Three Ways to Approach Compliance Management (Mar. 17, '14)

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Three Ways to Approach Compliance Management

Executives from Hewlett-Packard, EMC and Oracle share their methods for building compliance management organizations from the inside

By Leslie T. O'Neill

At IBSMA's 2014 Compliance Manager Summit, executives from three top software vendors offered insight into the ways they run their compliance management organizations. They're each taking a unique—sometimes revolutionary—approach toward enforcing their customers' compliance with their licensing contracts.

Christian Pruitt, director of worldwide compliance of software, hardware and support, explained that he's working to transform HP's compliance business into a license management business. Jared Collins, the Global Director of EMC's Asset Management Services (AMS), described his organization's "non-traditional" approach that treats software compliance as a secondary mission. Also, Brian J. Papay, Oracle's Senior Director, North America, License Management Services, advised compliance managers to take a fresh look at their data reporting systems.

Despite their differences, the three executives shared a common goal, articulated by Pruitt, "It's reasonable to expect customers to pay for intellectual property they use and pay in a reasonable time frame."

(left to right) HP's Christian Pruitt, EMC's Jared Collins and Oracle's Brian Papay

HP's transformation
Nine months ago, Pruitt began the shift away from enforcement activities toward license management. He's adopted a new philosophy, never presuming that customers are intentionally misusing software. He begins each engagement with the belief that "customers are trying to get it right."

According to Pruitt, HP is the sixth largest enterprise software company in the world, even though it's predominantly seen as a hardware vendor. Its compliance operation was launched only in 2010, but it quickly grew in terms of annual bookings from compliance operations.

"We want customers to pay for the stuff they use. Customers find it reasonable that they pay for software that they derive value from. But there is a gap between software deployed and software that's valuable," said Pruitt.

He notes that customers fall out of compliance for various reasons, primarily because they don't understand complex licensing models. So, educating customers is a big part of the transformation of HP's compliance organization. Pruitt has several more ideas to make it easier for customers to work with HP's software and validate their compliance, including adopting use-based reporting to simplify data gathering, simplifying licensing terms and reducing the number of metrics used to measure compliance and being transparent with customers about entitlements. Ultimately, he's aiming for a trust-based model of license management.

"I'm just asking the question—you tell me what you're using and we'll reconcile to that in a structured way," said Pruitt. "Generally, customers will be forthright and honest. I will rely on the that. That's the core of our transformation."

EMC's path to visibility
Collins said immediately that his AMS organization doesn't seek out compliance engagements, despite being EMC's software compliance organization.  

"There's no difference from what you'd do with other software compliance efforts, but it's very much a secondary aspect of what we do. It rarely comes up. The value we drive is in relationship driving, enabling strategic decisions," he said.  

Instead of driving revenue directly, Collins' group provides the sales teams with the data they need to enable deals with customers, including what assets they already have deployed, what they cost each year and what they might need to purchase. He provides sales with a credible, reliable baseline that can be used to draft data-driven proposals.

"We're very involved in the sales process, making sure that sales and customers both have the info they need to make decisions in every stage of the sales cycle," said Collins. "We want to reduce as much friction as possible for sales teams to go to customers."

Collins describes his work as a collaborative, interactive process through which they build trust with EMC's most strategic customers. Not only does the baseline he creates help identify new opportunities for the sales teams, it can help the customer make more strategic decisions.   

He acknowledges that justifying his group's existence with the executive team isn't always easy. "We're not driving incremental revenue. We're driving qualitative value. We need to show value every year," he said.

To that end, he is exploring ways to better use the baseline to give customers a complete view of their environments. Collins is also working to evolve their deliverables to better enable sales discussions in other parts of EMC's business, especially for cloud services. Still, he recognizes that the AMS can work with only a small percentage of EMC's customers.

"We focus on large customers with large, complex environments. We prioritize and qualify among them—it's more of a sniper rifle approach, not a shotgun."

Oracle's reporting re-do
Of the three programs, Papay represents the longest running of the compliance organizations. Yet, he also expressed a desire to partner with customers, recognizing the role his group can play optimizing a customer's investment in software.

"Our real job is to try to counteract the complexities of software for our customers. We want to give customers the ability to come to us and ask us to help them make better decisions, gain efficiency in the licensing marketing, get insight into what they purchase from Oracle and benefit from that investment," he said.

"We offer customers the ability to work with us cooperatively and proactively," Papay said. "But customers that don't want help? We'll go make sure that our intellectual property is being protected."

With 400,000 customers around the world to chose from, Papay's license management team is truly a global effort, undertaken by more than 400 employees. He found that they needed a custom-built reporting system to keep track of every step of every customer engagement they undertook in various countries and different languages.

"GEM—Global Engagement Manager—is completely homegrown. The nice thing is that it's engineered around our business processes. The downside is that it requires some sort of database and development team," said Papay.

Built with Oracle Business Intelligence, GEM is a dedicated system that can integrate data from several disparate sources, including revenue, sales and customer data, and can generate customized reports, depending on the audience's needs.

"Give people the ability to impact behavior based on data and reporting. Proper reporting can become an incredible feedback loop. You give them data; they understand the importance and they'll have a reaction," he said.

"I think a good reporting infrastructure makes all this possible."

Leslie T. O'Neill is a writer based in Pleasanton, CA.

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