Partnership with Xensam

SAM with Engineering Licenses


OpenLM has entered into an agreement with software asset management software company Xensam, which will not only provide added value to customers of both companies but will bring to the market a SAM software solution that includes concurrent engineering licenses.


Xensam approached OpenLM after one of their customers, who was also a customer of OpenLM’s software for engineering applications, requested integration of the two systems, so they could see the information about engineering license inventory and usage on the Xensam dashboard. Xensam will use OpenLM’s API to perform the task and both companies will make their customers aware of the new combined technology. OpenLM CEO Oren Gabay: “We welcome Xensam SAM to the partner community at OpenLM Software. Even though engineering licenses are the most expensive of software assets, the management of engineering licenses in organization is often done poorly or not at all. Adding engineering license management capabilities to Xensam software will provide significant added value to their offering and give their customers a holistic view over all types of assets.”


While monitoring and management of engineering software licenses is a form of software asset management, it is a highly specialized area that does its discovery on license managers such as Flexera Flexnet Manager, IBM LUM, Sentinel, DSLS and others. This is the key to monitoring concurrent (floating) licenses as well as other licensing models administered by license managers (sometimes called license servers). As they cater only for this area, they are not usually considered a part of the SAM software constellation. Alex Geuken CEO Xensam North Europe commented: “I see this as a unique opportunity. OpenLM, the best software asset management system for engineering software solutions on the market, together with Xensam, the next generation of software asset management. Our partnership will provide a brand-new form of cost saving and decision-making opportunities for organizations all around the world. I’m very happy for this partnership between two of the markets bravest innovators.”


About Xensam

Xensam Inc. is a software company with a product line developed to reduce software spend and bring the next generation of software asset management to the market. Their software merges a very easy user interface with the world’s first artificial intelligence for software asset management. With the help of their unique A.I, Mr Xam, software is recognized faster and the organization’s data center is automatically optimized using advanced license algorithms and machine learning, reducing the need for days of manual analysis by expensive short-term hired SAM consultants. This is only one example of what Mr Xam can do for organizations all around the world.

Enhanced API Released for OpenLM

The new enhanced OpenLM API is now available to technology partners and customers who want to display OpenLM data in their applications. Although officially part of version 4 that is scheduled to be publicly released by the end of 2017, the API is being made available ahead of time. New methods have been added to provide data about the summary report, service ports, denials, license activity, projects, user details, group details and user-vendor details.

If you are a customer and you want the new documentation, please contact support. If you are a vendor of SAM, helpdesk or other software, please visit our partner page.

Do you need to report on license usage for engineering software? If so, see the earlier post Do you need a license usage information API?

Enhanced Broker Release

To complement the latest releases last week of OpenLM Server and OpenLM Agent, this week we released version 3.3.19 of the broker for Windows and Linux. Here are the enhancements:

For the Windows version, automatic detection has been added for three license managers:

  • Dessault (DSLS)
  • X-Formation LM-X
  • OpenLM App Manager

Detection is done at installation time and when pressing the “Detect” button.

Automatic detection is now done for the the Linux version of the FlexLM license manager too, when running  a script from the Linux command line.


See all the latest software revisions here:

OpenLM is a GSA Vendor

It just got  a whole lot simpler to purchase OpenLM if you are a United States government agency. We’re happy to announce that OpenLM is now a GSA Contractor.

The purchasing process of governmental organizations can be long and drawn out and the General Services Administration (GSA) purchasing platform is meant to make the job faster and easier for procurement officers. Starting this month, OpenLM is listed as an approved vendor on the GSA schedule. The two most prominent benefits are:

  • Lower price – GSA customers get the best price of all
  • Faster procurement processing – when you’re ready to buy, execution of the transaction is as quick as it gets

There are many U.S. government agencies at local and federal levels using OpenLM to get inventory and usage information about the engineering software in their department. They cover aerospace, agriculture, research, military, homeland security, transport, financial and municipal institutions.

See SIN numbers, GSA contract number and other important information here.


Optimizing MATLAB’s Concurrent and Named User Engineering Software Licenses

If your company uses MATLAB®, you’re probably familiar with the assorted licensing methods that MathWorks® utilizes to extend access to its applications. Specifically, Individual (node-locked), network named user, and concurrent licenses are available, each offering different benefits, restrictions and price points.

