We are so pleased to announce our recent partnership with Revulytics, a leading provider of software usage analytics. You can read the press release here.

Article reposted with permission from Revulytics. Original article can be found here.


According to Gartner, analytics enables software providers to improve retention and revenue by “tracking how often and when the software (including specific modules) is being used, allowing identification of licensing compliance gaps.” Let’s consider how compliance analytics data can help ensure that your software license audits are more efficient and effective – while helping customers to view these engagements with a collaborative attitude.

1. Data can help avoid an audit

Some 83 percent of pirates either don’t know they’re using the software illegally or will become compliant with the right incentive, according to research from Microsoft and Adobe. Compliance analytics gives you actionable data and insights to quickly and accurately target license revenue opportunities. You can reach out to customers before an audit is even necessary and address unlicensed use before it gets out of hand.

2. Data validates the misuse and expedites the process

If an audit is necessary, having the data makes what could have been a very contentious process a more collaborative one. You know exactly where the overuse is, so you won’t waste time and resources sniffing it out, and can take quicker steps to reconcile it.

3. Data helps you frame the audit as a collaborative engagement

Accusing customers of unlicensed use doesn’t set the stage for a mutually beneficial relationship and long term customer value. Compliance analytics helps you frame the engagement as much more thoughtful and helpful: a usage assessment that will help them get an accurate picture of their landscape across subsidiaries, decrease security risks, improve TCO, and create a platform for innovation in the long run.

4. Data helps ensure strong executive buy-in and departmental alignment

Audits can be controversial within an organization, but done properly, they can generate revenue and improve customer relationships. Without buy-in from the right people who can direct less-willing parties, however, audit engagements can easily drag on. Data provides concrete evidence of noncompliance to ensure you have your organization’s executive buy-in from the start. This expedites the process and makes it less disruptive for the entire business. It also helps define goals, and ensures coordination among stakeholders who can delay or hinder the process. For instance, without careful coordination between those conducting the audit (especially when it’s a combination of internal and external resources) and the direct sales organization or resellers, you risk sales reps undermining the process by cutting a deal with customers that isn’t as lucrative in the long run.

5. Data helps develop a strategy for targeting misuse globally

Going into regions in which you have limited experience with limited local support to navigate the waters can cause problems. With clear evidence of misuse, you can identify and allocate the resources necessary to launch engagements in difficult areas. A strong command of the language and knowledge of the local business customs and nuances of the region are critical to success. In turn, there are some locations where IP laws are not held in the same regard, which will require a more aggressive approach. While a sales-based or legal-advisory approach may work well in India (which is working hard to shed its reputation as a top user of pirated software), a different combination of services will be required in Russia.

No one is excited to receive an audit notice, but with the right approach (and the right combination of skills, services and software), you can ensure customers meet audit notifications with a more positive attitude. Engagements are not disruptive to the business and position customers for future innovation with your products.


If you would like to learn more about how Connor and Revulytics can help you generate revenue from unlicensed software, contact us at info@connor-consulting.com today.

Strategic Partnership Combines Expertise and Technology to Deliver Path to License Compliance

 

San Francisco, CA – November 14, 2019 – Revulytics, Inc., a leading provider of software usage analytics, and Connor, a global professional services and solutions firm providing high-value software licensing compliance services combined with cutting edge technology solutions, today announced a strategic partnership. With the partnership, Revulytics and Connor customers will benefit from the combined expertise and technology from industry leaders that deliver highly effective, data-driven license compliance and audit programs.

The partnership brings together license compliance technology and services including Revulytics’ Compliance Intelligence data analytics and Connor’s audit services and automated audit and engagement platform to help software vendors generate revenue from the unlicensed use of their software.

“We are thrilled to partner with Connor to further strengthen our customers’ compliance programs and data-driven audits and educate the market on the overall advantages of implementing a strong software license compliance strategy,” said Joseph Noonan, president and CEO, Revulytics. “Revulytics industry-leading infringement analytics and data platform along with Connor’s automated audit engagement processes and services is a powerful combination that will drive new license revenue and success for our customers.”

