Mastering Software License Governance in Highly Regulated Industries

In today's digital world, software is the lifeblood of every organization. From electronic medical records systems at hospitals to trading platforms at investment firms, specialized (and standardized) software applications are essential to core business operations. However, the procurement and usage of these software must be carefully managed and controlled, especially in highly regulated industries (read:? especially ones where you get audited).

Failure to properly govern software licenses can expose an organization to significant risks - including potential regulatory sanctions, security vulnerabilities from unlicensed code, cash flow issues from over-payment of licenses, and business disruptions if legacy software becomes unsupportable. A fragmented, ad-hoc approach simply will not cut it when so much is at stake.

I help clients implement robust governance processes and tools to gain complete control over their software portfolio - from purchase decision to license deployment, metering, and renewal across the full hybrid environment of workstations, desktops, virtual desktops, and data center infrastructure. My systematic approach is built on years of experience working in Big-5 consulting firms (in an advisory and audit capacity) as well as other leading companies in highly regulated sectors.

Here are a couple of case studies that I wanted to share with you for your benefit and what the high-level approach was to remediate the challenges and where the client emerged ?stronger and better.

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Case Study #1:? From Overspending to Optimization: ?Software License Management Transformation

The Challenge: Audits revealed significant overspending and potential compliance issues within the hospital system's software licensing. This stemmed from a lack of centralized control and a fragmented approach to licensing governance.

The Approach: To address these concerns, a comprehensive solution was implemented:

• Baseline Inventory & Analysis: We conducted a thorough baseline inventory of all purchased licenses and corresponding software installations across the entire enterprise. This analysis identified underutilized licenses and unauthorized deployments by end-users, consultants, and managed service providers.
• Governance Model & Tools: We designed and implemented a robust software license governance model. This model leveraged market-leading license management tools to provide the health system with complete visibility across their hybrid IT environment (including on-premises and cloud deployments).

The Results: This comprehensive approach delivered significant benefits:

• License Optimization: The new system enabled the hospital system to reclaim unused licenses, eliminating overspending and optimizing license allocation based on evolving usage patterns.
• Compliance Assurance: Automated discovery, metering, and harvesting processes ensured all software deployments were compliant with their respective licenses.
• Financial Transparency: The finance department gained the ability to accurately budget for license costs, preventing future over-expenditure.
• IT Efficiency: The IT organization gained efficiency in delivering authorized software to end-users, streamlining software management processes.

This case study demonstrates the value of a strategic approach to software licensing governance. By combining a comprehensive inventory, a robust governance model, and market-leading tools, the team enabled a hospital system achieve cost savings, compliance assurance, and improved IT efficiency.

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Case Study #2:? Effective Software License Management

I have frequently encountered software licensing / asset management challenges. One such instance involved a client experiencing rampant proliferation of unused (but it was active, e.g. ‘turned on’) software from a defunct company.

The Challenge: The client had purchased a limited number of licenses for this software. However, an IT desktop engineer inadvertently included the activated software in the standard desktop image deployed across all desktops, laptops, and virtual desktops. Years later, a speculator company acquired the rights to the defunct company's software, including its notoriously strict EULA. The new owner of the defunct software initiated contact with all prior purchasers of the software product and was requesting on-site audits with potentially massive fines for non-compliance with the EULA.? Google searches confirmed the audits and fines being levied by courts.

The Approach: Recognizing the significant financial risk, I worked with a hybrid team to implement a comprehensive software license management strategy:

• Centralized Control: We established centralized oversight and an inventory audit of all software licenses to prevent similar inadvertent over-deployment in the future.
• Formalized Policies: We developed and implemented formal procurement and retirement policies for software. This ensured that only essential software was deployed and that unused licenses were appropriately decommissioned.
• License Recycling: We created license recycling workflows to recapture and reassign unused licenses, maximizing resource utilization.
• SCCM Deployment: We strategically leveraged System Center Configuration Manager (SCCM) on an enterprise scale. This allowed us to cleanse the standard desktop image and remove unnecessary software installations across all devices.
• Strategic Negotiation: ?We employed our negotiation expertise to strategically engage with the ‘speculator company’, delaying the audit to provide time for our updated desktop image rollout to take effect.

The Results: Within one year, our client achieved significant success:

• Reduced Waste: We eliminated $5 million in software waste, demonstrating a substantial return on investment.
• Lower Licensing Costs: We achieved a cost reduction of 22% in overall licensing costs through improved management.
• Compliance Achieved: We successfully avoided potential multi million-dollar fines by ensuring compliance with the EULA through proactive license management and the timely deployment of SCCM.

This case study exemplifies the power of proactive software license management in optimizing costs, achieving compliance, and enhancing overall IT efficiency.

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In summary, software powers every modern business - but that power must be intelligently harnessed and controlled, especially in highly regulated sectors. An ad-hoc approach, neglect, or lack of real governance controls will inevitably result in over-spending, security exposures, compliance risks, and lack of visibility into assets and their costs. By bringing on the right resources to implement robust governance frameworks and license management tools, organizations can optimize their software portfolio while enabling the business with the latest software capabilities in a controlled, secure manner. Reach out to ?discuss how I can put your software asset management house in order.