Software licensing: This man thinks it's time someone stood up for the end user

Software licensing: This man thinks it's time someone stood up for the end user

Summary: Software licensing is often impenetrable and costly for the CIO who makes a mistake. Mark Flynn leads a new body that aims to redress the balance and fight the corner for end-user companies.

Mark Flynn: You often need a law degree to understand overly complex software licences. Image: CCL

Software licensing can be fiendishly complicated even for the smartest CIO, and the consequences of getting it wrong can be very painful.

"If you, as an end user, are faced with trying to manage complex licensing agreements that are not manageable, you're staring down the barrel of an enforced audit," said Mark Flynn, the newly-appointed CEO of the Campaign for Clear Licensing.

"For that end-user organisation, that is a lonely place to be, and for the individual responsible for it, it's quite career-limiting," he said.

Analyst firm Gartner estimates that more than $400bn was spent on software worldwide last year, with between five to six percent of the total generated by audits.

"That can be a fractious, unpleasant exercise, where vendors go after end-user organisations, saying you're incorrectly licensed and you owe us more money," Flynn said.

The Campaign for Clear Licensing is a subscription- and event-financed membership lobbying body that plans to expand, with US and German operations starting within the next six months. The UK is currently recruiting members.

"We believe end-user organisations need effective representation because everybody wants to be legal, everybody wants to invest in software. But often licensing agreements are incredibly complicated. You often need a law degree as an IT person or a buyer really to understand them."

Flynn said end-user organisations often come unstuck because they don't fully understand the licences and can't manage them because vendors fail to provide clear directions on how to measure their product's use.

"It's always a surprise when they find they're not compliant, they're under-licensed. Then they get the poisonous situation where they're having to find unbudgeted spend — that might be hundreds of thousands or even millions," he said.

An absence of organised pressure from users has allowed software vendors to continue with their current licensing practices, he said.

"Unfortunately, it's been a bit of a divide-and-conquer story, where there isn't a body that provides a collective representation of the end-user community. That's the way vendors and publishers want it because they can just, on a divide-and-conquer basis, do what they want in terms of having complex licensing agreements," Flynn said.

"That might be simply because they're a little bit lazy because there's no pressure on them to make their licensing agreements simpler because people want to adopt their software."

Flynn said the CCL wants a positive dialogue with the software publishers, which should be interested to hear what enterprise customers have to say as a collective group.

"These [software vendors] are huge organisations with financial muscle behind them. The muscle that we have is the collective membership that we represent. If we are the mouthpiece for that collective, then vendors have got listen to what the issues or grievances and changes are that their end users want," he said.

"If they don't, then end-user organisations can look for alternatives. What we are not is an aggressive organisation that is looking for conflict. But it's important that if we have the muscle, which is our members behind us, then they will sit up and listen because it will impact their revenues, short term and long term, if they're not seen to respond."

As well lobbying on behalf of the end-user community among vendors, the CCL will also try to bring good practice by one vendor to the attention of others. Exposing bad practice is a powerful approach that the campaign will try to keep in reserve.

"That's got to be a weapon that you keep in your kitbag until you have to use it because you want to engage and be a positive force for change with that vendor. But if they choose to ignore it, then we can use that as a lever and tell the world about the bad and sharp practice that that vendor is using," Flynn said.

The arrival of the cloud is adding another level of complexity to already problematic situation for end-user businesses and will be at the forefront of the campaign's activities, he said.

However, the underlying problem remains the convoluted nature of licensing arrangements, whether on-premise, in the cloud or hybrid.

Not only do companies find it hard to calculate the costs and manage that complexity, the vendors' aggressive approach to auditing is damaging communications between provider and customer.

"End-user organisations are very wary about reaching out for help and clarification because that simply sets the alarm bells going at the vendor, who says, 'This is an auditing opportunity because this organisation isn't in control of our software'," Flynn said.

"They don't see it as an opportunity to help that customer. They see it as a short-term revenue opportunity to sting that customer. It really is a Catch-22. The end user won't reach out because of the complex licensing."

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  • 400 billion wasted?

    Time to move to something better. The only way to force the issue is to not play the game. When those vendors of such crappy licensing structures start to really lose money, they will change.

    Otherwise, learn to live and die by the gun.
    • There are already other groups doing pretty much the same thing

      Hi :)
      I guess it's good to fragment any efforts that are against companies to help the companies to "divide and rule".

      Better to reinvent the wheel than to stand alongside others with whom you might have minor disagreements. [sighs deeply]
      Regards from
      Tom :)
  • Who doesn't have a lawyer?

    You can't run a business of any size without having a lawyer working for you.
    Buster Friendly
    • I beg to differ

      Small businesses rarely have lawyers on retainer; instead, they pay by the hour and even GP lawyers are expensive.
      John L. Ries
      • How small are you talking about?