“The synergies between Connor and Revulytics’ offerings are clearly evident and a great match for any software vendor that is looking to build or grow its data-driven auditing and compliance programs,” said Viresh Chana, founding partner, Connor. “We look forward to working with Revulytics to bring our customers solutions that will help them both monetize their license infringement data and accelerate the growth and efficiency of their compliance programs.”

 

About Connor

Connor is a global professional services and solutions firm focused on providing high-value software licensing compliance services and technology enablement to customers around the globe. What makes us different from our competitors is expressed in our motto: Unparalleled Experience. Inspired Outcomes. Our team of experts has decades of Big-4 and industry experience in providing clients with innovative compliance and software advisory solutions that have a direct and measurable impact on their bottom line. Learn more at www.connor-consulting.com.

 

About Revulytics

Revulytics offers cloud-based software usage analytics that give software producers deep visibility into how their products are being used and misused, providing them with actionable intelligence to generate revenue, optimize product development, and make data-driven decisions across their business. Its compliance analytics solution and turnkey services are used by leading software vendors to increase license revenue and globally reduce software piracy. Its software usage analytics solution provides valuable insight into product usage and environments, enabling product managers and developers to build better products. Revulytics software usage analytics has supported customer compliance programs generating more than $2.4 billion in new license revenue since 2010.

Revulytics is headquartered in Waltham, Mass., USA and serves customers worldwide. For more information, please visit www.revulytics.com, follow us on Twitter (@revulytics), or subscribe to our blog.

When it comes to licensing audits, and as the complexity of IT environments increases, staying on top of your entitlements to mitigate over-deployment will save you time and money. With the complexity of IBM’s software licensing methods, they are no exception. Over the course of IBM’s 100+ year history, IBM has become a conglomerate of many small companies acquired through M&A. As a result, IBM’s Software Licensing is infamously complex with a variety of licensing metrics resulting in millions of audit findings. With over 80 different metrics covering the whole scope of IBM’s products, IBM’s metrics are notoriously difficult to navigate and license properly for. With IBM software commonly deployed in enterprise data centers, understanding the whole slew of licensing metrics and compliance requirements becomes crucial to ensuring you are not paying unnecessary IBM licensing fees. To help you navigate through IBM’s license complexity, let’s get to know some of the metrics and challenges associated with IBM Software Licensing.

 

License Agreements – Understanding Entitlement and Product Use Rights

IBM has recognized the difficulty associated with understanding their product entitlements and have tried to centralize and simplify its licensing by creating the Passport Advantage (IPAA) program. Passport Advantage is a centralized program that uses a common set of agreements, processes, and tools rather than individual agreements for each of its products. However, you cannot solely rely on Passport Advantage alone, as it does not recognize any license purchases outside of the system. Furthermore, because Passport Advantage allows you to download products without restrictions, unmanaged downloads can expose you to over deployment risks. For any legacy purchases, you will need to present the contract or Purchase Order Entitlement (POE) to IBM. You will also need to account for product migrations to get a more complete, and more accurate picture of your IBM entitlements.

In addition to IPAA, IBM uses multiple other license agreements, each with its own set of terms and conditions that are applicable depending on how the product is licensed or deployed in the environment.  Each agreement has its own set of terms and conditions that are applicable depending on how the product is licensed or deployed in the environment. Thus, you’ll want to pay close attention to any changes that impact licensing across agreements.

 

License Models—Varied Metrics and Complexity 

IBM’s software products are frequently deployed across the IT infrastructure and supported on multiple operating system platforms, which increases the complexity of the environment. Managing the vast deployment of IBM products is a daunting task, but for the most part, licensing can be categorized into three major “buckets” – user-based, capacity-based, and other licensing. However, the main difficulty comes from tracking which product goes with the appropriate licensing “bucket.” We’ll now cover the most popular licensing metrics, starting with what is known as Processor Value Unit (PVU).

Processor Value Unit (PVU) – Introduced in 2006, PVU based licensing was created to take the processing capacity of the server into account to determine licensing, rather than relying solely on the number of cores. This change was made to account for the increased processing power of newer technologies, and the gradual shift towards virtualization.

