3 Trends Every Software Compliance Manager Needs to Prepare For Now (Mar. 16, '15)

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3 Trends Every Software Compliance Manager Needs to Prepare For Now

Compliance pros gather in San Francisco to discuss the issues facing the software industry in 2015 and find solutions for challenges common to new and maturing compliance programs.

One of the best revelations to come out of last week's gathering of software company compliance managers at the 2015 Compliance Manager Summit was this:

"It's not the customer's fault if the software is too difficult to manage or it's too hard to tell what's legal or illegal."—Richard Atkinson, Corporate Director of Adobe System's Global Piracy Conversion Team.

Atkinson summed up the evolving attitude many (but not all) vendors have about licensing issues.

Speaking to an audience of software company compliance managers and industry experts in San Francisco on March 12 and 13, the opening keynote panel, four industry insiders—Atkinson, Mathieu Baissac of Flexera Software; Jared Collins of EMC; and Courtney Grey at PricewaterhouseCoopers—expressed different perspective on the roles compliance managers play in managing their software assets. Yet, all agreed on three trends that every compliance manager needs to prepare for.

1. Shifting focus toward sales enablement

An improving economy and intensifying competition in the marketplace is forcing vendors to soften their approach to compliance -- and question if forcing a few dollars out of customers' hands with an audit is worth creating long-standing bad feelings about that vendor.

"New and rapid changes in the way software is monetized are disrupting traditional business models," said Baissac. "They require new ways of thinking. Providers need to move away from auditing and take on the burden of compliance."

Compliance managers in the audience were advised to begin moving away from a hard-line stance on auditing. For long-term success, a compliance program should instead focus on sales enablement activities.

"Having a little bit of compliance is a backstop to the conversation, but keeping the conversation on a sales standpoint and not taking the audit path is happening more and more," Atkinson said.

Customers, of course, don't react positively when threatened with an audit, particularly if they believe they're working within the terms of their licensing agreements.

"Ultimately, you might get some money, but your customers are going to make sure hell is frozen over before you get it," said Atkinson. "It's not a win."

Nodding his head vigorously, Collins agreed. "Forego a short-term compliance win. Get a long-term sales win while maintaining the relationship—a good faith element is critical in every agreement."

2. Taking greater responsibility for customers' compliance

Collins believes that most customers, at least in the U.S., don't intend to defraud their vendors. Licensing agreements are increasing complex and difficult to understand, particularly when customers are juggling a mix of on-premise and hosted applications from various publishers across the enterprise. Global installations with varying price points further cloud-licensing metrics.

The panel's experts agreed that software publishers and customers share the responsibility for maintaining compliance -- the degree to which each is responsible, however, is a contentious issue.

"It's 90 percent vendor and 10 percent customer," insisted Baissac. "It's too complicated. If we want them to be compliant, we have to give them the tools that make them compliant. It's our job to simplify."

He suggested vendors find new, more straightforward ways of pricing software and tracking usage, such as value-based meters that provide customers with a consistent way of measuring and reporting the use of software. He also thinks vendors should integrate controls into their software that makes it impossible to steal it.

However difficult to read licensing agreements may be or how convoluted their metrics, Grey puts the onus on customers to understand them. After all, they sign the contract.

"Compliance is here to protect intellectual property and revenue. Customers needs to understand how they're deploying and managing software. It's not a get-out-of-jail-free card just because [licensing] is complicated," he said.

Like Baissac, Grey encourages software publishers to become more proactive when it comes to protecting their software. No one can possibly imagine every potential use case of each application when it's written or when the licensing agreements are determined, he said, particularly as software is moved to the cloud, is deployed through different hosting relationships, and is used in new technologies, such as the Internet of Things. Nevertheless, he challenges vendors to stay ahead of rapidly evolving technologies in order to preserve their intellectual property.

"Have you considered what the next thing that the market will bring?" Grey asked.

3. Embracing the long-term value of customers

Predicting new game-changing technologies may be outside the scope of most compliance managers, but understanding economics—and human nature—is not. To that end, Collins advises compliance managers to look for value in the customer relationship that may not be immediately tied to their companies' bottom lines.

"We need to educate our sales force that gaps in compliance speaks to the value of our software. They can highlight those gaps and leverage that info to get better deals with customers," he said. "That awareness has a lot of value."

Only focusing on revenue may cost vendors dearly in terms of their relationships with customers and their reputations in the market.

"I can force you to pay me, but you will hate me. If you hate me and you have alternatives, you're going to look at those pretty hard," added Atkinson. "Are you driving such a hard line that your customers hate you?"

He recommends compliance managers transform their programs into a product brand strategy, pointing out that even industry titans like Microsoft are "starting to shift away from the big stick mentality."

Atkinson's perspective may seem extreme to some compliance managers, but he thinks that all market share is valuable to the vendor, even if the customer isn't paying for the software. That customer isn't dedicating his IT budget to competitors and may still become a paying customer if the software has become valuable to his business.

Compliance managers need to work with their sales teams and executives to determine the ultimate goals of their compliance programs: supplementing revenue, protecting intellectual property, engaging in long-term customer relationships, or wiping out piracy.  

To help compliance managers figure out the objectives of their programs, Collins asked several questions that hinted at an underlying shift in attitudes about compliance.

"What's the fundamental value that you're driving with customers? How long are you willing to wait for that value to come to play?"

Join us at our next event in Chicago for end user company software asset managers, the SAM Summit 2015, June 8-10. Visit SAMSummit.com.

Additional reporting contributed by Leslie O'Neill.

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