How can software licensing compliance impact a merger, acquisition or divestiture?
Any organization undergoing a merger, acquisition or divestiture (MAD) should undertake due-diligence in respect to their hardware and software assets and compliance. This is necessary to understand the impact on its business and any potential risk they may be exposing themselves to.
Some of the major software vendors closely observe the activities of their customers with regard to organizational change and frequently target those who have undergone any form of MAD activity. So, it makes good business sense to ensure you aware of the full implications of any organizational change on your software licensing position.
Understanding Software Licensing Compliance
To understand the impact you will need to follow a series of steps, which may seem obvious but are worth stating here:
This is normally the first step and will confirm what software is in scope of the MAD. Context is determined by what aspect of a MAD is being performed and who needs to be asked for what. It will start from the top down beginning with the areas of the business in scope and for each, ascertain the business services in scope.
Hardware and Software Inventory and Discovery
Is where all of these business services are explored to ascertain the hardware infrastructure required to deliver each one. Next, obtain clarity on the software that runs on these systems. Consideration needs to be given to system interfaces, as there may be indirect use of a system thought not to be in scope. Also, cloud or SaaS-based solutions may need to be brought into scope. The outcome will be a view of all computer hardware and software products in scope.
Entitlement Discovery and Inventory
Is where all entitlement relevant to the business is collected and collated. This can be a daunting task involving many people from different organizations and vendors, all depending on the circumstances and software asset management maturity of the entities involved with the MAD. This is key to obtaining clarity on licenses owned for the entities in scope and the terms and conditions that would be relevant in respect to the MAD.
MAD Agreement of Specific Strategy Options: Outcomes
This is the identification of viable options relevant to each vendor agreement and the products and services within its scope. It will map discovered software products to what entitlement already exists. Whilst in some cases there will be no option about how this is done, for others, there may be multiple agreements that provide entitlement for a software product, so mapping to the correct or optimal agreement is important.
Next, each agreement is reviewed to ensure in terms of the MAD the options available to the parties involved. Cost implications are critical as part of this to ensure, of the available options, the costs are clearly understood.
This information should be fed back into the due diligence team so that any implications on the overall MAD are understood.
MAD Agreement Recommendation and Execution
This is the work associated to sharing these outcomes with those that would execute the approach, for example, legal and procurement teams working with vendors. In some cases, the preferred outcome will be achievable, in which case there will be iterations until a way forward is agreed between all parties.
Certero consultants have in-depth experience of managing and supporting organisations in respect to hardware and software as they perform a merger, acquisition or divestiture due diligence.
If you are facing a MAD activity and are unsure about how best to proceed with regard to your software licensing position and ensuring licensing compliance, please get in touch with Certero today.