According to IBM, a Processor Value Unit (PVU) is a unit of measure used to differentiate licensing of software on distributed processor technologies (defined by Processor Vendor, Brand, Type and Model Number). In many virtualized environments, certain cores and processors are partitioned, or segmented off to be used for VMs. This means that using the PVU metric under full capacity, a virtual application that only uses 12 out of 24 cores on a server, would still be licensed for all 24 cores under the PVU metric, rather than the 12 cores that are currently in use to support the application.

PVU metric calculations are by far the most complicated and have many moving variables, including the use of virtualization, processor name, server model, number of sockets,  and processor model. IBM created IBM PVU tables assigning core values based on processor architecture, vendor, brand, type, and model number as well as the total cores (number of processors x core per processor). These PVU tables publicly available on their website and show the model, processing capacity, as well as the associated PVU value for the available processing technologies (x86, RISC, and System Z).

Storage Value Licensing—For products licensed by storage data, IBM counts the deployment by ‘Tebibyte’ and not the default ‘Terabyte’, which is 90 percent of a Tebibyte. This confuses many customers as it is a nonstandard way to measure storage.

User-Based Metrics—Be sure not to overlook the user-based metrics, as it is very common to over-deploy IBM’s user-based software since there aren’t any built-in controls to restrict software usage.

Disaster Recovery (DR) Environments—Cold and warm standby servers are not chargeable. Therefore, you need to be careful around IBM’s classification of “hot standby” systems, which are servers performing work such as mirroring of transactions, updating of files, and synchronization of programs, etc. Machines deemed to be running in “hot standby” mode require the appropriate software licenses from IBM.

Full Capacity Versus Sub-Capacity Licensing—To account for increased virtualization, IBM introduced licensing by sub-capacity. Instead of licensing the product for the full capacity of the server or group of servers; it instead measures the capacity in use in the environment. This helps to reduce unnecessary licensing fees as servers are not licensed by their full capacity or total CPU cores.

While sub-capacity is available to customers who agree to the terms and conditions of the agreement, full-capacity licensing is the default unless otherwise agreed in writing with IBM. Given the cost and processing advantage of running IBM software on virtual servers, most businesses prefer to virtualize their IBM environments. However, by default the software is licensed by full-capacity or all processors and cores on the physical host (and server cluster in some cases) must be licensed, as opposed to just the VM or instance running IBM software, which is known as sub-capacity licensing. For a customer to be granted sub-capacity licensing rights, the customer must agree to the terms and conditions of IBM’s sub-capacity agreement.

However, there are two requirements to be eligible for sub-capacity licensing. First, the IBM License Metric Tool (ILMT) must be installed and configured within 90 days of first use of an eligible sub-capacity product. Second, a quarterly report must be produced through ILMT and available to IBM upon IBM’s request.

 

What you need to know about IBM’s License Metric Tool (ILMT)

ILMT is a free tool offered by IBM to measure the metrics necessary for IBM software licensing. ILMT has several functionalities, including software discovery and identification, signature discovery, reports, license usage monitoring, and producing metrics for IBM licensing. In other words, ILMT is similar to a SAM tool that is built specifically around IBM’s PVU based products.

As it relates to licensing, the most important features of ILMT are the reports, license usage monitoring, and licensing metrics. ILMT calculates the maximum core capacity of the server that is available to the installed IBM software, and then determines the number of PVUs or other processor-core entitlements that are required. Given this information, ILMT can produce reports that contain a detailed summary of all the machines in your environment. These are the reports that must be submitted to IBM to be eligible for sub-capacity licensing.

While these features are undoubtedly valuable, they are not perfect. Part of the challenge with ILMT is that it requires significant effort to properly install and configure to capture all of the necessary information. ILMT relies on an agent being installed on a target machine, whether physical or virtual, in order to report deployment data to the ILMT license server. In cases where an agent cannot be deployed to certain enterprise systems, there needs to be a workaround process to gather the installation data from the machines.  Furthermore, many customers find that despite having ILMT installed, their coverage across the environment is incomplete, or they did not properly account for bundled software. The scans themselves can also fail, as there have been known issues with disk space, compatibility, and credentials. Be sure to be aware of these potential pitfalls when using ILMT and consult an expert as needed.

