Software Licensing & Compliance: Two Strategies, One Goal


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Presentation on software licensing and compliance given at SoftSummit 2008 on Oct 20-22, 2008 in Santa Clara, CA.

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  • Introduction Thank you: SoftSummit 2008 Administrative notes: Variety of information in appendices at the back of the slide deck (e.g. contact information, bibliography, etc.)
  • Software Licensing & Compliance: Two Strategies, One Goal

    1. 1. Licensing & Compliance: Two Strategies, One Goal Jeff Gustafson EMC Corporation
    2. 2. Roadmap for Discussion… <ul><li>1) What are the challenges facing the Software Industry today? </li></ul><ul><li>2) What is the relationship between the business and technology? </li></ul><ul><li>3) Why are license management and compliance complimentary? </li></ul><ul><li>4) How does the firm begin to frame the issue of compliance? </li></ul><ul><li>5) What tools are available in pursuit of the firm’s strategy? </li></ul>
    3. 3. The Business Relationship <ul><li>Producer: </li></ul><ul><li>Are they entitled to it? </li></ul><ul><li>Have they deployed it? </li></ul><ul><li>Are they using it? </li></ul><ul><li>What version is it? </li></ul><ul><li>Is it supported? </li></ul><ul><li>Where is it? </li></ul><ul><li>Do they want it? </li></ul><ul><li>Do they need it? </li></ul><ul><li>Enterprise: </li></ul><ul><li>What is it? </li></ul><ul><li>Are we entitled to it? </li></ul><ul><li>Have we deployed it? </li></ul><ul><li>Are we using it? </li></ul><ul><li>Is it supported? </li></ul><ul><li>Where is it? </li></ul><ul><li>Do we want it? </li></ul><ul><li>Do we need it? </li></ul>“ It” Relationship Management: Optimizing/Leveraging current/future investments Aligning to value in the relationship Establishing baseline visibility on usage/deployment Clarifying issues of entitlement
    4. 4. Software Licensing Framework Monitoring, Tracking & Compliance (Audit, self-reporting / manual, electronic / data, financial) Entitlement Deployment LICENSING METRICS (Named-User, Concurrent User, CPU, Server, Core, Terabyte, Usage, etc.) OTHER LICENSING T&Cs (Express rights and limitations regarding usage, functionality, deployment, etc.) LICENSE GRANT (Perpetual / Non-Perpetual) OTHER T&Cs (Reporting requirements, Audit rights, Derivative works, Sublicensing, Transferability, etc.)
    5. 5. Elements of Change Legacy Inertia Internal ∆ External ∆ ↓ Undermines Alignment of the Relationship Time Probability Of Mis-alignment “ Genesis of a Contract” Use- Cases Software Portfolio M & A Activity Technology Trends Institutional Memory Regulatory Trends Industry Trends
    6. 6. Perpetual / On-site Model <ul><li>Development: 18+ month cycle </li></ul><ul><li>License Right: Perpetual </li></ul><ul><li>Deployment: On-premise </li></ul><ul><li>Installation: Extensible / Customized </li></ul><ul><li>License Renewal: Annual Annuity </li></ul><ul><li>Procurement: Upfront payment </li></ul><ul><li>Return on Investment: Expected future return </li></ul><ul><li>Probability: Variable </li></ul>Alignment to Value: ????? Exposure to Risk: ????? Business Relationship: ?????
    7. 7. Epistemology <ul><li>Overcome: </li></ul><ul><li>Imperfect Information </li></ul><ul><li>Information Silos </li></ul><ul><li>Asymmetric Relationships </li></ul><ul><li>Lack of Transparency </li></ul><ul><li>Objective: </li></ul><ul><li>Fact-based Dialogue </li></ul><ul><li>Strategic partnership </li></ul>Mutual Insight Asymmetric Information Asymmetric Information Mutual Uncertainty Licensor “ Known” “ Unknown” Licensee “ Known” “ Unknown”
    8. 8. Yin-Yang of Business and Technology <ul><li>What are the strategic goals of the firm in licensing? </li></ul><ul><li>How will technology enable those objectives? </li></ul>“ All of the infrastructure and processes necessary for the effective management, control and protection of the software assets within an organization, throughout all stages of their lifecycle.” - ITIL Best Practice Guide – Software Asset Management Business Technology
    9. 9. Ownership and Deployment Communication Reconciliation Disintermediation Corporate Complexity Disintermediation Institutional Memory M&A Activity Organizational Alignment IT Decentralization M&A Activity Technology Trends Knowledge of Ownership Ownership Knowledge of Deployment Deployment People Process Tools