        I'm sure the one man landscaper doesn't but anyone with an IT department and CIO would. It's the specialized software that's the real pain. Off the shelf stuff that a mom and pop would use is easy.
        Buster Friendly
        • Then you're going to have to be more specific

          Mom and pop businesses (like my wife's yarn shop) rarely have either the money or need for an on-staff lawyer. My employer, which is somewhat larger than that and does software and consulting, doesn't have a lawyer on staff (not enough work to justify it). It only makes sense for medium to large businesses to have lawyers on staff; everyone else hires them as needed (even small municipalities hire private attorneys as needed instead of employing them full time).
          John L. Ries
          • What you buy though?

            What you do you buy that's not off the shelf software? Common applications like Office, Creative Suite, and QuickBooks are all standard licenses and software enforced. It's when you get in large scale, custom, and specialty that contracts are negotiated specifically for your business. That's when you need the legal help to make sure both sides are getting what they expect. If you're doing your own development around open source, you do have to read those carefully although the chance of anyone making an issue of it are slim.
            Buster Friendly
          • Agreed

            But you made a stupid generalization in your initial post that needed challenging. Regardless, proprietary EULAs are way too complicated (I suspect that few really need to be more complicated than the Borland license was). This would result in lost sales if the software market were more than marginally competitive.
            John L. Ries
          • And...

            ...the yarn shop buys very little in the way of proprietary software. Almost everything my wife uses is open source (guess who the IT department is).
            John L. Ries
        • hmm

          Currently my IT department is my wife. It is hard enough to start a business at all - let alone pay a lawyer to monitor every item I purchase for the company to understand liability and usage. Most of the time you go by what the sales folk and brochures say.
      • Small Business?

        I don't think the large software companies go after the small business. It probably costs more money to run the audit than to get 3-5 more licenses. What we are talking about is BIG Business. We had 100,000 employees and I'm pretty sure, with Microsoft's presence or Symantec's or whomever that it is usually hard to make too many mistakes. They did internal audits. As Buster said, it is usually the RARE software that gets to be an issue. I've found that licenses that cost > $600 a clip usually result in more complicated copy protection.
    • Wrong

      Lot's of companies don't employ lawyers directly. 100+ employees here, none of them lawyers. When we need one, we pay the hourly rate.
      • I didn't mean direct hire

        I didn't mean to imply direct hire as you'd need to be pretty big to keep one lawyer busy 40 hours a week. You do need someone to do your contracts if you want to stay in business. Even personal you need to hire someone to buy a house or make a will.
        Buster Friendly
        • But the lawyer isn't usually on retainer.

          Rather, a lawyer is hired as needed and paid by the hour. Thus, paying a lawyer to analyze software EULAs would get rather expensive.
          John L. Ries
          • Retainer is more expensive

            If you can pay a retainer, it cost more than just by the hour. The retainer is just paying out money to keep them on demand. Legal fees are part of doing business. It doesn't matter if it's buying software, property, or another business.
            Buster Friendly
        • That said

          If the expense of hiring a lawyer to analyze the EULA is part of the cost of licensing proprietary software, that makes open source (and even paper ledgers) a lot more competitive. So maybe you really don't want to go there.
          John L. Ries
  • it seems that the world is ready

    for a 'software license insurance', the same way we can buy a title insurance for a property.
    • no, the world is ready for the licening shema that works...

      what needs to happen is for the licensing schema to change for an easy to understand and easy to follow agreement easy for anyone to read and comprehend. not one so convoluted that you need a lawyer to understand.
      what is so complicated in any software that it needs an agreement of over 10+ pages long?
      why is Windows (an operating system) needs 5+ different SKUs to exists and even that is a low number if you count the VLC and VM SKUs.
      Why do we need to have an OEM license tide to the hardware?
      Why do we need to have a Home/Prof/Ultimate etc. SKUs as well as an OEM variants of same?
      Why a business need to run a Business license of the above?

      as an operating system (OS) all is needed is 1 SKU that reads "THIS IS AN OS TO BE USED ON YOUR PC"
      "it includes 60% of all features available that are needed by 95%"
      " of all the users and that are installed at initial setup"
      " any additional features maybe downloaded/installed as required at later time"
      "you have the right to run this OS on a single PC or Device"
      "each PC or Device is required to have a separate License of the OS"

      this way the licensing is simple and straightforward, I buy device/PC with OS I have a license that I have paid for, that I can use on this device/PC or when it brakes I can configure the replacement and use on it.
      • It's not just the OS

        A lot of it is applications that contain use restrictions, including 1) requiring licenses for each device/user connecting to a server, 2) separate licensing when connecting via remote desktop / citrix, 3) separate licenses for each virtual machine, core, or processor, and 4) improper mixing of development and production licenses.
      • That's easy

        An OEM license is tied to hardware because the hardware manufacturer is responsible for providing warranty and support. That's different from a retail license where you're directly buying the software and warranty and support come from the software company. The cost for those services that are not in the OEM license are added to the hardware cost.
        Buster Friendly