The SCG Blog

How Do You Build a License Compliance Program?

June 17, 2016


Jason Swan
Managing Director


Some number of years ago, a colleague of mine was on a Royal Caribbean cruise – Adventure of the Seas – a decent-sized (1,020 feet) ship. As they approached a port of call in St. Thomas, the captain of this substantial vessel felt compelled to call attention to a nearby “boat” also in port – the 454-foot Rising Sun yacht that at the time belonged to Larry Ellison.

Larry Ellison's Rising Sun Yacht by Svedenhaus at the English language Wikipedia, CC BY-SA 3.0

Now, that boat was so big, had Johnny Depp (as Jack Sparrow) and his crew climbed aboard, Ellison may never have even known. But the company he built has always been well aware and on top of those pirating its software anywhere across the globe. Oracle’s compliance program boasts 450 people in 114 countries, working with more than 15,000 customers a year. For mega vendors like Oracle, license management has always been a big business – and a lucrative source of revenue (as evidenced by said yacht).

Most software vendors aren’t big enough to chase pirates on their own yachts. The lack of resources to seek out and mitigate noncompliance is the biggest challenge smaller vendors face in trying to institutionalize compliance programs. Unless you’re Oracle and have people in every nook and cranny on the globe, building a compliance program by relying entirely on your own devices is a bear.  But that doesn’t mean that Ellison-like opportunity (relatively speaking) isn’t still available to the rest of us. With the right strategy and support, uncovering piracy and under-licensed software is a business opportunity for everyone – even your customers themselves.

Develop a strong foundation for building a program

Almost every call I get goes something like this: “we know our software is being misused, but we don’t know how to engage the customer.” Vendors either have data gathered through piracy business intelligence software, or they have softer data – perhaps they’ve been monitoring mergers and acquisitions, technical support logs or social media channels. They don’t have the personnel, or don’t know how, to go after piracy and software misuse themselves.

You could have all the evidence of piracy or misuse in the world, but without the right foundation for building a compliance program, you won’t see a dime of that money. As we start to engage with our clients, there are certain pillars that need to be in place to ensure the partnership is successful.

Step 1. Create the right culture

The single biggest factor in a building a successful compliance program is ensuring it has executive buy-in. If the overall culture of the company is supportive of the program, it will go well. Ensuring compliance touches so many different departments – from the sales rep who owns the customer relationship, to the legal department that can validate contract language, to back office support to gather the appropriate documentation on the contract terms. The importance of everyone working toward the same goal needs to be communicated from the top down.

Step 2: Ensure strong communication

Communication is the key to a shortened sales cycle and a smooth engagement model. Everyone on the team must understand and completely buy-in to what we’re all trying to accomplish – which is ultimately to make more money for the company.

The first thing an infringing customer is going to do is call the person he is most familiar with – asking for a favor, or for more time, or trying to cut a quick (and ultimately less lucrative) deal with his reseller or sales rep.

Someone internally needs to have command and control of the distribution model, to communicate with all of those parties and mitigate any internal politics. I prefer the project owner be in sales or have a sales background – the ability to look out multiple quarters as a long-term, strategic thinker.

Step 3: Stay confident

There are a lot of excuses your customers will use or favors they’ll seek to try to delay things. But with strong executive support and a focused communication, the best and most successful customers don’t allow nonsense to creep into the dialogue. I can’t tell you how many times I’ve heard the hollow threat that – “I’ll rip out everything and buy your competitor.” It can make even the most seasoned purveyor of software skittish. But stay strong that’s a costly and unlikely scenario for your customer, who would rather view you as their partner in innovation.

Above all, remember that reining in pirates pays off – not only for you, but for your customers. In the BSA’s latest Global Software Survey, the United States had the lowest piracy rate (17 percent) but also the highest commercial value of licensed software ($9.1 billion). Your customers benefit from the cost avoidance, cost savings, and risk management ensured in bringing their entitlements into compliance.

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