For individual or node-locked licenses, you specify the user, and the application can be installed on up to four computers. This license doesn’t support multiple sessions so users are prevented from operating the program on two or more computers simultaneously.

With a network named user license, you specify the list of possible users. The program may be operated by those individuals on computers served by a single license manager, and up to the maximum number of people on the license. This license doesn’t support multiple sessions either.

A concurrent license enables you to provide application use to anyone with access to your network. Access is not limited to specific named users.

In general, a concurrent license is more expensive than the other two options but it gives companies more flexibility to support larger numbers of users. Moreover, the price per user should be lower because the licenses can be shared.

Mixing License Types and Planning

It’s common for companies to employ a mix of licensing models to best suit their workforce requirements, and to get the most out of their software expenditure. However, the task of planning which users should get the named licenses and which need to share the pool of concurrent licenses is often done without fully understanding the impact of the decision on overall cost. Below are a few common errors that license administrators can easily make.

  1. Assigning a named license to a user who does not actually use it for most of their working day. A named license might initially appear to cost less than a concurrent license but a named license that isn’t used intensively day after day can work out much more expensive than a concurrent license that serves a number of users each at a different time of day. If a named license is given on the basis of seniority or status rather than actual usage requirements then the engineers who really need the software may run out of available pooled licenses while the named license is idle.
  2. Purchasing individual or node-locked licenses that are not network-based. Individual and node-locked Matlab licenses can be purchased to be stand-alone and not need a license manager. This can be advantageous if the workstation is not always connected to the network. However, something that can be overlooked is that the tools required by the team can extend also to include one or more of the many Matlab toolboxes at a considerable extra cost. The toolboxes needed are likely to vary from one user to the next and so one size generally doesn’t fit all. An interesting ‘hybrid’ solution that not everyone knows about is to use concurrent licensed toolboxes with node-locked licenses for the Matlab basic product thus getting the benefits of pooling for some important features. The result is that to optimize license usage, you need to look carefully at how all the licensed features are used and not just the package or main product.
  3. Not checking actual usage on a frequent basis. But perhaps the most important practice to remember when it comes to planning and allocating named licenses is frequently reviewing the actual usage and continually making changes to fit the current situation. An intensive user of a feature this month might have no need for that feature next month, because engineers may need different tools at different stages of a project.

The license manager employed by MathWorks to control and manage the issuing of concurrent and named user licenses over the network is Flexera FlexNet Manager.

License Manager Configuration

FlexNet Manager is configured by editing a text file called the options file and if not performed properly, named users can unknowingly check out more expensive concurrent licenses. This effectively raises the licensing cost and can lead to downtime due to a lack of available MATLAB or other essential engineering software licenses.

You also need to check that the license file is correct and that new license files have been uploaded. This may require renaming and moving files for backup purposes in case of error. This administrative process takes time and, if you judge by the number of configuration questions that show up on vendor support forums, is prone to error.

There are also times when a concurrent license gets issued improperly, even though the named users appear to have been correctly defined. It’s unclear what causes this problem but might be connected to the license file structure and its segmentation into pools. Multiple pools are created in the license file licenses when batches of licenses are purchased at different times.

Each pool can contain one or more license types, but usually only has a single type. By rearranging the order of appearance of pools in a multi-pool license file, you can reduce the chance that a concurrent license is pulled when a named license should have been taken instead.

In any case, whether the licenses are checked out according to the way your organization intended them to be or not, the license manager is concerned primarily with controlling allocation and doesn’t provide the requisite details regarding license usage.

Enhancing the License Manager

License managers provide the basic capabilities for ensuring compliance  according to the licensing agreement but there are specific areas where they can be improved to the benefit of the user organization. That’s where OpenLM can assist. It works in combination with your existing license manager making it easier to configure your named license definitions, and monitor which licenses have been checked out.

With the OpenLM License Allocation Manager extension, you can more easily edit the appropriate options file and define named users by completing a simple input screen that functions like an online form. There is also an option in OpenLM to optimally sort the vendor’s license file so that when the license manager’s selection algorithm receives a request, it’s more likely to fulfill that request accurately. A named user will receive his allocated license instead of being assigned a concurrent one.


