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Software license agreements aren’t made to be broken

Virtualization complicates software licensing because it’s more difficult to quantify CPU usage and attain the correct number of software licenses. It’s therefore

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easier for organizations to violate a software license agreement, often without even knowing it.

Why it’s easy to accidentally violate software license agreements
There is no question that some software license agreements are violated deliberately by organizations trying to avoid paying for an appropriate number of software licenses. In the vast majority of cases, however, software license agreement violations occur inadvertently because of confusion in license terminology or poor communication between the IT department and the company representative that signed the software license agreement. 

Even deploying virtualization may constitute a software license breach, depending on the software vendor and how the agreement is written, said Sanjeev Aggarwal, founder and partner of SMB Group Inc. in Northboro, Mass.

Most software vendors have no remote means of detecting a software license agreement violation, and many violations are discovered by logical deduction or by accident. For example, a software vendor may receive far too many support calls from a client for the number of software licenses that they hold. Or a support call may disclose that a license is running on a different server or virtual platform that violates specific terms of the software license agreement.

As another example, a large client that reasonably needs 10,000 software licenses might buy only 100 licenses. Such circumstances can trigger an investigation or audit to determine the client’s compliance with its software license agreements.

Most software vendors are willing to negotiate corrective action when a violation is discovered. When the violation is inadvertent, it’s usually a simple matter of buying more software licenses, although the cost of additional licenses may be substantial.

“Vendors are more willing to work with clients to ‘right-size’ the different business models and license arrangements so that the problem is corrected,” said Aggarwal, adding that it’s in the vendor’s best interests to maintain a cordial and supportive business relationship with the client. But if the software license agreement violation is clearly intentional or the client refuses to correct the violation, the vendor may pursue legal action.

So the real challenge for data center administrators and executives is to maintain compliance with software license agreements, especially as data center platforms and technologies evolve over time.

How to avoid software licensing violations
There are many issues to consider, and the most obvious answer is greater awareness of software licensing. Certainly issues like the total number of software licenses and a clear picture of how those licenses can and cannot be deployed are crucial to maintaining compliance, but it’s not just a matter of reading the contract. There must be better understanding between IT and company executives who actually sign the software license agreement.

IT should have a seat at that table, bringing its needs and knowledge of the long-term strategy to the software licensing negotiation. For example, a license that prohibits platform mobility may not bother a C-level executive, but it may be a devastating impediment to an IT department banking on live migration as part of a future disaster recovery or application availability strategy.

Another consideration is careful management of software licensing. Software vendors rarely -- if ever -- provide tools that track license use. But there are numerous third-party software asset management tools, often working in conjunction with IT asset management tools, that can help an organization identify server and end-user software deployed across an organization.

This information can be compared to general software license terms to provide early warning of possible violations. For example, software asset management might show an inordinate number of operating system and application deployments because of virtualization sprawl. The cost of software asset management tools is often insignificant compared to the cost of buying more software licenses or defending your organization against legal action from a software vendor.

This article originally appeared in the Virtual Data Center E-Zine.

This was first published in March 2011

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