Other leading SAM tools have developed capabilities to measure IBM product use, specifically for the PVU metric. However, if used in place of ILMT, the tool outputs should be reviewed to ensure PVU calculations for both full and sub-capacity licensing are accurate, and product bundling is being addressed by the non-IBM solution.

Given the complexity and dynamic nature of IBM’s licensing models and technology portfolio, it’s very important to understand the licensing metrics to ensure that you mitigate over-deployment, as many customers have been subject to millions of dollars in license fees resulting from an IBM software audit.

 

While this article is not an exhaustive list of IBM licensing metrics or a complete audit defense playbook, we hope that this provides some clarity and insights around IBM’s complex licensing models and ILMT to better prepare for your next software review or IBM renewal. If you would like more information on how Connor’s Software Advisory Services may help reduce your vendor licensing risks and optimize IT spend, please contact us at info@connor-consulting.com.

For companies with limited resources, deciding to start a compliance program can be tricky. As we’ve outlined in our previous blog post, there are good reasons to establish a compliance program for your company, even if it’s small or medium-sized.

Despite these benefits, many companies are concerned about how a compliance program will affect their relationships with their customers. Executives weigh the responses to questions, such as “How will a compliance program impact my customer relationships? Will auditing a customer damage my relationship with them?”

These are legitimate concerns for companies to have, especially when they are considering establishing a compliance program. The inter-company dynamics that are at play, and which have oftentimes opposing motivations, are manifold. For example, when expanding and growing your company’s footprint within your customer base, the sales division is typically risk-averse and tends to avoid anything that may jeopardize their sales efforts. From their point of view, customers may not want to place new orders if they get audited for their prior purchases. This is an old argument that has been proven to be wrong. The notion that your customers will pull their prior investments and go to your competitor makes no economic sense. While working with all our clients, we have not found evidence that this is the case. Here’s why:

  1. Your customers choose your product over your competitors for good reason. There is value that your product or service offers, and an audit of books and records will not diminish this fact.
  2. No CEO or CFO will ever consider killing a prior investment for the sake of vengeance. They have invested thousands, if not millions, of dollars in implementing your offering and moving to a competitive solution would effectively destroy this capital and damage shareholder value.
  3. Auditing is a standard business practice across all industries. Let’s face it – audits are just a part of life and your customers are being audited by other vendors as well.

Although customers/licensees may try to use the concerns above as scare tactics to discourage audits, the reality is that compliance is—and has been—a fact of business life for a long time. Done correctly, the risk of losing customers or business can be mitigated, and your customer relationships will remain intact.

In fact, contrary to popular belief, most compliance programs strengthen your relationships with customers, rather than harming them. By nature, compliance audits require more regular touchpoints and communication between both parties. While some of these touchpoints will be focused on the audit, both parties can leverage the frequent interactions to re-evaluate future business needs and dynamics. This, in turn, can help identify business opportunities tailored to your customer’s immediate and future needs.

As the licensor, a key component to setting up a successful compliance program that will not harm your customer relationships is effective internal selling. Your main goal will be to secure C-level buy-in and support. To begin with, you’ll want to articulate the right value propositions for the program and remove any fears that your internal stakeholders may have. Furthermore, demonstrating the value of a program through a successful pilot, or getting testimonials from industry peers, will help you win over your critics.

At the same time, you’ll want to be sure you are deploying best practices when it comes to your compliance program. At Connor, we leverage our compliance expertise to help you get started and set up an effective compliance program with the industry’s best practices.

To learn more about how to get started on a compliance program with Connor, please contact us at info@connor-consulting.com.

The function of License Compliance has been around for years to combat the increasing global problem of unlicensed/incorrectly licensed software and brand counterfeiting. Despite many companies tackling this via License Compliance and Anti-Piracy programs, many more companies are not doing anything. Simon Gadd, Partner at Connor, takes an introductory deep dive into License Compliance to educate more companies of what it is, why companies leverage it, and how it can benefit organizations that generate revenues from licensing.