Combining MathWorks concurrent and named user licenses can help companies save money on software licensing and ensure that employees have the application access they need. Heavy users will probably require their own named licenses and part-time users can share licenses from the pool on a first-come, first-served basis.

This process works efficiently as long as named users have been configured properly, they pull the appropriate license type, and their use patterns really justify having individual licenses. This mandates proper setting up and prior and ongoing planning together with detailed monitoring of actual usage (as provided by the OpenLM Actual Usage extension).

The Future of ESRI ArcGIS Concurrent User Licenses


Since this post was published, ESRI has reconsidered its approach to floating licenses and has now confirmed its continued support of the concurrent license model. See footnote or go straight to our more recent post Esri Users Bring Back Concurrent Licensing.

The life of a license administrator at a company that uses engineering software for its business has become increasingly complex recently. Many of the major software vendors are moving away from the concurrent user model to a pay-per-use model, as a response to the growth of cloud-based offerings. Now ESRI has also decided to discontinue concurrent licenses in favor of single user licenses. Customers discovered towards the end of 2016 that this would take effect as at 1/1/2017, which did not give them much time to prepare.  

An added complication in understanding the already complex ESRI licensing options is that new product ArcGIS Pro (“Pro”), has a different licensing model from ArcGIS Desktop  (“Desktop”). Existing users of Desktop have access to Pro, which is included in the package, as long as they have a maintenance contract for Desktop in place, in order to encourage them to experiment with Pro. The drive is for ESRI customers to move to Pro, as the latest release 10.5 of Desktop is slated to be retired in December 2022 . However, it seems that more consultation with existing customers should have been done, based on community feedback and discussion.

ESRI’s Different License Types

Phrases like “concurrent user” and “single user” mean different things to different vendors, and ESRI is no exception. Here are some license type definitions according to ESRI.

  • Named User – The Named User license can be used on any machine, as it is linked to the person authorized to use it. That user can run the ArcGIS on up to 3 machines simultaneously. This is the default license type for ArcGIS Pro.
  • Single User – A Single User license is linked to the MAC of a specific machine and can be used by anyone who has access to that machine. This has become the new default license for other ESRI products.
  • Concurrent User – The user books out a license from the ESRI License Manager Server, and, as long as there are available licenses in the pool, can work on any machine. The ESRI License Manager will deny service if the maximum number of licenses have been booked out. The number of machines with the software installed can exceed the cap of concurrent licenses. Standard (or perpetual) licenses are available for ArcGIS for Desktop, which require the customer to pay an annual maintenance fee. This is the license format that most long-standing customers of ESRI have in place to manage their concurrent users. If the maintenance fee lapses, the customer’s access to ArcGIS Pro is revoked. However, ArcGIS for Desktop can still be used, without the benefit of future upgrades.

Concurrent User Licenses in 2017

ESRI’s original stance on concurrent licenses was that they were to be discontinued at the beginning of 2017. This definitely still applies to any new customers, who will be required to buy named licenses. Unfortunately, ESRI’s communication process was less than perfect, and many long-time users of ArcGIS only found out about the planned changes via the community grapevine. Even where a formal communication was made by the account manager, this was done very late during 2016, with little time for customers to assess their current and future license needs. This caused a considerable backlash, and for now, this is the situation:-

  • Existing Desktop customers will still be able to purchase concurrent user licenses, presumably until Desktop is retired. The oldest version still supported is 10.1, but this will be retired by the beginning of 2018, so any Desktop 10.1 users will have to decide whether to migrate to Desktop 10.5 or Pro or take another path entirely in the very near future. Any maintenance agreements must be kept current, as access to Pro is revoked if the maintenance agreement expires.
  • Customers who purchase Pro are issued named licenses by default. However, the license administrator can convert named licenses either to single or concurrent licenses with the aid of My ESRI. My ESRI is a self-service website for managing the customer-ESRI relationship and facilitating license modifications. It must be noted that the change to a single or concurrent user license model is a one-way change, although if one reads between the lines, it does appear that one can revert after discussion with one’s account manager.

Should one migrate to ArcGIS Pro?

