Maximize the Impact of Your License Compliance Function

License compliance efforts are an essential tool for any organization with significant licensing revenue. The license compliance function ensures that the organization is collecting the revenue it is entitled to under its license agreements and maintains a level playing field for the organization’s licensees.

The license compliance function is facing growing challenges of trying to do more with less – whether it is a ‘one-person team’ leading all license compliance efforts, or a small group covering the compliance function for hundreds or thousands of licensees. Your organization’s compliance strategy will have a significant impact on the return on investment generated by the compliance team, which will impact how the compliance function is viewed within your organization and partners.

The most successful license compliance programs focus on the following key areas:

Coverage of licensee base rather than a focus on a handful of the largest licensees

It may be tempting to focus license compliance efforts on the small group of licensees that drive the majority of your organizations’ licensing revenue.  However, focusing on these top licensees exclusively can lead to significant compliance issues throughout your licensee base. To ensure that your compliance efforts maximize revenue recoveries, focus on the following targeting approaches:

• Perform targeting across your licensee base to identify the right targets to maximize the ROI on your audit activity. The right partner can help structure the right quantitative measures to combine with your subjective organizational insights. Don’t just focus on your largest partners – identify ‘low hanging fruit’ across the licensee base.
• Identify gaps in reporting or submission errors or delays that could be signs of reporting issues/challenges
• Perform event-based targeting for compliance efforts – evaluating risks and potential issues stemming from acquisitions, divestitures, etc.
• Finding the right partner with the industry, data, and contract experience to help supplement your internal knowledge and resources.

Use of multiple compliance tools, going beyond traditional full scope audits

Traditional full scope audits should not be your only tool, as they take up a relatively high amount of your team’s time and budget compared to other valuable ‘lighter touch’ tools that provide significant value with more flexibility on timing and spend.  Therefore, full scope audits need to be carefully targeted. Supplements to full scope audits include:

• Data analytics on self-reported data from your contractual partner
• Utilizing tools that help triangulate public data and self-reported data
• Performing continuous monitoring on your partner base to identify anomalies in reported data
• Utilizing ‘light touch’ or ‘single issue’ audits to address specific compliance risks with limited procedures (expanding procedures if significant risks or issues are identified during the initial analysis)
• Determine if an audit is necessary to collect the missed revenue/overpaid amounts – in some cases, if only one or several specific issues are identified, direct interaction with the partner can address the issues without the need for an audit

To discuss license compliance strategies, and how they can drive material revenue for your organization, contact industry leader Connor Consulting at slc@connor-consulting.com.

‍