Organisations are unprepared for software license compliance risks arising from virtualisation

As the server virtualisation, desktop virtualisation and application virtualisation trends continues to take firm root within organisations globally, a new Flexera Software Survey, prepared jointly with IDC, has found 43% of organisations do not have sufficient processes and automation in place to manage their virtual licenses, placing them in substantial risk of falling out of compliance with their software licenses.

“While server, desktop and application virtualisation provide tremendous operational efficiencies to organisations, each vendor has unique, evolving and frequently opaque licensing rules around virtualisation. If sufficient measures are not taken to manage and optimise those virtualised licenses, companies may be vulnerable to substantial ‘true-up’ penalties if they are audited by their software vendors,” said Amy Konary, Research Vice President - Software Licensing & Provisioning, IDC. “In one instance, I am aware of a global enterprise that saved $4 million in hardware through virtualisation, but it cost them $52 million in a resulting software license compliance issue.”

Growth in Virtualisation & Audits Suggests Noncompliance Windfall for Producers
The survey points to both the increasing penetration of virtualisation within organisations, and the increasing frequency of vendor software license audits, underscoring the vulnerabilities enterprises will face if they do not take additional steps to more strategically manage and optimise their virtualised applications. According to the survey, 56% of enterprises (up from 51% in 2011) report that 41% or more of their applications have been virtualised using server virtualisation, and 24% say that between 10-25% of their apps are delivered though desktop virtualisation (VDI).

The survey also reveals that application producers see virtualisation as a new revenue opportunity. 50% of producers indicated that over the next 18-24 months they will be changing their licensing models to accommodate virtualisation. When the producers were asked why they change licensing models, the overwhelming majority – 69% -- said it was to generate more revenue.

Where will some of that additional revenue come from? According to the survey, 17% of producers currently rely upon trust-based licensing coupled with vendor-compliance audits. Looking into the future 18-24 months, this method of licensing and enforcement is expected to increase by 11% – suggesting an acceleration of the audit trend.

“Our customers have been reporting a major uptick in the frequency of vendor compliance audits, underscoring the strategic importance of continual compliance, and continual license optimisation in reducing financial risk,” said Jim Ryan, Chief Operating Officer of Flexera Software. “When organisations have the best practices and solutions in place to optimise their virtual licenses, they will know ahead of time the impact that virtualising their applications will have – allowing them to minimise their virtualisation costs, and risk.”