Announcing ComplianceWare 3.0 with the addition of Hardware Discovery and InventoryAs a logical extension to the extensive Software and Licensing functionality of ComplianceWare we've now added the capability to track Hardware as well. Using the familiar script extract and load process across hardware devices you can now inventory your IT assets by site, view associated attributes, and generate reports based on specific templates.  For companies with sub-entities there is also the ability to create a hierarchy of related sites to provide a holistic view across all assets - a valuable insight into what refreshes might be necessary and coordinated across all sites enabling:
Future planned enhancements include the ability to interrogate failure rates to assist in determining which products and models are performing better than others, enabling procurement of least costly and more reliable IT assets. Want to know more - check out the documentation or contact us for more information. 
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Lets Straighten out On-Premise Rights Included with M365A quick internet search is likely to find conflicting views on what on-premise rights you are granted with your M365 Subscription particularly in relation to server software. Many sites will state that you gain only user access rights with your USL licenses, ie. essentially a CAL license entitlement, and that you are still required to acquire the server licenses for the likes of Exchange and Sharepoint. Simply, that's not correct. Firstly though, be sure of the M365 Subscription you are dealing with as each will offer different content and scope. The CAL/ML equivalency table of the Product Terms provides a good overview to this:  Note for example that the common business E3 and E5 plans provide both Base and Additive access rights for Exchange and SharePoint Server. But what about the Server Licenses? A quick browse through the FAQ of the M365 Site provides the first hint that certain Server software is indeed included: 
While the respective sections covering the likes of Exchange or SharePoint Server software don't provide any clues, the Microsoft 365 section clearly articulates the entitlement (page 57 of the October 2019 document):  Assuming all of your users are properly licensed (and they should be) your on-premise Exchange, SharePoint and Skype for Business Server installations are covered! ... and that includes back-versions of course under the Universal License Terms part 3 - "Rights to Use Other Versions and Lower Editions". So no need to True-Up those on-premise Server licenses for Exchange or SharePoint, and who isn't keen for less overhead and more funds right?!
IBM Announces its new "Authorised SAM Provider" Offering (IASP)While it appears the disgruntled messaging from clients is finally starting to register with some major vendors, a recent announcement from IBM (outlined here by the ITAM Review) by no means makes it an all clear. We're all for any move to make software licensing compliance simpler, and the IASP program for some large IBM customers might just do that - although by invitation only and accomplished by engaging one of just four designated IBM partners:
OKAY, SO WHAT's THE OBJECTIVE?In a nutshell, to offer those select few an alternative to IBM's License Reviews by operating a managed service that brings SAM expertise, tools, and knowledge to organisations who are perhaps struggling with those skills themselves - which happens to be exactly what we at Software Compliance have been offering our valued clients since 2016! HOW ABOUT the APPROACH?Once invited, an organisation selects an authorised partner who will then - through a defined scope of paid work - follow the standard licensing compliance process to create a baseline (using ILMT), perform an initial reconciliation, resolve any issues, and implement an ongoing management and control program, all done under an IASP Agreement that must be executed with IBM (covering a term of up to 3 years). ... And THE Benefits?The major attraction is that any licensing shortfalls discovered in the initial baseline can be resolved at the customers entitled price without any back-dating of S&S - and - an apparent waiver of any sub-capacity issues (tbc). ... and we all know how problematic (ie. costly) issues in this space can be! On the surface perhaps an admirable new direction from IBM, but does it really differ to how customers operating under the likes of an Enterprise Services & Software Offering (ESSO) have been treated for the last 10+ years? We think not - baselines were created, shortfalls resolved (albeit perhaps not as transparently), regular reporting was mandatory, etc ... so the only difference seems to be that the customer is required to engage one of just four designated partners.