Pro is a true 64-bit application that allows all the artifacts from the project to linked together easily. It has specifically been designed to work with ArcGIS Online (“AGOL”), the cloud-based mapping product, and ArcGIS Enterprise, the mapping platform. It can be run in tandem with ArcMAP on the same machine. The customer will also be able to obtain fixes and upgrades automatically (advisable with a new product).

While users of the new product are generally appreciative of its new features, and it is cost-efficient for certain customer setups, most large users see this as a massive price hike. Where a company has several hundred users, the license administrator manages costs via a concurrent user model and will generally have far less licenses than GIS users. ESRI has recognised this and made an offer where such companies can exchange one concurrent license for 3 named licenses. However, more than one customer has commented that they have a concurrent usage basis of up to 1:5, and moving to a named license option will definitely harm their software budget. Using the right license management software, this ratio can be even higher. Also, many companies only use GIS software sporadically, and the acquisition of full named licenses for occasional use is obviously not in their best interests.

Some Unintended Consequences

The decision on whether to move to a named user model and Pro is very dependent on the unique GIS requirements of an organization. What has happened in some cases is that long-standing users are evaluating whether they even want to upgrade to Desktop 10.5, which is surely not what ESRI expected. The license situation is still in flux, even for Pro, – ESRI has expanded the named license option to a two-tier system, with a type 1 and type 2 user, which makes the licensing model even more complicated. It is hoped that the license debate will be sorted out sooner than later, but until it is resolved, there will be some discomfort in the GIS marketplace.

Footnote for 2018

We are happy to add that ESRI has since reconsidered its approach to floating licenses and has now confirmed its continuation of this important model for new and existing customers. See the update in our later post Esri Users Bring Back Concurrent Licensing.


Bentley Software Licensing Reviewed

When it comes to engineering software, one of the most widely-known companies is Bentley Systems. A large population of engineering software users have used Bentley Microstation in their time for 2D and 3D CAD, Projectwise for managing the project or Assetwise for managing the assets. In addition to these generic products, Bentley provides software for most engineering disciplines, from products like Inroads for civil engineering and Substation for power utilities to visualization and imaging tools such as Descartes.

Purchasers of Bentley products have a couple of licensing options available to them, perpetual or term. Users can select either option, or use them in conjunction, depending on which model suits them better.

  • Perpetual license. Unlike some other vendors, Bentley claims to have no intention of dispensing with the perpetual licensing model. With this licensing model, a set number of licenses are purchased annually.  This is ideal for managing a fixed license base, such as a drafting office, where a set number of users  log into the software regularly but not all at the same time. The perpetual license is based on concurrent usage, also known as pooling. Some customers have expressed concerns that Bentley may discontinue the concurrent user model, but the company has put out reassurances that they have no intention of discontinuing concurrent usage. Bentley’s assessment of what constitutes concurrent usage can be a little complex to grasp; we will return to this later.
  • Term license. A term license is a short-term alternative that works well for extra demand because of a new project, where the demand is expected to fall away once the project is completed. A term license is a subscription-based license, which is based on pay-per-use.
  • “Select”. In order to provide an option where customers can use a combination of the two models, Bentley has come up with “Select” which can manage a portfolio of licenses.Users have to register as a Select user in all circumstances and license monitoring is reported to one or more Select servers, which are installed on site.

How Bentley Calculates Concurrent Usage.

At first glance, Bentley’s concurrent usage model appears quite equitable. For each day, it monitors how many licenses are booked out for each ten minutes of each hour of the day and records this on the Select server. Special allowance is given to very short-term and accidental usage. If a user books out a license in error, or for less than 10 minutes, those first ten minutes are excluded from the license count. This calculation used to be based on usage per-hour, for example, from 8:00-8:59. Now it works from 08:00-08:09. The change has caused some confusion among customers. The server aggregates all usage per 10 minute period and determines the peak number of devices concurrently using the software in that day for a particular timeslot. This peak usage is used by Bentley for billing purposes. There is a video on Bentley’s site which you can watch to get a more detailed understanding of their system .

Geographic Limitations

Bentley only grants perpetual licenses per country, which may make the management of concurrent usage simpler, with a Select Server per country. What happens where a country includes several time-zones is not so clear, for instance, where there is an office running on Pacific time and another office using Eastern Standard time.

