Are your software licences up to date - and does your CFO know?

Audits mean it's not just the IT department that should be keeping an eye on software
Written by Tim Ferguson, Contributor

Audits mean it's not just the IT department that should be keeping an eye on software

As vendors tighten up on software licensing, CFOs are being encouraged to get more involved in licence management.

According to research released this week, there has been a significant increase in the number of licence audits that software companies are carrying out with their customers, in order to make sure users are paying the right amount for the software they use.

The research, by consultancy Fast, found the number of businesses audited by one of their software suppliers in the past year has increased by 50 per cent compared to the previous 12 months.

Software pile

With more software vendors cracking down on licensing, CFOs and CIOs have their work cut out
(Photo credit: BSA)

Businesses found to have too few licences for the technology they are using could be liable to fines, while those with more licences than software are spending more money than they need to. In both cases the financial implications are clear - giving CFOs a powerful incentive to contribute to better licence management.

According to the Business Software Alliance (BSA), there is plenty of scope for finance chiefs to be more involved with software licensing.

"I don't think this is an issue that in most companies is part of the CFO's agenda and therefore it's not necessarily given the prominence that it deserves and yet this is an area of compliance and often the CFO is the person responsible for all compliance issues in a company. So there is definitely a role for the CFO," a spokesman for the organisation told silicon.com.

For businesses where IT isn't represented at board level, the role of the CFO becomes particularly important due to the financial implications of software licence problems. "It is an issue that should be represented on the board. Quite who's responsibility it is - whether it's the CFO's or the CIO's - will depend on each individual company but there are definitely things [CFOs] can do," the spokesman said.

Needless to say, CFOs need to work with the CIO and IT department to make sure licences are up to date.

Finance chiefs should ask their tech team to centralise documents regarding software licences, meaning they're easy to get hold of in the event of an audit, the BSA's spokesman said.

CFOs can also help their IT counterparts by making sure the IT department has sufficient human and financial resources so that the right skills and processes are in place to avoid software compliance issues arising in the first place.

With software purchases typically made by the IT department through expenses rather than a business' standard processes, procurement processes should come under particular scrutiny from CFOs.

Mark Bethell, senior manager within Deloitte's contract risk and compliance team, said it's common for companies' tech and procurement teams to not be equally well-informed about software buying.

"Often there's a disconnect between IT and procurement so you've got one part of the organisation buying it and another that's responsible for using it and knows how much [the company] should have. When those two don't work well together, you're not buying the right quantity or you're not buying the right thing," he told silicon.com.

By making software subject to the same purchasing processes as any other significant item the company buys, CFOs can ensure a better paper trail to show the right licences have been bought.

But it's not just IT that should be aware of the importance of software licensing - Bethell said CFOs should stress its importance company-wide.

"Ultimately, from a governance perspective the tone and the culture is set from the CFO and they have a role to play in ensuring that the organisation - and that includes the IT function - are aware how seriously the organisation takes compliance and that includes software compliance," he said.

To keep the whole company on the right side of software licensing, the BSA recommends CFOs should also set out guidelines for employees to ensure they don't introduce unlicensed software into the business via mobile devices or when working from home.

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