Contact Us ... (before your Vendors do)
Could the Change to IBM's PVU Core Table Signal a Refreshing SHIFT in Sub-Capacity Licensing? While some vendors prefer to wallow in the mire of antiquated and irrelevant licensing regimes others seem to be moving ahead with revised models that provide clarity and ease in establishing your licensing and compliance position. A case in point - IBM - who flagged a rethink with a shift from the messy PVU to Virtual Processor Core metrics (example in the hyperlink). Starting April this year the x86 PVU Table has been culled down to just 6 entries with the Intel category now much simplified for the Xeon chipset, basically all determined by the number of sockets at 2, 4, and >4 (with the lower models in the listed ranges remaining at 50 PVU's):  There is however one complication - Symmetric Multiprocessing Servers - which you need to factor per definition below: The PVU requirement for the Intel processor technology indicated is dependent on the maximum number of sockets on the server. If sockets on two or more servers are connected to form a Symmetric Multiprocessing (SMP) Server, the maximum number of sockets per server increases. Example:
Good news from our perspective - anything that removes ambiguity is welcomed (with reference to the linked post at the start of this blog: "oh but you have to count the Physical cores, not virtual, on the Host, in fact all Hosts in the complex, actually in the Data Center, well let's say the Cloud then, so basically ... ... everything, everywhere")
All might not be what You think - It's time to CheckSo all's fine with your Oracle Database - it's been installed for some time now, had a few upgrades, tweaks and tune-ups, you're across your NUP and Processor entitlements, so why have any concerns from a licensing perspective? Well, what about all of those Feature, Option, and Management Packs that lurk quietly in the background - have you checked on the status of those lately?
Worth checking to be certain before that next, friendly ... 'Oracle License Review'. To facilitate this Oracle provides a script - options_packs_usage_statistics.sql - which enables you to check Oracle Database feature usage, option usage, and management pack usage. The script lists, in two distinct sections:
The script can be run manually on an individual database or you can use Oracle Enterprise Manager Job System to automatically run the script on multiple databases, giving output like the below (with formatting added):  Now with insight into the actual system settings a simple reconciliation to your licensing / entitlements will give you assurance that everything is in order, or alternatively highlight what needs to be resolved. A simple task well worth scheduling at least annually. and it's always good to keep a record for later comparison / compliance requirements (with ComplianceWare you can easily register the output as 'Verification' material alongside your licenses).
ADVERSE VIRTUALISATION TERMSCould You Be At Risk From Covert LICENSING TERMS?While some vendors are well known for their hostile terms towards specific forms of virtualisation (consider Oracle with VMware), others are not, slyly waiting for sufficient time to pass before issuing that dreaded ‘license review’ (aka audit) letter, hoping they can trap you with their archaic, antiquated, yet bizarrely enforceable terms that could see you severely punished if you have virtualised systems that fall under these conditions. Two current protagonists are coming to the fore in this space for their equally aggressive – and global – onslaught, hounding their loyal customers with totally unreasonable findings and outrageous demands for compensation. The problem emerged from the days of licensing physical installations by cores – easily managed when applications ran in their own dedicated servers, but with the shift to now omnipresent server farms, be it on-premise or cloud based, where their terms have not changed and don’t automatically recognise virtualisation as a means to limit the licensable metric (cores) you are at risk of paying for all of the physical cores in your entire Host estate. Consider the terms below extracted from the respective vendor agreements: Micro Focus End User License AgreemenT
"Server License for CPUs. Licensed Software provided under this License Option gives Licensee the right to install the Licensed Software on a single machine or server ("Host Server"), or one or more Containers on the Host Server, and have the Licensed Software executed by up to the total number of CPUs, Cores, Integrated Facility for Linux processors ("IFLs"), Blades or other processing devices specified for the license in the applicable Product Order ("License Specification"). If the number of Cores is not specified for a CPU in the event a CPU is specified in the License Specification, such CPU shall be considered to be single-Core. A Server License for CPUs license covering all CPUs, Cores, IFLs, Blades and other processing devices that are contained in and/or can be accessed by the Host Server ("Total Processors") is required with all applicable license fees paid, even if one or more of such CPUs, Cores, IFLs, Blades or other processing devices are not accessing or running the Licensed Software. For example, if 32 Cores are the Total Processors on the Host Server, but only 16 Cores are utilized to execute the Licensed Software, a 32-Core Server License for CPUs license is required notwithstanding the fact that 16 of the 32 Cores may not actually be accessing the Licensed Software. Each Core on a multi-core CPU requires a Server License for CPUs license covering each such Core. For example a Host Server with Total Processors consisting of a single quad-core CPU will require a 4-Core Server License for CPUs license and payment of the license fees applicable to all 4 Cores." OPEN TEXT – ECD Central Processing Unit (“CPU”) ModeL Affected products are any of those on your Order From that have a UOM code of ‘ZA’:  "Licensing and pricing is based upon the total number of CPU cores present in the computer upon which the ECD Software will operate. The ECD Software is licensed per physical dual-core device (“Dual-Core CPU”). Licensee must purchase an individual Software License for each Dual-Core CPU on which the ECD Software is executed or made available to execute." If you are in the unfortunate position of running any products that fall into the categories above, act fast. You will need to either move the affected applications to a right-sized physical box (with all of the accompanying issues that presents) or seek to agree with the vendor the appropriate virtualisation terms (and be wary – if they play this type of game that will likely just get their cash registers ringing). We find it hard to believe that such terms remain in vendor agreements, more so even deemed enforceable. If you've had the misfortune to have gone through such an affront, or think you might be about to, get in touch - we'd like to hear of (or help with) your experience.