Causes for Concern

While Bentley believes that their method of calculating concurrent usage is equitable, this view is not shared by all its customers. One of the limitations of Bentley’s license management is that it does not issue a denial of service when a new user books out a license above the concurrent usage maximum contractually agreed upon. Secondly, it does not proactively advise the customer of licenses that have been booked out and are lying idle. Thirdly, and most importantly, using the highest peak usage as a basis for billing does not align with true pay-per use.

Customers are not keeping quiet about this, and have expressed their feelings on the Bentley community website. One customer explained how they used only ten of their 24 licenses concurrently during one day. However, if one user books software out a few minutes before the ten-minute start period, and another user logs out a few minutes after a ten minute period, both of these are included in the peak calculation. In this instance, Bentley calculated a peak usage of 16 licences. Another customer claimed to have been billed for usage on a computer that is not registered anywhere in his network; whether the claim is justified or not doesn’t change the fact that customers are expressing doubts about the accuracy or fairness of the billing algorithm.

Managing the Costs of a Bentley Relationship

The challenge of limiting costs when using Bentley tools has some administrators keeping a very tight rein on who can access the tools as well as maintaining a watchful brief on idle licenses that have been booked out. Bentley does give pointers as to how the customer can monitor and optimize usage, which requires changing some settings in the Bentley set-up, and there is reporting after the event which can be used for future trimming of costs. However, this doesn’t give the customer full control over the licensing costs. Customers would be happier if they could get functions like  

  • monitoring usage per license per minute
  • warning when concurrent usage is at its maximum
  • “harvesting” idle licenses, by suspending the session and freeing the license.
  • providing accurate usage values so that the administrator can optimize the bouquet of licenses held, and determine whether term licenses may not be more appropriate in some cases.

So it seems there are some rumblings from customers that Bentley needs to address, especially in the light of their recent initiative to convince Autodesk users to swap to Bentley, now that Autodesk has changed its policy on perpetual licences. While there are some customers who say the model works for them, its success and equitability is very dependent on the type of engineering concern and how they work. The fact that Bentley does not limit usage over the agreed base does not make life easier for the customer.

OpenLM is a software audit and management system for engineering software licenses for more information Contact us or get a free 30-day trial.

6 Ways to Save Money on Engineering Software

The high cost of engineering software programs is a pain-point for many organizations from multi-nationals to small company engineering shops. Paradoxically, many of these companies do not have effective mechanisms in place to monitor their software inventory and usage; they may for example have multiple agreements in place with the same vendor for the same software.

Our CEO was astonished when, in a recent conversation with one of the world’s largest engineering companies, they admitted that they did not have a clue about what engineering software they had on board. The fact that the cost of an idle engineer far outweighs the cost of acquiring another licence is often given as justification for how such a situation can arise but this is not a justifiable reason for non-management of your software assets.

Inadequate software management often starts at the planning phase. Bidding for and winning contracts can take months, if not years, and desk studies, project plans and resource scheduling is done long before the project is started. Furthermore, until the licenses are finally acquired, conditions and circumstances may well have changed, and the documented predicted software usage may no longer be current. A danger of over-licensing at the organizational level exists when there is a lack of centralized license control, where projects are estimated without taking into account the economics of using software that is currently lying unused within the parent organization, or will become free by the time the new project gets under way.

Software license control should be part of the CIO’s portfolio and if there was effective centralized licensing monitoring control in place, the points raised below would probably not arise. Centralized software license management may take time to implement, but should bring about a marked reduction in engineering software spend. There is some admin work required but this is a small price to pay in exchange for knowing how your software is being utilized across the organization.

While license monitoring has become a complex task in recent years, there are software licensing tools available that reduce the time and cost overheads and offer the potential for impressive cost savings. These actions will also reduce the risk of non-compliance fines in the case of a software audit (see our post on software compliance). To get you started with rethinking your license spend, here are five approaches that can optimize software usage throughout your company without increasing the risk of denial-of-service to your most valuable assets, your engineers.

1.   Know What You Have

This is an essential part of centralizing responsibility. Unearthing all your instances of engineering software licenses is a challenge, especially where they were bought for projects that have completed, or were used in a different geographical location, where they may have been purchased from the local representative of the vendor. If you do not have a clear idea of what software you own, your chances of being found non-compliant in a software audit are higher. It’s not such a great idea to rely on your vendor for accurate licence management either; you should always keep your own records. And, once you have catalogued all your licenses for a vendor , you may be in a position to work out a better deal, especially where they appear to have been overzealous in selling you licenses, which leads us to the next point.

