Risks and consequences of poor license management

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Licensing and the broader imperative for improvement IT Asset Management presents a challenge for many government agencies, especially at the state level.

A recent GovLoop media investigation revealed that agencies at all levels of government continue to fail to properly manage software licenses in line with the demands of the modern enterprise. The consequences of inefficient license management fall into three main categories: tax, security and operational.

Tax

This lack of visibility increases the likelihood that agencies will overpay or underpay for software licenses. Unexposed accounting errors tend to persist, compounding losses over time.

  • 57% of respondents said agencies pay for software that is no longer used; the same percentage of respondents said their organizations had more licenses than needed
  • More than 33% of respondents said their IT teams either don’t monitor usage or that they (the respondents) don’t know if the IT team is tracking.

Security

To appreciate the security risk of mismanaged software licenses, just scan the news about organizations that have fallen prey to known vulnerabilities exploited by cyber attackers. The inability to properly manage IT systems and address potential vulnerabilities was. a factor in attacks, but companies cannot fix hidden software vulnerabilities.

  • 56% of survey respondents indicated that their organization uses applications that are no longer supported by vendors
  • 44% agreed that apps that are no longer sold are used in some cases
  • Another 13% said end-of-service software is used a lot

Operational

Simply put, vendor audits are an integral part of running a modern IT business.

  • 74% of survey respondents reported one or two supplier audits per year
  • 14% reported three or four per year, and 12% five or more
  • Nearly 60% of respondents said their organization had not recently conducted a licensing compliance initiative to determine alignment between software licensing and actual software usage, or that they were unaware of the status of initiatives to determine the gap.
  • 54% of agencies surveyed have multiple licenses for the same software products across different divisions of the agency

Environments tend to become less neat over time as organizations grow, contract, or merge, further complicating license management. There are new employees, new vendors, new vendors and hardware, as well as departures of people, vendors, hardware, and software licenses.

The pressure to use some type of automated system to manage licenses comes from government mandates and the desire to avoid financial loss, security breaches, and compromised IT operations. In summary: poor license management is expensive.

The goal is transparency, a 360 degree view of licenses, their use and their access. Transparency through automated license management limits errors that inevitably occur when organizations rely on processes performed manually by human workers.

To find out more, see our Federal Software Licensing Optimization White Paper.

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