IT SEEMS AUDIT SEASON HAS STARTED EARLY ...Revenue outlook must be a concern for a number of large, global corporates going by the number of audits we're aware of already this year - typically they seem to favour the mid to late part of the calendar. And lets face it, an audit is the last thing you need when you're just getting back to those major initiatives that need focus. Of course often its that very focus that leads to compliance issues - lacking the necessary oversight and controls in your IT landscape its not uncommon for BAU changes to cause a world of difficulty - a simple server refresh that introduces more cores, a change in access permissions that broadens the user base, or perhaps just plain old virtualisation. So what might target your organisation for attention by those loathed 'License Review Teams' waiting out there? Well the answer is, more than you might think. Typically something has got you to the top of the list. It can of course be within a common cycle such as at a contract renewal period, or an untimely prompt by one of those independent organisations whose entire income is through specialised and aggressive audits, but if not, what might cause it - and how might you prevent it? First, consider the common triggers:
If any of the above have you a little worried look for the most telling signal from your vendors of an impending audit - the unexpected communication that your "account team is going through some changes", which is simply a calculated, preemptive move to extricate any history and/or advocacy you might otherwise have had - prepare and get ready! all of those "but" arguments will get you nowhere - "but we had an agreement", "the account have known it was like this for years", "it was the licensing sold to us", etc etc. Alternatively, if you're feeling comfortable that you're not under any imminent threat its still a good idea to take stock and review your position against the common triggers. The best defense is without doubt a robust and competent software licensing function within your organisation that maintains the necessary level of control (and has the added benefit of warding off those vendors who would rather take on an easier, less capable target). When it comes to licensing and compliance its good practice to not treat your vendors like 'trusted partners' - keep in mind who they're actually working for, and who's paying their salaries. So - what to do:
Concerns? if you need any help, we're just a phone call away.
With a New Year ahead it's a good time to reflect on your IT Licensing status and Compliance Position - Are you confident that it's all under control?
Or does effective management of IT licensing just seem too vast and perhaps cost prohibitive to implement and maintain? It can seem that way - there are numerous and ever changing products, platforms, and models to complicate the situation, so how do you keep up? And what about the cost? - yes, Software Asset Management and Licensing Compliance to many executives can seem like an unnecessary spend, much like the early days of Disaster Recovery where the prevailing thinking was typically "why would we spend so much on hardware that's just going to sit idle?". Well compare that to the contemporary thinking today where Service Recovery is a given with any robust application - the spend is seen as a worthy investment, not just additional cost. At Software Compliance we recognised these factors as the perplexing problems the majority of organisations with broad IT solutions faced, and we decided to develop a solution that would work - and scale - to a vast array of companies, particularly SME's. So how did we do it? First and foremost we developed a tool to enable organisations to capture, contain and maintain that vast amount of software information important to them - their contracts, deployments, and licensing - the tool - ComplianceWare. Not only does ComplianceWare discover and track your software deployments, but it removes layers of licensing complexity by automatically tallying installations, performing product bundling where appropriate, and providing direct links to vendor licensing information to help you decipher whats relevant - all kept current for you by the team here at SWC. So if that solves the complexity issue, what about the next inhibitor - cost? Again, that was something we were very aware of. While there were existing solutions in the market they are typically high-end, bloated products aimed at large enterprises at a cost to match. We took a different approach - build a lean, cloud delivered, simplified application that organisations could subscribe to based on their requirements, and be there to provide ongoing support and expertise as those ever-changing products and platforms emerge and evolve. All at a such a compelling cost you'll wonder why you paid such exorbitant remediation fees in the first place (or perhaps might be about to!). So as holidays come to an end and we embark on another year it's a good time to reflect and ask yourself, in 2019 will we be:
It's not nearly as hard or as costlier a problem as you might believe it to be - find out more - get in touch and let's see how we might be able to help you gain more success in 2019.  effective January 2019 ORACLE HAS ANNOUNCED THAT Java SE 8 public updates will no longer be available for "Business, Commercial or Production use" without a commercial license.What does this mean to your organisation? ... For Commercial Users (being those "entities other than Oracle Customers that use Java SE for free for business, commercial or production purposes as part of a Java application delivered by a third party or developed internally" Oracle will not post further updates of Java SE 8 to its public download sites after January 2019. If you need continued access to critical bug fixes and security fixes as well as general maintenance for Java SE 8 or previous versions you'll need a long term support subscription through Oracle Java SE Advanced Desktop, or Oracle Java SE Suite. Of course if Java is licensed for use under another Oracle or other third-party license you are exempt. You'd be entitled to ask - what exactly is Oracle's justification for this new charge, well simply put their contention is captured in this statement: "As the main contributor and steward of Java SE, Oracle is the only company that can guarantee long-term support and updates on a timely and predictable schedule. The Java SE Subscription from Oracle provides access to tools that consistently manage updates, enables enterprises to monitor their own Java platforms, and provides direct access to a specialized Java SE support team" Where to next? ... What do I need to do?? Assuming you have broad use of Java SE like most organisations - noting the Java Platform, Standard Edition (Java SE) and Oracle Java SE Advanced and Suite products are currently shipping from Oracle in the form of the Java Development Kit (JDK), and Java Runtime Environment (JRE) - you'll need to inventory your entire software landscape to identify what installations you have, under what license. For those that aren't captured by an over-arching entitlement you will need to assess the level of support and currency you are willing to operate. Put simply, that all means:
And what's that all going to cost? ... Well the latest Oracle Technology Global Price List (June 19, 2018) states the following under Fusion Middleware:  ... however the literature surrounding the Subscriptions appears to indicate a more reasonable cost profile:  So with January 2019 looming the priority needs to be getting full clarity of your position:
... and then quantify what that might cost. It would be fair to predict that Oracle will no doubt scrutinise this space at some point in the near future ... best to be prepared. ... and that's where Software Compliance and our ComplianceWare tool can help ...
READY TO WORK WITH US? |
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What will 'end of support' mean? ... it will mean the end of regular security updates, and with the extent of hacks and attacks going on at any time - and the (legitimately) tough regulatory position on data protection - that would be a concern to all.
Now there are of course some options available at this stage to address this exposure:
- If you are an Azure customer, Extended Security Updates will be available for free in Azure for 2008 and 2008 R2 versions of SQL Server and Windows Server to help secure your workloads for three more years after the end of support deadline.
- If you run on-premise installations, you will be able to purchase Extended Security Updates for three more years as long as you have Software Assurance or Subscription licenses under an Enterprise Agreement enrollment.
So if it's free for Azure customers, what does it cost if I'm not? ...
75 percent of the full license cost of the latest version of SQL Server or Windows Server, purchased annually to cover only the servers that require the updates.
Ouch.
But wait, there's more. If you happen to run any IBM software under Windows Server, and you also run those servers in a virtualised environment, you need to be aware of an often overlooked limitation under IBM's sub-capacity rules. And that relates to 'Eligible Technologies'.
A quick glance through the regularly updated table by our ILMT development friends could come as a bit of a shock if you happen to still be running Windows Server 2003 - it's no longer an eligible technology - take a look at the snippet below under VMware:
You can view the entire list here.
And if it's 'not eligible', what does that mean? Basically that you'll need to revert to manual counting for that environment, and for which IBM provides a particularly onerous method and template as an Excel workbook downloadable here.
So taking the Windows Server 2003 omission as an example it's fair to expect that we'll see Windows Server 2008 drop off in equally quick time. Not only then is there a compelling cost imperative due to Extended Support, but an equally expensive overhead with IBM sub-capacity tracking and reporting as well (remember - you need to generate your sub-cap domain usage quarterly).
