How To Conquer Software's Rising Costs - InformationWeek
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8/24/2011
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How To Conquer Software's Rising Costs

Complex licensing policies and increased fees can seems like an insurmountable challenge. These steps can help you get a better grip.

Roles And Responsibilities

With shrink-wrap software licenses committing companies to legally binding agreements, and with enterprise software being such a critical component of business success, you'd think that LOB executives would be involved in evaluating software licenses. But more than a third of our survey respondents say their LOB execs aren't involved in such decisions at all.

Granted, you can't expect execs to get involved in every $100 transaction, and they don't need to be evaluating contracts for infrastructure software (though legal, purchasing, and finance need to review all licenses). However, if LOB execs aren't looking at the license agreements for the software that runs their businesses, that's a problem--100% of executives should understand the terms and conditions under which their enterprise software can be used and will be supported.

For example, buried in a contract for a recent government agency software purchase was language that defined the "site license" as limited to employees of that particular division, which IT probably thought was fine. However, while that software was used primarily by that division, other divisions--and even agencies--had to use it as well. Had the division's director not reviewed the license agreement, it would have been a costly mistake.

It appears that IT organizations are on board with this thinking, as 78% of the respondents to our survey say LOB execs should be familiar with the terms and conditions of software licenses and contracts. And once folks other than IT pros are involved, it appears the right ones are at the table: top management, IT governance, legal, finance, and purchasing.

More than half of survey respondents say the ultimate responsibility for software license agreements resides both with IT and internal service functions. As IT matures, we hope this percentage will rise. Expecting IT by itself to handle software license agreements is a little like expecting finance to spend all of the company's money with no input from departments.

Which elements are the most important parts of a licensing agreement or contract between your enterprise and a software manufacturer?

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