It’s not uncommon for companies to ignore software license management until they’re forced to act — often because a software maker notifies them of an impending audit. But that’s a huge mistake.

As a licensing account executive with CDW, I work with companies of all sizes to manage their software licensing needs. Over the past four years, I’ve seen companies make some huge mistakes when it comes to managing licenses.

For example, one company I work with would have been on the hook for $1.2 million in make-good licenses, plus fines, if it hadn’t become proactive.

To their surprise, the managers of this company uncovered 2,000 extra copies of Microsoft Visio Professional installed for people who didn’t need them because someone mistakenly included the program as a standard image used for provisioning computers.

We reviewed actual usage data and found only 72 people were regularly using the program. If the company couldn’t prove to auditors that those 1,928 copies weren’t being used, it would have been on the hook to buy licenses at more than $600 a copy and taken a staggering financial hit.

Fortunately, we caught the error in time, and the company was able to take corrective action and decommission the unused software.

The process that uncovered the problem is known as software reharvesting, and it’s something I encourage every company to implement. Reharvesting uses a formal process and an associated management tool to make sure every program is legally licensed and that it’s assigned — or reallocated — to users who actually need it.

For example, another company I work with can spot when a particular license hasn’t been used for 72 hours. Managers then can assess why the program is not being used and, if appropriate, put the program into a pool so it can be reassigned when necessary, per the terms of its enterprise license agreement.

A Strategy for Success

Software reharvesting can be a financial lifesaver for many companies, but what does it take to create a successful strategy? These five steps will point you in the right direction:

Comb through your license portfolio and account for what you’re currently spending. Factor in the staff time devoted to managing licenses and responding to audit requests from publishers. Also, understand your risk exposure. Despite helping companies manage their software licenses every day, I’m still regularly astounded by the propensity for employees to borrow software from peers or download it from the Internet. Ninety-five percent of my customers have more software installed than they imagined, sometimes by a factor of 10.

Make sure it performs software metering to document the usage rates of each title. The best SAM tools display the results in easily understood dashboards, rather than just dumping a lot of data into a spreadsheet that you then have to comb over to tease out and analyze.

  • Make the business case for your reharvesting strategy.

Many people initially balk at the cost of SAM tools, which can range from $50 to as much as $100 per endpoint per year. I hear people say, “We have 50 users, and we can’t afford $2,500 per year for a new tool.”

But every time I’ve analyzed an organization’s software environment, I’ve been able to easily justify the cost of a SAM tool through the savings gained by identifying unused software and reducing the time spent tracking programs.

You will want to compare a tool’s annual cost to the dollars being spent for over-licensed programs and the labor cost in hours required to sift through licensing data. My rule of thumb? If one out of every eight machines is running unnecessary software, the company will save money — and one in eight is actually a very conservative ratio.

  • Perform software license analyses on a routine basis.

Most publishers allow for license migrations every 30 to 60 days. That makes monthly reviews ideal. If you’re re-evaluating use data once a month, you can reassign licenses when necessary (and often) within your agreement’s terms, maximizing your savings.

  • Re-evaluate your licensing contracts at least three times a year.

By taking stock regularly, you know well in advance which titles you absolutely must renew. Always start from a position of not renewing, then work your way to convincing yourself that a particular title is still essential.

Prepare for a Shock

Once your reharvesting process and SAM tool are up and running, steel yourself for the initial results they reveal — both the unnecessary titles running across the organization and other issues that might trigger noncompliance with your license agreements.

Many people actually freak out. But take comfort because that old adage is true: Knowledge is power. You’ve taken the steps that will now give you the upper hand in your organization’s software use so you can better manage what you spend and avoid future unpleasant surprises.

Learn more about CDW’s Total Software Management solutions that can help protect two of your most valuable assets: time and money.

Lastly, protect your business and check out CDW’s latest article, “Four Licensing Mistakes that May Boost Costs and Increase Risk.”

As always, feel free to leave a question or comment below.