Time to act!
Microsoft have an advisory page here that is worth checking which also provides links to their end of support resource center for further advice and assistance. And if you're looking for a better tool than perhaps a spreadsheet for you IBM sub-cap reporting we have just the ticket with our ComplianceWare application - we recommend you check it out here!
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The BSA, in collaboration with IDC, release their latest global study:
Software Management: Security Imperative, Business Opportunity.
This revealing June'18 study set out to quantify the volume and value of unlicensed software installed on personal computers across more than 110 national and regional economies, finding that although there has been a global two-point drop in unlicensed software installation rates during the last two years, an astonishing 37 percent of software installed on personal computers is still unlicensed.
Of the six regions encompassed by the study, Asia-Pacific was one of four in which the majority of software deployed on personal computers was unlicensed, representing the largest commercial value globally:
And while the rates across both Australia and New Zealand have shown a decline over recent years there is clearly still room for improvement:
Compelling numbers - sure, but how does unlicensed software translate to an imperative to me and my organisation?
The answer can be summed up succinctly in just two words - Savings and Security.
savings.
IDC estimates that when companies take pragmatic steps to improve their software management they not only boost their bottom line by as much as 11 percent, but can also achieve as much as 30 percent savings in annual software costs by implementing a robust SAM and software license optimisation program.
They also calculated that by improving the software compliance rate by just 20 percent (for example, lowering an unlicensed software rate from 24 percent to 19 percent), an enterprise with annual revenue of $83 million (the average in the survey) could increase profits by an astounding 11 percent. This, along with other benefits stated by CIO's below, represent compelling reasons to adopt a strong SAM practice in any organisation, irrespective of size:
SECURITY.
In addition to the potential savings, the study highlights that organisations need to consider the security risks of running unlicensed software, in particular the heightened one-in-three chance of encountering malware, with the associated costs potentially more than $10,000 per infected computer, and a combined cost to companies worldwide of nearly $359 billion a year.
While the primary concern relating to malware was the theft of data (46 percent), there were also significant concerns with other key exposures of:
- unauthorised network access (40 percent)
- responding to potential ransomware (30 percent)
- system outages and downtime (28 percent), and
- the time and cost of disinfecting the network (25 percent).
Clearly, minimising malware exposure by avoiding unlicensed use is critical but, even when a company is using licensed software, the study reiterates that having an adequate SAM system in place is still essential.
The study concludes with the very relevant and often over-looked point that robust SAM also helps companies accelerate the transformational benefits they can achieve by migrating to the cloud by providing the foundational steps necessary to make a smooth transition - think how can I leverage the value of current software assets without knowing what those assets are?
A timely reminder (and prompt) for those with responsibility across their organisations commercial software. If you're unsure where to start just get in touch with us here, and if you're lacking the tools necessary to manage your IT landscape take a look at the most cost effective SAM tool on the market - ComplianceWare - here (where you can also request a demonstration login to try it out for yourself as well).
As the chatter of audits increases around the industry
the range of reaction can be outright fear to mild anxiety,
but ... sometimes - enthusiasm!
the range of reaction can be outright fear to mild anxiety,
but ... sometimes - enthusiasm!
What I hear you say - Enthusiasm??
Well yes surprisingly - for those organisations who run a well informed and skilled software / licensing function - it offers the prospect of evaluating just how effective their investment in processes and tools has been, and make any adjustments as/if necessary. Similarly, it provides an opportunity for objective feedback to management in a discipline that is otherwise difficult to gauge - just think - how can you quantify ROI without having a relative measure to report against?
Well yes surprisingly - for those organisations who run a well informed and skilled software / licensing function - it offers the prospect of evaluating just how effective their investment in processes and tools has been, and make any adjustments as/if necessary. Similarly, it provides an opportunity for objective feedback to management in a discipline that is otherwise difficult to gauge - just think - how can you quantify ROI without having a relative measure to report against?
The contrary position - where organisations have no certainty at all of their compliance state - is not a great place to be and certainly does warrant some anxiety. Not only is there the likelihood of remediation (at $$?? cost), but when you don't have a position what can you actually contest? There's no doubt that the 'arms-length' engagement of external auditors allows just that much more vendor independence to put more onus on you the customer - the audit will deliver a straight deployment report, leaving it to you to clarify what might be chargeable, and what might not.