2.   Timely and Organized Renewals Can Save Money

Multiple instances of licenses for the same product do occur and sometimes cannot be avoided, especially where you are operating multi-nationally and are receiving support from the vendor’s local offices. This is the time to formulate a strategy for your vendor relationship. You do not want to be in a position where you have multiple renewal dates for your CAD engineering software, for example. If you can identify all the instances of licenses for a particular vendor, you can work out a solution that requires only one renewal per annum and will help you root out licenses you do not need. Resolving this situation also helps ensure that you are software compliant with that vendor. Multiple license agreements is associated also with the problem of multiple license managers.

3.   Multiple instances of the same license managers

This happens more frequently than you might think. A typical case is where the mechanical engineering department purchased some CAD licenses a few years ago and the maintenance is still renewed. Subsequently the electrical engineering department purchased the same software for a specific project, followed by the civil engineering department. The acquisition of another engineering company that uses the same CAD software in Asia adds another layer of complexity. The CAD vendor supplies a license manager with each sale, resulting in 4 different license managers being installed and administered by 4 different business units. Maintaining multiple license managers for the same vendor gives rise to:

  • Unbalanced license availability – Some departments may suffer from high demand and license denials while others may have many unused (or “shelf”) licenses.
  • Ineffective utilization of licenses – It is not possible to optimise the license utilization across these separate license managers for each vendor.

License server consolidation is a measure that can simplify license management and provide substantial savings and additionally improve utilization efficiency of your licenses.

4.   Use some Machine Intelligence

While vendors may or may not provide a license manager to manage your use of their products, you do not want to be in a situation where you do not have a comprehensive single view of all the licensed software tools you have purchased. In a study by Opinion Matters, it was found that over 50% of companies who did perform some form of license internal control used spreadsheets for this purpose. This is not an effective license monitoring method because while you might have all the products in one list, it tells you nothing about utilization, idle software or denials-of-service to frustrated engineers. OpenLM on the other hand is a self monitoring and internal audit solution that can help get control of the software you have in your organization and its usage, that extends way beyond mere inventory. One of these is monitoring of individual usage of licences, and the ability to control license hogging, which is our fifth pointer.

5.   Ensure Equitable Use of Software

Engineers typically use several software tools available to them today in the engineering space. Some of them like to have them constantly close to hand, even when they are not using them and will book out a license at the start of day whether they intend to use the software or not. If the license admin had the ability to find software that has been booked out and is lying idle, suspend the idle session and free up the license (license harvesting), software hoarding could be eliminated. This is a valuable feature, especially during periods of peak usage. It will no doubt cause some negative reaction from the software hoarder initially, but it will soon be recognised that the software library is there to be shared with others in the company and the discipline of only booking out software when it is needed will gradually become ingrained in the organization. Managing idle licenses effectively will help you to identify whether you really need to purchase more licenses of your preferred CAD engineering or simulation software or not.

6.   We did an Optimization in the Past

Finally, some admins are under the mistaken impression that license optimization carried out several years ago is sufficient to tide them through till the foreseeable future. New projects, completed projects and mergers and acquisitions will all affect the licensing status quo. Reviewing and administering the software portfolio and the licenses that support it is a continuous task.

In Conclusion

We have briefly described some ways to enhance productivity and reduce costs through dedicated license monitoring and management. In addition, you should be able to reduce risk of unplanned fines from failed software audits and from delayed projects by demonstrating software compliance and reducing denials-of-service respectively.

OpenLM is a software audit and management system for engineering software licenses for more information Contact us or get a free 30-day trial.



Software License Compliance – A Manager’s Guide

Software licensing compliance used to be a fairly straightforward business. You could purchase a license per user or a site license, and vendors made sure you complied to their license by using physical or virtual license keys, which were usually linked to a particular computer. In addition, you paid an annual maintenance fee that both gave you support and validated your license usage for the duration of the maintenance period. This arrangement was simple to manage but the simplicity has eroded over time. One complication came when the concept of concurrent usage was launched. This is a licensing model that allows you a maximum number of users of the software at the same time, which became popular with organizations for their expensive software (such as engineering software) as it was more cost-effective. The dawn of services in the cloud has added new complexities to licensing; most cloud-based software is subscription based, either on an annualised basis or pay-per-use.