Here are some additional resources:

Links: BSA/IDC 2018 – Global Software Survey – https://www.bsa.org/reports/2018-bsa-global-software-survey

Links: Global Counterfeiting Report 2017 – https://www.researchandmarkets.com/research/hzjb9c/global_brand?w=4

 

Interested in learning more about License Compliance best practices and how Connor can help you drive licensing revenue? Contact us at info@connor-consulting.com to learn more.

Licensors collect significant revenue through effective license compliance programs.   However, the direct revenue generation is only a fraction of the value that is realized by licensors who have implemented a robust compliance program consisting of targeted audits and data analytics.  Several of the critical but less obvious benefits that leading licensors are capturing through their compliance efforts include:

Streamlining internal processes

Working with a seasoned partner with years of compliance program experience — both from the industry as well as the audit — can provide a massive boost to operational efficiencies. Connor has worked with our clients to implement best practices for the tools and processes utilized in their royalty analysis and collection process.  These best practices have proven to increase the accuracy of analysis, allow teams to provide better visibility and quality of executive reports and summaries to the business while minimizing manual effort, and enable internal resources to focus on value-add activities (i.e. management dashboards and reports and root cause analysis rather than manual data consolidations or manipulation).

Addressing internal control issues

A license compliance program can identify control gaps and also potential process improvements within the order-to-cash process. An example of a control gap is licensees who have signed a license agreement but never reported royalties to a licensor.  Connor has assisted clients with analyzing this population and providing creative guidance to address this control gap while identifying additional revenue for our clients.

Clarifying contractual terminology

Under reporting of royalties is a problem that is difficult to harness. In fact, around 90% of our license compliance audits identify under-reporting of royalties. While in some cases, this under-reporting is due to intentional underpayment and non-compliance with contract terms, it is more common to see under-reporting due to manual processes at the licensee or an inaccurate contractual interpretation. A robust audit program will help a licensor identify commonly misused or misunderstood agreement terms, and this valuable insight can be passed back to the business to explore clarifications of these complex contract terms. Clarifying these contract terms not only supports the accuracy of future reporting, but it also helps the licensor identify additional licensees who may have similar issues so that these issues can be addressed before the financial impact balloons to an amount that is challenging to resolve amicably.    

Gaining revenue assurance during licensee M&A activity

Operational changes during mergers, acquisitions, divestitures, or other forms of operational restructuring frequently cause issues in licensee reporting and as a result friction in the licensor/licensee relationship. An active compliance program can help clarify the obligations over the period prior to and up to the organizational change and establish the relationships with the contacts and departments who will take over the royalty compliance process at the new entity. Additionally, an audit during this period can mitigate the operational challenges and control deficiencies caused by these changes and lay the foundation for a continued mutually beneficial partnership.

Choosing a partner to lean on

To maximize the potential benefits of a license compliance program for your organization, you need an experienced partner. Connor Consulting is a leading independent audit firm that specializes in contract compliance. Connor is a strategic advisor to industry leaders such as ARM, HDMI, Dolby, and many others. Our goal is to ensure our clients maximize ROI and program impact. In fact, Connor’s clients have seen an ROI of 10x every dollar they have spent with our firm and have also seen revenue contributions by license compliance efforts increase up to 24% of their total revenue.

 

If you would like to learn more about our services and how we can help you with your compliance programs, please contact us to explore the benefits of a contract compliance program for your organization:

+1 (415) 578 5002 or fill out an inquiry at http://www.connor-consulting.com/work

 

About the Authors

David Gettelman is a director at Connor Consulting Corporation. David has over 10 years of experience in the technology, semiconductor, and consumer electronics industries.

Ana Newman is a manager at Connor Consulting Corporation. Ana has over 7 years of experience in audit, risk, and compliance services across the technology and finance industries.

They have managed hundreds of IP-related audits and have helped numerous companies collect lost revenue and improve their control environment and licensee base relationships. Connor Consulting has global teams with an average experience of 10+ years that specialize in IP royalty audits, third-party review, contract compliance, and software asset management and license compliance.

SAN FRANCISCO, Sept. 13, 2018 (GLOBE NEWSWIRE) — Connor (http://connor-consulting.com/), a global leader in contract compliance and software licensing announced the appointment of Jay Buck as a Managing Director (MD).

