Study: Companies still face software licensing problems

A new industry report confirms enterprises find it tough to ensure software compliance, especially with increasing regulatory pressures.

A study has found that companies are finding software licensing a problem to manage in the Sarbanes-Oxley era, where 72 percent of those surveyed still do not monitor their licenses or are only doing so manually.

Sponsored by the Software & Information Industry Association (SIIA), Centralized Electronic Licensing User Group (CELUG) and software vendor Macrovision, the annual survey tracks software pricing and licensing trends. Approximately 500 software industry executives were polled for the study.

The survey confirms that enterprises find it a challenge to ensure they are in compliance with software license agreements, following increasing pressures to address the influx of regulatory policies such as the Sarbanes-Oxley Act.

Some key findings from the new study include:

  • About 72 percent of enterprises either manually track their license compliance, or do not track it at all. The report further stated that manual methods tend to be error-ridden and non-scalable in large enterprises, and as a result, a large number of enterprises are likely to be out of compliance with their vendors.

  • Fifty percent of respondents would like to have their software licenses monitored automatically, compared to 44 percent last year.

  • An estimated 72 percent of enterprises are not satisfied with the pricing and licensing strategies of independent software vendors (ISVs), even though more than two-thirds of software vendors have modified their pricing and licensing policies over the past two years. In fact, 57 percent of software vendors say they are satisfied with those policies.

  • About 40 percent of software vendors this year have been offering subscription models as their primary pricing method, an increase of 7 percent over 2004. By 2007, this number is expected to reach 60 percent, according to the survey. Enterprises bear a similar sentiment, with 43 percent preferring to purchase software through a subscription-based model.

  • Both enterprises and vendors are moving toward concurrent software licenses, and away from per machine or per server licensing structures. About 53 percent of enterprises prefer concurrent licensing, an increase of 11 percent in 2004, while the preference for traditional per machine or server licensing dropped by 7 percent. Among ISVs, there was a 16 percent decrease in the prevalence of the per machine or server model. Metric-based licensing is expected to reach almost 40 percent among software vendors by 2007.

  • Only 6 percent of enterprises prefer processor-based licensing.

  • Product activation is preferred by 47 percent of ISVs who have moved away from older licensing models such as serial numbers, dongle/USB keys and audit and compliance teams. A projected 57 percent of vendors use product activation by 2007.