While careful selection and use of these more complex options can result in savings, the management of licenses and compliance to the various restrictions imposed by vendors has created headaches for CIOs. All too often the processes and practices required for managing licenses fall short of the disciplines in other aspects of IT, such as security, managing hardware assets and access control, and this creates risk in the organization. In some jurisdictions where there has been a lapse in compliance, managers and other officers of the company who were responsible for the governance of  software compliance management have been held personally liable.

Vendor Software Audits for Software Licensing Compliance

The methods of identifying software compliance have developed too. In the days before global connectivity, auditing for software compliance was put in the hands of some bodies formed by an association of vendors, such as the BSA (Business Software Alliance), who were incorporated to prevent software piracy. These bodies still exist today and still use the same software audit methods to check up on software compliance, with added channels like encouraging whistleblowers to come forward with information about possible infractions by their employers. Vendors also check on actual usage both in the cloud and by interrogating the customer’s server or servers from where users are granted access, using their own software audit tools.

Non-Compliance can Occur Unintentionally

No manager wants to be non-compliant, but being out of compliance can happen all too easily,   even where controls would appear to be in place. Some of the pitfalls that can trap the unwary include:-

  • A lack of centralized control of software licenses. There are often different silos within a company that manage traditional office software, IT-specific software and specialized software, such as engineering tools. Furthermore, engineering concerns can have different silos for civil, electrical and process engineering, not to mention R&D.
  • No comprehensive policy and process for software asset management. The BSA found that 65% of companies did not have these in place in a report published in 2014.
  • A lack of awareness within the workforce.
  • Exceeding the concurrent usage maximum where the vendor has not provided sufficient automation to limit usage.
  • The license was issued for a specific geographic location, and is being used outside that region. This is often the result of a complex vendor pricing structure, such as one differentiated by region – e.g. EMEA and APAC. In such cases the customer’s portfolio may only be viable for that region, and cannot be used beyond its boundaries.
  • The license was provided for a specific scope of use and the customer is using it outside this boundary. This is especially a problem with ERPs and large, complex software suites. The business needs of the 21st century place pressure on companies to re-gear their business models, which can also cause a misalignment between what was bought and how it is currently used. SAP for example recently won a huge claim against their customer Diageo, in which all the software in question had been legally purchased for millions of dollars, but the devil was in the detail of a very complex contract.
  • Usage by contractors and employees on devices that are not part of the company asset register.
  • Usage past renewal date. Licenses do not all expire on the same date and not all vendors remind the client timeously.
  • Changes in organizational structure. Mergers and acquisitions, unbundling and other forms of restructuring often neglect the management of software licenses when splitting up or consolidating asset registers.

If any of these issues have arisen in your environment, and you are not aware of them, your organization could be exposed to both financial and reputational risk. In 2013, PWC estimated that approximately 80% of software customers had instances of non-compliance of licensed software .

What the Vendor Provides

One of the factors making software compliance so difficult is that vendors do not always provide adequate tools to help their customers, although it would appear to be in their best interests to do so. New features can be introduced by vendors via the latest software releases without reviewing the effect they can have on existing licensing conditions. Where vendors are changing to a pay-per-use model and retiring earlier offerings, such as perpetual licenses, some customers are faced with different compliance regimes for the same vendor. For instance, under the old concurrent usage model, the user had access to the complete application. If the customer purchases an additional pay-per-use option with a maximum of ten seats, this could be a basic version that excludes some of the features available in the full package.

When it comes to engineering software, licenses are generally expensive, and engineers require a plethora of software tools to get their work done, from generic CAD software to specialized products for failure analysis, lightning protection, 3D-imaging, to name just a few. Most major engineering software vendors such as AutoDesk and Siemens use Flexera for their license management, as do other large vendors, such as Adobe and IBM. Flexera is robust and will give a generally good overview of your compliance, but it may not pick up infractions such as an ex-contractor or employee who still has a loaded copy of your expensive engineering software on his own laptop.