Examples .... development software that might be free, supporting products under one suite that might be dispersed across servers, or even bundles - permitted, but unless qualified by you will still be listed as chargeable installs.
So it's worth considering just where you are on the compliance scale.
Ask yourself these three key questions:
- Do you have dedicated resources overseeing your software assets?
- Do you have a current, accurate and accessible record of your entitlements?
- Do you have the necessary software discovery and inventory tools to keep track of your deployments?
If you do - great! - check that the processes are running as expected and you can take any impending audit on without that gut-wrenching fear and anxiety.
If you're lacking on any front though some attention is warranted. Start with ownership - who will be responsible and held accountable for your software assets? Then, how will you keep a current and complete record across it all?
You'll no doubt arrive at the conclusion you'll need tools to help do it all efficiently and effectively, so the question becomes - which tool is right for you? What features and functions do I really need? What price do I then want to pay for it?
The very questions that led us to develop ComplianceWare - our full featured, cloud-based product designed to meet the needs of organisations who don't want those top-end highly integration reliant, distended suites offered by some more well known global providers. ComplianceWare offers just those essential functions in an easy to use web-based application such as software discovery and deployment reporting, customisation via configurations and conventions, and of course a contracts and license repository.
And by delivering just the essentials we can offer a price to match - that is, the most cost effective solution you will find in the market. Try it as a one-off managed service (perhaps even using that audit data you've just been asked to provide) and evaluate on your own estate, or as a term license have access when and as you need it. Take a look at the Documentation or request a Demonstration to find out more, and then we're always here to help you out as needed!
While these three little snippets might not seem particularly sensational they are worth noting precisely for that reason - they are likely lurking in the background, ready to cost you money when you least need it!
| 1. IBM License Management Tool (ILMT) |  |
OK, so we all know that under the IBM sub-capacity rules we must produce a report from ILMT every quarter right? And we know that we must sign and date that record, and keep them all as an artefact that may be required during any audit too, right?
All good, then the tip:
All good, then the tip:
Make sure you have configured ILMT correctly and fully for VM Management.
What's so important about VM Management in ILMT? If not properly configured it will default to 120 PVUs per core, so you could be over-reporting without being aware. How can you tell if its configured? Firstly, it shows a status on the Dashboard, and secondly, if not configured servers will be displayed with a serial-like number beginning with 'TLM_VM' or similar.
If you need more information on how to configure just look here.
| 2. Microsoft Subscription Licensing. |  |
Microsoft in many ways have led the industry in a shift to SaaS offerings backed by subscription based licensing. While this may appear to have a favourable ROI initially, there are other Time-Value commercial components to consider.
Firstly, you need to be aware that your licensing is now not only visible but manageable real-time by Microsoft. So from a commercial perspective there is now no locked-in pricing for the typical 3 year term of an Enterprise Agreement, instead you will see price increases built-in year on year in your CPS. And more so, there is no 'True-Up' benefit whereby you would pay essentially half the cost in the year in which you deployed the product - you now 'reserve' the additional licenses you need to be drawn down, and you start paying from that month onwards.
The tip?
The tip?
Make sure you consider TVM with subscription changes in your ROI / Cost Comparisons.
And the last tip for 2017 ... a favourite topic here at Software Compliance ... processor to core conversion.
| 3. No 'unpacking' of Core Licenses So a quick tally of the number of core licenses across your Windows Server fleet divided by 16 gives you your number of 16 Pack licenses required right? |  |
Wrong! ... A license pack is applied to a server, so where you have say a 12 Core server you need to assign 6 x 2 Core packs - you can't assign 12 from your 16 Core pack, and then apply the other 4 elsewhere. A nasty - and potentially expensive error - if not properly considered in determining your conversion.
And so ends 2017 ... we look forward to a busy and productive 2018 for us all!