    10. 10. Variables to Consider <ul><li>Market Structure: </li></ul><ul><li>Business Climate: </li></ul><ul><li>Legal Environment: </li></ul><ul><li>Business Dynamic: </li></ul><ul><li>Go-to-Market: </li></ul><ul><li>Regional Scope: </li></ul><ul><li>Business Solution: </li></ul><ul><li>SEULA: </li></ul><ul><li>Software Portfolio: </li></ul><ul><li>Software Type: </li></ul><ul><li>License Metrics: </li></ul><ul><li>Customization: </li></ul><ul><li>Sponsorship </li></ul><ul><li>Objectives </li></ul><ul><li>Abilities </li></ul>Monopoly – Competitive Objective – Relationship Supportive – Non-supportive Trusted – Arms Length Standard – Negotiated Domestic – Global Horizontal – Vertical End-user – Partner Narrow – Broad Desktop – Enterprise Concrete – Diffuse Stock – Extensible ??? ??? ???
    11. 11. Strategy and Tactics INTER-Corporate INTRA-Corporate License Management Compliance Monitor “ Ad-hoc” “ Iterative” “ Structured” “ Batch”
    12. 12. Two Tales (Software Producer Lifecycle) Compliance Corporate Strategy Technology Strategy Marketing Strategy R & D Licensing Pricing Distribution Go-to- Market
    13. 13. Two Tales (Enterprise Lifecycle) Software Asset Mgmt Corporate Strategy Technology Strategy Marketing Strategy Invest Deploy Manage Optimize Leverage
    14. 14. Thoughts regarding Tools ISO Standards: 19770 – Part 1 19770 – Part 2 19770 – Part 3 People Process Tools Entitlement Management Fulfillment/Back Office Systems of Record Electronic Software Distribution License Activation License Management Software Discovery Tools Usage Analysis Proprietary and/or 3 rd -Party Point Solutions and/or Suites
    15. 15. In Conclusion… <ul><li>Prevalence of Complexity, Uncertainty and Risk </li></ul><ul><li>One size certainly does not fit all in Software Industry </li></ul><ul><li>Opportunity for common lessons learned </li></ul><ul><ul><li>Software Producers </li></ul></ul><ul><ul><li>Enterprise </li></ul></ul><ul><ul><li>3 rd -Parties </li></ul></ul><ul><li>Legitimacy of divergent perspectives </li></ul><ul><li>Piracy  Audit  Compliance  SAM  ????? </li></ul>
    16. 17. Appendix 1: Contact Information Jeff Gustafson WW Software Licensing & Compliance EMC Corporation eMail: Direct: (925) 600-5781 Thank you!
    17. 18. Appendix 2: Selected Reading <ul><li>Software Asset Management: A Key to Infrastructure Optimization by KPMG, October 2008. </li></ul><ul><li>Tools Manager 2008 ITAM and SAM Tools by ECPweb, Winter 2008. </li></ul><ul><li>Bringing Software into the Computer Age with Electronic Licensing and Distribution by IDC, October 2008. </li></ul><ul><li>Software and IT Asset Management by IBSMA, June 2008. </li></ul><ul><li>Worldwide Software Pricing and Licensing Taxonomy and Report Guide by IDC, March 2008. </li></ul><ul><li>Trends 2008: Application Licensing and Pricing by Forrester, January 2008. </li></ul><ul><li>Key Trends in Software Pricing and Licensing by ECPweb, Macrovision, SoftSummit, CELUG, and EDA, November 2007. </li></ul><ul><li>Is Unlicensed Software Usage Hurting Your Bottom Line by KPMG, October 2007. </li></ul><ul><li>Contract Risk and Compliance: Understanding and Mitigating Risks in Extended Business Relationships by Deloitte & Touche, September 2007. </li></ul><ul><li>Could Pay-Per-Use Software Licensing Solve the Virtualization Conundrum? by IDC, June 2007 </li></ul><ul><li>Auditing in the Self-Reporting Economy by Harvard Business School, June 2007. </li></ul><ul><li>Fifth Annual BSA and IDC Global Software Piracy Study – 2007. </li></ul><ul><li>Software 2006 Industry Report by McKinsey & Company, April 2006. </li></ul><ul><li>More than a Matter of Trust: Managing Risk in Extended Business Relationships by Deloitte, April 2006. </li></ul><ul><li>The Impact of SOX on IP Management presentation to the Licensing Executives Society-Silicon Valley Chapter by Ernst & Young, February 2006. </li></ul><ul><li>The End of Software by Timothy Chou, 2005. </li></ul><ul><li>Software Publishers’ Enforcement Programs: A Survey by, November, 2005. </li></ul><ul><li>The Future of Enterprise Software by Accenture, October 2005 </li></ul><ul><li>An Insider’s View on Software Licensing Trends for Enterprise Applications presentation to SoftSummit by Forrester, October 2005. </li></ul><ul><li>The Self-Reporting Economy: A Matter of Transparency and Trust by KPMG, 2004. </li></ul><ul><li>The Future of Software Licensing: Software Licensing Under Siege by IDC, March 2004. </li></ul>