Vendors are not very forgiving when it comes to non-compliance, and they are increasingly applying pressure in this regard. It is advisable to get all your ducks in a row as soon as possible, a spot software audit by the BSA or the SIIA (Software & Information Industry Association) could be an unpleasant and costly exercise if you are not in compliance with licensing agreements. . There are many cases against customers ranging from the US Army to SMEs, and, while most settlements are out-of-court, they can stunt a company’s growth or even close it down.

When Elephants Fight: SAP vs Anheuser-Busch

ERP company SAP obviously has a strategy in place to rein in some of its largest customers. Following on a settlement with Diageo in February this year, where SAP won, they have now taken on the brewing giant for an estimated $600-million in damages for non-compliance. There is an African proverb; “When elephants fight, the jungle gets trampled”. It is quite likely that the software compliance landscape could look very different after this dispute. When it is considered that ABI has just completed the world’s largest M&A by acquiring SAB-Miller, it is quite likely that the software licensing issues internally still have to be put to bed.

The case with Diageo will give cause for concern to many SAP clients. Diageo wanted to provide their customers with a new self-service function, which  they could access via their SalesForce portal. Diageo used the SAP API to interface their Salesforce CRM with the SAP Business Suite and access the data required. SAP’s argument was that these users were outside the ambit of the agreement of the Business Suite, and by providing data from the Business Suite to power the Salesforce integration, Diageo was infringing their agreement with SAP and the court agreed.

The fact that SAP feels it necessary to tackle its very largest customers, seemingly in a position of strength, because all its clients are locked in to the ERP, have made massive investments in time and money and cannot just migrate to another product overnight or even over the next 12 months, is a wake-up call for the rest of the market.

Internal Software Audits

Below is a list of recommended best practices of what you can do to keep your compliance in good order .

  • Appoint a dedicated license administration function in your organization, if you do not already have one.
  • Scope and prioritize. For instance, you may want to start with office software or engineering software, and add other disciplines later. You may want to perform this exercise in several tranches.
  • Unearth all instances of software that your organization has paid for and find the associated contracts, if possible. Find the accompanying invoices and proof of payment.
  • Identify who, if anyone, is using the software, where, on what hardware and why.
  • Build a centralized software asset register and a diary of upcoming renewal dates.
  • Capture all the business rules pertaining to use of each product you have acquired.
  • Define a policy and document a process for software management, if you do not already have one. If you do, review it and make sure it supports the newer licensing models.
  • Create a software audit checklist and run periodic drills to ensure that, in the event of a spot audit, everyone is prepared.
  • Draw up a training program for all employees to understand the implications of non-compliant software and its use.
  • Start a compliance project, to eliminate non-conformance. This could also be a good time to consolidate and make a decision on a preferred vendor and toolset where possible (perhaps you do not need 7 different CAD/CAM tools!).

Implementing a program like this will not just reduce risk, it will put you in control of your licensing arrangements with vendors. However, when it comes to the more complex licence models you are likely to find limitations with manual management using spreadsheets.

OpenLM App Manager

A dedicated software licence management product such as OpenLM App Manager can help you identify the gaps and manage them proactively, increase compliance and reduce risk. OpenLM App Manager actually does much more than observe and monitor compliance; it can also pick up on poor and costly usage of tools and whether your licenses are over- or underutilized. It can help you ensure there is conformance to your software usage policy irrespective of the license management tool used by the vendor. In the cases where the vendor does not provide you with licensing management software for their products, you can use OpenLM to provide the necessary oversight on usage and licenses utilized.

A further advantage of the tool is that of license harvesting, the ability to manually or automatically intervene in user sessions and suspend or cancel them if they are not being used according to the organization’s policy. For more information contact us.

If and When the Auditors come Knocking

If the auditors come knocking, they will want to see documentary evidence of purchase agreements, payments, records of usage as part of the software audit process, so it is best to ensure you have everything they require in printable or hard-copy format. You can also provide your policy and process documentation for them to evaluate and leave them in the hands of your dedicated license management team. This software compliance audit is time-consuming and stressful for all involved, but if you have taken the pre-emptive steps described above, you will increase your resilience against non-compliance and may be able to wave goodbye to a team of disappointed auditors.

OpenLM is a software audit and management system for engineering software licenses for more information Contact us or get a free 30-day trial.