As Manager Director, Buck will lead a team focused on expanding the company’s Software License Compliance and Software Advisory Practice, including business development and client delivery for key accounts.

“Jay’s experience leading one of the world’s largest vendor compliance programs is unrivaled,” said Simon Gadd, Partner of Connor. “Whether its organizations seeking to implement a compliance program or established programs looking to scale, Jay’s insights will provide immense value to those organizations seeking fast results.”

Most recently, Jay was a Senior Director of License Verification at Micro Focus, helping to drive the integration of the heritage Hewlett Packard Enterprise (HPE) and Micro Focus compliance teams into one cohesive unit.  Prior to this, Jay led the Worldwide HPE Compliance Organization, working with customers to ensure conformity to HPE’s software licensing terms. Jay’s previous experience includes 11 years at Adobe Systems holding various positions in sales and leadership roles in compliance including focused efforts in EMEA and APJ.

“I could not be more thrilled to join the Connor team.  After working directly with them for the last five years I was always impressed with their knowledge, professionalism and efforts when working with HPE and our customers.  This is an extremely talented team with Big-4 experience, global reach and the confidence of Fortune 500 companies,” Buck stated.  “With Connor there was always a deep sense of trust when working with them and in today’s world that is very important.  I am excited to leverage this team and bring their skills to other companies that would benefit from Connor’s global experience and service offerings.”

The Software License Compliance Practice led by Simon Gadd, Partner at Connor, is providing the following professional services to companies:

  • Software License Compliance outsourcing services
  • SMB large-scale campaign management
  • Engineering microservices for complex data analysis and reporting requirements
  • Entitlement analysis and targeting assessments

For more information about Connor and Jay Buck, visit http://www.connor-consulting.com/.

To view original publication, visit https://bit.ly/2NbKJ0p.

Top 5 Mistakes Made During A Software Audit

According to Gartner, software audits are increasing for organizations of all sizes and industries, as IT vendors look to protect their intellectual property and augment traditional sales streams. Suppliers and their compliance teams continue to leverage new tactics to uncover over-deployed licenses that can be converted into a revenue opportunity or an unplanned expense for their customers.
Companies typically undergo 5 or less software audits per year, so it’s not surprising that internal resources and product owners are caught off guard and unprepared for information requests made during a license assessment. Although many enterprises have invested in Software Asset Management (SAM) tools and programs, Connor Consulting continues to observe that companies tend to make 5 common mistakes when undergoing a software review, which frequently leads to excessive license and support fees being paid to vendors.

In no particular order, below is a summary of the Top 5 mistakes made by enterprises when being audited:

1. Formal Audit Response Team (ART) is not in place.
Communication is not centralized through a designated or formal team, commonly referred to as an ART. Vendors and their auditors often have direct access to IT administrators and operations personnel, which can lead to over-sharing of information or data collected that’s not relevant to the scope of the software audit. The ART should designate a single point of contact for any license review to prevent information leaks that increase adverse findings and software over-deployment risk exposure.

2. Entitlement data is not requested up front.
It is common business practice for vendors and auditors to withhold software entitlement data from customers once an audit is initiated or until the reporting phase of the review. Having a complete picture of your software purchases is essential in ensuring compliance with a given IT supplier agreement. While vendors don’t always agree or aren’t forthcoming with the records, it’s a leading practice to leverage relationships with your account teams and/or resellers to obtain complete downloads of your license entitlement data. Ideally, these requests for major IT vendors should be made prior to any audit, as part of normal SAM operations.

3. Data provided to vendors and auditors contains too much information.
During a kickoff or scoping meeting, the auditors will talk through the data collection procedures. They generally provide flexibility as to how they’ll extract pertinent software data from existing tools and/or their own custom shell scripts. More often than not, the output contains information that may not be directly relevant to the scope of the vendor review. It’s important for customers to review the code of any custom scripts and verify the key words being used for software discovery queries, as they could produce data about users, systems or other vendors that should not be divulged.

4. Audit findings, calculations and assumptions aren’t challenged by customers.
After the vendor deployment data is collected and reconciled to the customer’s purchase entitlements, the auditors will generate a compliance table summarizing the auditee’s effective licensing position, marking any license issues in red. In many cases, companies don’t try and self-audit the findings, check the Excel formulas/calculations and verify whether the assumptions are reasonable, given the existing product install base and other IT environment factors. Failure to do so can cost them an exorbitant amount of software and support fees upon settlement of the audit.

