ve been using this product for 10 years

What can go wrong? Response

• Delayed responses garner attention.• Engage quickly and professionally.• Bitterness about an audit tends to attract attention.• Demonstrate a willingness to co-operate.

Know your rights but don’t lead the effort with legal. This results in the publisher being forced to take the legal route too.Assign resources and ask your publisher sales person to help you.Involve your legal team early on in the process and cc them on internal communication to keep it privileged.

What can go wrong? Extrapolation of data based on coverage

Publishers tend to use extrapolation techniques to account for the lack of 100% coverage of your audited environment.The better the coverage, the less you need to worry about extrapolation.Work now to ensure your coverage is as high as possible.If you have holes, fix them or define techniques to cover the unaudited holes.

Example:A license shortfall of 2,000 in and environment with only 80% coverage will add an additional 400 to the shortfall. This WILL cost you.

Advice:Ensure your coverage is as high as possible

What can go wrong – Misinterpretation of SLA

Review of applicable SLA’s / EULA’s

• Ensure that you have the right license agreements in place and that you are working from them. Multiple license agreements with varying terms can muddy the waters. You will likely be working with multiple license agreements. Keep the license shortfalls in silos where you can.

• Ensure that you understand alternate rights usage of all your licenses.• Publishers will lean towards license agreements that work in their favour.

Lice

nse

A

Lice

nse

B

Lice

nse

C

Entitlement Comparison of findings vs. Entitlement

• Publishers will strive to have you settle on data before they start talking about pricing.

• Publishers will try to keep these exercises as data driven as possible for potential legal remedies.

• Publishers will endeavor to keep their practices as consistent as possible for the same reason.

• Implement tools that track entitlement.• Work with your publisher sales people to

understand entitlement.• Ask your resellers to help with

entitlement data.

Software License Management Reduces Risk

• Companies that implement SLM tools are 32% less likely to get audited

• Among companies that do get audited, those with SLM tools report:

• Fewer (if any) financial penalties; fewer unanticipated true-up costs

• Nearly 50% less time spent on audit

Why most companies fail audits

Decision-makers underestimate the exposure; view SLM as an expense vs. investment

You are forced into reactionary mode;

when it comes to license compliance, this means failure

Minimizing Compliance Risk

Eliminate Wasteful Spending

Are you worried about your next software license audit

or are you amidst an audit already?

Questions?

Where do we go from here?