By Natalie Overstreet Lias
Like Randy Littleson, I was struck by Michala Wardell’s article Don't Let Software Licensing Fall Between the M&A Cracks. This article highlighted a lack of due diligence on the part of acquiring firms when it comes to software assets; Randy’s follow-up article pointed out that the lack of a software asset management (SAM) program will lead to other ills beyond merely fines and audit true-up purchases for unlicensed software. But for organizations seeking to make a near-term strategic transition, how can you accomplish the due diligence you need while laying the groundwork for true software license optimization after the transaction is final and both organizations constitute a single legal entity?
Today, only the most mature organizations approach 100% application coverage in their software asset management programs. Typically, acquired organizations will have key software purchase agreements in place such as a Microsoft Enterprise Agreement (EA) or Select Plus agreement, but often will have very limited visibility into actual software inventory or overall software purchases outside their strategic vendors. They may even be immature with regard to key vendors, particularly if they have a simple or unlimited licensing model. As a result, the critical data for analysis of an acquired entity’s software licensing risk is frequently unavailable during the time-critical M&A process.
So if the acquired organization does not already have a documented license compliance position at the start of the M&A process, what can be done? In order to understand an organization’s software license position, two things are required: license entitlement data, and hardware/software inventory data.
Typically, software licensing and purchase information to establish software entitlements can be found in purchase orders, contracts, and vendor license statements. In a typical M&A situation, there is no time to collect all historical purchase orders for software, because time is limited and usually there is no centralized asset management repository such that software purchase orders can be identified and distinguished from the organization’s entire set of POs. In any case, a better practice for any initial SAM assessment (whether or not for M&A) is to work from vendor licensing statements to provide a baseline for license reconciliation without the complexity of understanding historical purchases, product use rights—including upgrades, and maintenance. This will not give 100% coverage of the license entitlement landscape, but a focus on key vendors will provide enough visibility to assess overall license liability risk, as well as specific risk associated with each of the enumerated key vendors.
On the inventory side, sometimes even a relatively immature organization, from a SAM perspective, will have SCCM, Altiris, or some other software that provides hardware and software inventory capabilities (possibly in addition to software deployment and other functions). However, in the absence of such systems, an alternative approach must be used for software inventory. For example, Flexera Software’s FlexNet Manager Suite allows for the collection of inventory without installing an agent (“zero-touch”) by executing inventory collection remotely over the network. If the acquired company has firewalls, other complex network structures, or specific throughput concerns, inventory collection can be performed using “inventory beacons” located in the target network or networks. (Read more about inventory beacons here).
As a worst case scenario, if the target is small enough, the inventory collection process can be done by “sneakernet” – IT administrators can collect inventory automatically on an individual machine basis without network connectivity to the acquiring organization. The important thing is to ensure that inventory is truly measured, not assumed or guessed at. Without measurement, the acquiring company is assuming the risk of the acquired company’s assertions concerning its software license compliance.
By identifying key vendors, collecting license entitlements, and matching them to inventory, organizations can begin to understand the overall SAM maturity and software license compliance of acquisition targets. With this knowledge in-hand, they can make critical assessments concerning risk and establish an appropriate software license management budget post-transaction. This way, when the new organization goes live, it will be positioned for software asset management success.
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