5. Future business or pending vendor purchases aren’t consistently leveraged.
Yes, the vendor usually has the right to audit you and verify compliance with an existing software agreement; however, your company may have deal leverage that is not being used to influence the outcome of the review. For example, there could be a sizable investment in flight or being considered with the incumbent IT supplier. Creating an alignment wedge between the sales organization and compliance function is a well-known best practice, but it’s not routinely employed enough by customers under review. If the commercial opportunity is considered significant or strategic (e.g., cloud migration, contract renewal, etc.), the timing, scope and results of the assessment could be impacted in your favor, saving your organization cycles and cash.

For more information regarding the above or to learn how you can repeatedly avoid these costly mistakes through effective Software Asset Management and leading Audit Coaching practices, contact Connor Consulting at http://www.connor-consulting.com/.

Connor Consulting has global teams with an average experience of 10+ years that specialize in contract & license compliance, software asset management, IP royalty audits and 3rd party reviews.

About the Author

Rich Reyes is an Executive Vice President (EVP) for the global Software Advisory practice at Connor Consulting. He brings 20 years of thought leadership around software licensing & compliance, technology asset management and IT sourcing. Rich has performed hundreds of software audits on behalf of major vendors, established an ITAM/SAM practice for a Fortune 100 retailer and continues to advise companies on practical ways to mitigate IT supplier risks, reduce software total cost of ownership (TCO) and optimize licensing environments. He’s also a frequent speaker at industry events.

San Francisco, California., July 10, 2018 — Connor (http://connor-consulting.com/), a global leader in contract compliance and software licensing today announced the appointment of Rich Reyes as Executive Vice President (EVP) responsible for leading the company’s newly formed Software Advisory practice, including operations and client delivery for key accounts.

“Rich’s deep experience in software license compliance, asset management and IT spend management gives him a unique perspective that our clients have been clamoring for,” said Viresh Chana, Founding Partner of Connor. “ His expertise and experience will be a competitive advantage to our Software Advisory clients as Rich will bring valuable insights for our clients as they tackle their IT risks and software audits.”   

Most recently, Rich was a Managing Director at ClearEdge Partners, providing software asset management (SAM), cloud migration license readiness, and IT contract optimization services to Fortune 100 clients.  Prior to ClearEdge, Rich created and ran the SAM department at Safeway, later acquired by Albertsons Companies. He helped Safeway navigate through the IT supplier and contractual risks of M&A and was responsible for the IT Asset Management and Strategic Sourcing functions of the combined company, which had roughly $60 billion in total annual revenue.  Rich has a Big-4 background and also spent several years in the software industry overseeing customer audit programs.

“I am incredibly excited to join the Connor team, filled with an amazing group of thought leaders and consultants worldwide, who bring extensive Big-4 experience and industry insights from Fortune 500 companies,” said Reyes.  “Our practitioners are deeply versed in contract compliance, software licensing and SAM, but I truly believe it’s our commitment to delivering actionable insights and inspired outcomes with an innovative client approach that sets us apart from our competitors.”

With the launch of the Software Advisory practice led by Reyes, Connor is providing the following professional services to companies:

  • Audit Playbook & Defense
  • Software Asset Management (“SAM”) Services
    • Program Design & Implementation
    • Program Fitness & Assessments
    • Practice Audits & True-Ups
    • Managed SAM
  • Cloud Migration Software License Readiness
  • M&A Software License Preparedness
  • IT Contract Optimization

For more information about Connor and Rich Reyes, visit http://www.connor-consulting.com/.

Debunking myths about license compliance audits

Whether through intentional under reporting, gaps caused by outdated or manual processes, or simple human error, many licensees do not accurately report payments due under their license agreements. Given the potentially significant financial benefits of a license compliance program to a licensor’s organization, any company that generates royalty and/or license revenue should evaluate whether a license compliance program makes sense for it. During this evaluation, you may encounter several common misconceptions about license compliance audits. With the background below, you can confidently dispel these common misconceptions and make an informed decision as to the viability of a license compliance program for your organization.