As a postscript to the May blog regarding the SAP-Diageo lawsuit that found in favour of SAP a further action has been lodged against Anheuser-Busch Companies in the courts of New York, this time a staggering claim of US$600M (which must be a very confronting scenario for a company running a $150M annual IT budget) alleging license deficiency and misuse as summed up in the Anheuser-Busch Form-20 below:
On 21 February 2017, SAP America, Inc. (“SAP”) commenced an arbitration in New York against Anheuser-Busch Companies, LLC pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The statement of claim asserts multiple breaches of a 30 September 2010 Software License Agreement (together with related amendments and ancillary documents, the “SLA”) based on allegations that company employees used SAP systems and data—directly and indirectly—without appropriate licenses, and that the company underpaid fees due under the SLA. The statement of claim seeks both reformation of the SLA in certain respects and also damages potentially in excess of USD 600 million. We intend to defend against SAP’s asserted claims vigorously.
Given SAPs 65,000 customers globally there would appear to be a potential minefield of non-compliance that presents an unenviable opportunity – remedy via lawsuit (with resultant consequences), or go some-way to addressing customer issues. SAP have now at least started to clarify and evolve their licensing to accommodate the inherent issue of how broader access by external parties and devices should be authorised, in their words embarking:
“on a journey to move away from user-based licensing to a more transparent and predictable licensing model focused on outcomes related to our customers’ use of the SAP ERP system”.
The fundamental principal though – changes or otherwise – remains that you cannot ignore the simple premise that accessing a system, or the data generated by the system, undoubtedly has a cost attached to it in the form of licensing.
Consider SAPs own definition of ‘Use’ which is the central tenant of the misuse claims:
Use means “to activate the processing capabilities of the Software, load, execute, access, employ the Software, or display information resulting from such capabilities.” Additionally, “Use may occur by way of an interface delivered with or as a part of the Software, a Licensee or third-party interface, or another intermediary system.” Use is defined broadly to cover both direct and indirect access scenarios and any use of the SAP Software requires an appropriate license.
In response SAP identified the three most common indirect access scenarios that they have defined new “transparent and predictable” policy for, being: (1) order-to-cash (meaning the number of sales & service orders processed by the Software annually), (2) procure-to-pay (meaning the number of purchase orders processed by the Software annually), and (3) indirect static read, as represented below:
Use means “to activate the processing capabilities of the Software, load, execute, access, employ the Software, or display information resulting from such capabilities.” Additionally, “Use may occur by way of an interface delivered with or as a part of the Software, a Licensee or third-party interface, or another intermediary system.” Use is defined broadly to cover both direct and indirect access scenarios and any use of the SAP Software requires an appropriate license.
In response SAP identified the three most common indirect access scenarios that they have defined new “transparent and predictable” policy for, being: (1) order-to-cash (meaning the number of sales & service orders processed by the Software annually), (2) procure-to-pay (meaning the number of purchase orders processed by the Software annually), and (3) indirect static read, as represented below:
While encouraging to see a major vendor respond to their customers in a progressive way there is no silver bullet – with any installation and any metric there is the potential (or more often likelihood) that changes in your environment over time will generate further exposure.
So whether your organisation runs a $5M or a $150M IT budget, any sizeable investment in software – and the reputation of your company – surely warrants a robust and regular compliance and review program.
So whether your organisation runs a $5M or a $150M IT budget, any sizeable investment in software – and the reputation of your company – surely warrants a robust and regular compliance and review program.
As many major software vendors approach that ever ominous 4th Quarter revenues become very much front of mind, and in a climate of slow sales customer compliance can be an easy target - just consider the rather telling statistics:
Of the US$20 Billion dollars in unlicensed software attributed to the Asia-Pacific region the BSA / Software Alliance considers more than US$500 Million of that figure to be within organisations based in Australia:
Quite an attractive source of ready funds to tap into, and with the Campaign for Clear Licensing (CCL) reporting the average audit spanning 7 months and consuming some 200 hours of IT time www.clearlicensing.org/2016/11/24/audit-report-nov-2016/ it's not just potentially a costly exercise, but also an unwanted disruption to normal business - consider the more detailed timings reported by Cherwell:
So if you haven't seen a dreaded audit letter for some time (and current reported frequencies are as high as one every two years in major companies), or if you have significant arrangements coming up for renewal, you should be taking stock of your software and confirming your compliance position as a priority.
| What might it cost otherwise? The same report suggested over half of respondents paid remedial costs of up to US$5 Million, while you could, like us, be thinking many of those who reported 'None' actually did, they just might not of realised it was built-in to their renewals or other orders. |  |
Of further interest (and perhaps concern) is the recent elevation by the BSA of their "Australian Rewards Program", (www.bsa.org) where individuals who report cases of unlicensed software can gain up to AU$20,000 on successful prosecution or out of court settlement - an attractive amount for any aggrieved employee or perhaps contractor recently let go who might have come across an oversight within your organisation.
