Five Shades Of Grey… How software buyers should be compliant without being submissive

“Don’t let the salesperson persuade you that his company’s opinion is gospel truth – it isn’t."

“Software license managers should be compliant without being submissive,” says Duncan Jones, VP of Sourcing & Vendor Management Professionals, Forrester Research.

So much so that Jones believes any procurement or asset management professionals who have seen the new movie based on E.L.James’ best selling novels may have noticed the similarity between the “eponymous antihero and a license management services consultant”.

“You’re a sadist?”

“I’m a Dominant.” His eyes are a scorching gray, intense.

“What does that mean?” I whisper.

“It means I want you to willingly surrender yourself to me, in all things.”

I frown at him as I try to assimilate this idea.

“Why would I do that?”

“To please me,” he whispers as he cocks his head to one side, and I see a ghost of a smile.

Please him! He wants me to please him! I think my mouth drops open. Please Christian Grey. And I realise, in that moment, that yes, that’s exactly what I want to do. I want him to be damned delighted with me. It’s a revelation.”

"Yes, yes, I'll let you run your audit script on my servers.”

“Sources inside some large software companies tell me that license audits generate 20% to 30% of their license revenue,” Jones observes.

“Although a lot of that will represent deliberate or reckless under-licensing, many of the disputes that I hear about involve software salespeople abusing some licensing shades of grey to pressurise customers into paying them money.”

Jones believes that because it’s difficult to predict how a court will interpret nineties contract language in the current technology context, many companies pay up rather than risk a compliance lawsuit.

Consequently, Jones offers five questions of interpretation that no lawyer can answer.

1. Who is really using my software?

“I continue to hear risible interpretations of ‘use’ and ‘access’, such as the software company that claimed motorists were users because they saw output from its database when they drove past an electronic road sign,” Jones adds.

Previously suggesting a standard interpretation of use based on the concept of interaction - i.e. both input by a user and output by the software, Jones says enterprises need to persuade their vendors to accept this interpretation urgently, “otherwise the Internet Of Things will bankrupt you.”

2. Where is the boundary between soft and hard partitioning?

While “processors on which the software is installed and/ or running” was fine when chips, memory and storage were all in the same box, Jones believes today’s data centres are different.

“Even when vendors add extra language post-contract, technology evolution can restore the grey shades,” he adds.

“For instance, who can say whether or not the latest ways of optimising storage and resilience are "installation", as the contract signatories understood the term?

“The vendors may try to convince you that they can redefine the word as they see fit, but they may not be correct.”

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3. At what point does an enhancement become a new product?

“We know we’re paying maintenance so we can get “product upgrades”, but it is unclear exactly what that means,” Jones explains.

He believes software companies reinvest their maintenance revenue into development and acquisitions, packaging some of the results as new products that you can buy if you want to, and others as enhancements that you get at no extra cost when you upgrade.

“How should they decide between these two?” he asks. “It’s not defined anywhere.

“What’s a fair balance between the two to represent value for money from maintenance? 80%? 50% 5%? No-one knows that either.”

4. Does my contract allow me to collaborate with customers?

Most software contracts grant you a license to use the software, but according to Jones, “solely for your internal business purposes”.

“What does that mean?” he asks. “Isn’t an oxymoron? Surely business is external, by definition?

“Increasingly, our business processes involve external collaboration and engagement, with customers, suppliers, distributors, agents, etc.

“We all need to be able to use our software and/ or data for joint endeavours that support their business and ours, but the contracts appear to forbid this.”

5. Under what circumstances does one person need two user licenses?

Another grey aspect of collaboration scenarios, according to Jones, is the principle of one-person, one-license (OPOL).

“Suppose you allow me authenticated access to your network to collaborate with you, via an Oracle database, say, or via Microsoft Sharepoint,” he speculates.

“I’m using the software, so I need a user license – that’s clear. But what if Forrester uses the same software, so I already have a user license that Forrester has bought and assigned to me?

“Surely you don’t need to buy me a 2nd user license? Every user needs a user license, I have a user license, WTP? It seems reasonable to assume that OPOL applies, but few contracts say clearly whether or not it does.”

Grey Situations…

With these grey situations, just as with marital disagreements over the activities in the aforementioned film, Jones believes businesses need to have an “open, honest, adult discussion” about the wider relationship.

“Don’t let the salesperson persuade you that his company’s opinion is gospel truth – it isn’t,” he adds.

“Try to show how the vendor’s attempts to enforce a warped (in your view) interpretation of this particular issue will damage your firm’s perception of it, and hence limit its chances of winning future business.

“Otherwise the salesperson will focus only on the short term revenue he can extract from you if he stubbornly holds to the official line.”