License compliance program myths:

  • License compliance programs are costly and inefficient
    This myth is perpetuated based on a view of long and costly audits. However, those licensors who have partnered with experienced firms to structure a license compliance program that fits their licensing model and licensee base have in fact been significant revenue drivers for their organizations. Historically, my clients have seen a return on investment of 10x every dollar they have spent with my firm. In fact, my clients have seen up to 24% of their total revenue driven by license compliance efforts. These returns have been achieved by taking a data driven approach to compliance and utilizing a variety of audit techniques to complement the traditional full scope onsite audit (i.e. limited scope audits, desk audits, market data, etc.)

 

  • Launching audits will damage my relationship and future business prospects with my licensees
    This myth is perpetuated based on the view that an audit would only be launched at specific licensees where there is significant mistrust, and the audit is followed by heated negotiations regarding unpaid amounts. In fact, license compliance audits are such common practice that I have seen cases where a licensee requested a short delay in the audit visit since they had four other licensors who launched audits prior to my client. Additionally, partnering with an experienced audit firm will lead to an efficient audit process that can provide value to the licensee in understanding gaps in their own processes. Over 10% of my firm’s clients have actually been companies whom we audited for a licensor, which helped these companies see the strategic value in a well-run license compliance program. Finally, the results of the audit can be balanced with other strategic priorities at the licensees. Even if the decision is made to not pursue certain findings due to their impact on future business deals, the knowledge gained during the audit (for instance of differing interpretations of contract terms) can be valuable in structuring future deals across the licensee base.

 

  • I have trustworthy licensees, therefore a license compliance program is unnecessary
    This myth is perpetuated by the misconception that all audit findings are driven by a licensee who is actively avoiding paying the proper amounts under their license agreement. In fact, a large portion of audit findings arise based on unintentional errors made by the licensee during reporting, or differences in interpretation of a contractual clause. In my experience, over 80% of license audits resulted in an under reporting of royalties. A large driver of the under reporting was the licensee using manual processes to identify royalty bearing products, and calculate the royalties due. Therefore, the reality is that even with the most trustworthy and ethical business partners, audits can uncover significant under reporting of royalties.

 

  • My budget for a license compliance program is small, therefore a program wouldn’t make an impact
    This myth is perpetuated by the misconceptions that a license compliance program is solely audit driven, identifying the right licensees to audit is a very low percentage exercise, and an audit’s impact is limited to the under reported amounts identified at the specific licensee. The reality is that effective license compliance programs use a number of techniques outside of audits to identify revenue. Additionally, leveraging the right data within your organization along with the market data will provide a high likelihood that your limited audit budget will be spent reviewing the licensees at highest risk of under reporting. Finally, licensees within a given industry tend to be very knowledgeable within their space. News of an active license compliance program at a specific licensor will travel fast throughout the industry and may lead to other licensees reviewing their reporting to identify any gaps in anticipation that they may be subject to an audit in the near future.

A well-run license compliance program is self-sustaining and provides significant value to a licensor’s organization in both the short and long term. My goal in debunking the above myths is to encourage licensors to explore the potential of a license compliance program for their organizations as my experience has shown that a program tailored to a licensor’s unique circumstances can be instrumental in an organization’s profitability.
To maximize the potential benefits of a license compliance program for your organization, you need an experienced partner. Connor Consulting is a leading independent audit firm that specializes in contract compliance. Connor is a strategic advisor to industry leaders such as ARM, HDMI, Dolby and many others. Contact us today to explore the benefits of a contract compliance program for your organization:
+1 (415) 578 5002 or fill out an inquiry at http://www.connor-consulting.com/work

 

About the Author
Viresh Chana is a partner in Connor Consulting Corporation. Viresh has over 20 years of experience in the technology, semiconductor, and consumer electronics industries. He has managed hundreds of IP-related audits and has helped numerous companies collect lost revenue and improve their control environment and licensee base relationships.
Connor Consulting has global teams with an average experience of 10+ years that specialize in IP royalty audits, third party review, contract compliance, and software asset management and license compliance.