The alternative just makes sense - run a compliance report at a minimum and discover what your software landscape actually looks like. The comparative effort and nominal cost could save a lot of grief and damage if (and when) those auditors are sent in. Talk to us about a simple and quick services engagement that will deliver a comprehensive inventory report via our ComplianceWare product, and the addition of our services to then analyse and establish your compliance position.
The alternative just makes sense - run a compliance report at a minimum and discover what your software landscape actually looks like. The comparative effort and nominal cost could save a lot of grief and damage if (and when) those auditors are sent in. Talk to us about a simple and quick services engagement that will deliver a comprehensive inventory report via our ComplianceWare product, and the addition of our services to then analyse and establish your compliance position.
Software Compliance.
Software Certainty.
Software Certainty.
It's there in the agreement, you can bet on it. Indirect Access. Whether it's disguised as 'qualified users, or 'devices', or perhaps 'multiplexing', it's prohibited. And that means you need to be sure that the access you're providing to your licensed systems is correct and compliant.
The simple way to think about it is that if it's related to a proprietary system, or sourced from a proprietary system, any access must be properly authorised. And that means properly licensed. So whether it's via an API, an interface, or extracts, you need to ensure that you're compliant with the terms of your agreement - to not be can prove very problematic, and potentially very costly.
Take the recent finding (Feb 2017) in favour of SAP UK over DIAGEO Great Britain which you can view at http://www.bailii.org/ew/cases/EWHC/TCC/2017/189.html in a remarkably readable form for a crown judgement. The core of the matter was the "Named User" metric by which DIAGEO licensed its SAP installation, and the development and use of functionality within Salesforce (known as Gen2 or Connect) that enabled DIAGEO customers and distributors to places orders, check stock availability and prices, see invoices and select delivery. Through various interfaces back to SAP, Connect provided the necessary data, lists, and workflow to those end customers and distributors 24x7 negating the need for a call centre to receive and process requests. Despite DIAGEO asserting that the use of Connect by customers was essentially no different to when they contacted and were processed through the call centre, the judge saw otherwise and ruled that such access constituted use of the SAP system.
The implications are yet to be seen, however in summary the damages were considered by the judge as below:
The simple way to think about it is that if it's related to a proprietary system, or sourced from a proprietary system, any access must be properly authorised. And that means properly licensed. So whether it's via an API, an interface, or extracts, you need to ensure that you're compliant with the terms of your agreement - to not be can prove very problematic, and potentially very costly.
Take the recent finding (Feb 2017) in favour of SAP UK over DIAGEO Great Britain which you can view at http://www.bailii.org/ew/cases/EWHC/TCC/2017/189.html in a remarkably readable form for a crown judgement. The core of the matter was the "Named User" metric by which DIAGEO licensed its SAP installation, and the development and use of functionality within Salesforce (known as Gen2 or Connect) that enabled DIAGEO customers and distributors to places orders, check stock availability and prices, see invoices and select delivery. Through various interfaces back to SAP, Connect provided the necessary data, lists, and workflow to those end customers and distributors 24x7 negating the need for a call centre to receive and process requests. Despite DIAGEO asserting that the use of Connect by customers was essentially no different to when they contacted and were processed through the call centre, the judge saw otherwise and ruled that such access constituted use of the SAP system.
The implications are yet to be seen, however in summary the damages were considered by the judge as below:
"In summary, usage by Gen2 sales representatives is not authorised usage under the Agreement. SAP is entitled to additional licence and maintenance fees, the level of such fees to be assessed in the quantum phase of the trial, if not agreed, by reference to the nature and extent of the usage and SAP's price list."
So, should we be concerned? Absolutely. If you're unsure of the your license grants or metrics, the terms of your agreements, or the compliance of any periphery/accessing systems, you need to take stock and run a full assessment exercise across your domain.
To be unaware is to be in danger.
To be unaware is to be in danger.