So, who’s in charge of your software licenses? - Part 2

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Failure to update
This is not simply a matter of copyright. Hosting companies trip over their shoelaces when it comes to software in ways that involve no intellectual property theft — and find the trouble is just as damaging.

“One of our clients had its website crash repeatedly as a result of the hosting company running incompatible versions of out-of-date software,” recalls Bates. “We successfully terminated the hosting agreement based on these occurrences, which cost the hosting company tens of thousands of dollars in lost revenue. The negligence of a hosting company utilizing obsolete versions of software is something litigators dream about at night. I know of one hosting company that had its future put in jeopardy due to outages resulting from running incompatible versions of software.”

“Don’t immediately upgrade to the latest version of NT/2000 just because Microsoft launches it and says it’s the greatest”

Automatically upgrading software can be almost as dangerous. A failure to properly test new versions and new products could result in a systems meltdown. “Don’t immediately upgrade to the latest version of NT/2000 just because Microsoft launches it and says it’s the greatest,” says Jeffrey Cohen, president of ImageWorks (imagesites.com), a design and Web hosting company. “It could cause some other applications on your server to fail with a ‘No longer compatible’ response. It’s better to have a testing environment (a duplicate server that you can deploy new technologies on), test them, see how they impact your environment, and develop an upgrade plan.”

Defensive licensing management

Better software management is a popular concern, and companies are looking to automation to avoid mistakes and botched purchases. ASAP Software (www.asap.com), a software licensing services provider, offers a groundbreaking, comprehensive license management tool for its customers. ASAP eSMART automatically tracks software on every device in an organization’s network, compares it against a company’s license purchases, and reports on whether they are over or under on their licensing purchases. ASAP eSMART also provides hardware inventory tracking.

“Software management is more than knowing what applications are installed,” says Harry Zoberman, senior vice president at ASAP. “It requires establishing and enforcing company-wide standards, as well as closely monitoring software licensing. Start by asking: ‘How many applications are you running in each department? How many copies of each application are installed throughout your enterprise? Are you using all of the applications you own? How many systems are no longer used that still have software installed? Can applications and licenses be transferred from unused systems to new systems coming in?’ If you can’t answer all of these questions, you’re either losing money by purchasing more than you need or you’re in jeopardy of failing a license audit.

“Organizations that have recently completed large mergers are particularly vulnerable because they often don’t have the time or the resources to conduct full audits,” adds Zoberman. “Since hosting companies typically use a number of high-end applications for development, security, encryption, and data storage, they must maintain accurate software and hardware inventories. When you’re paying in the five- and six-figure range for highly advanced encryption systems, you need to know exactly how many licenses to buy.”

Software licensing is more than just a legal complication, it is also an opportunity to bolster hosted offerings. Zend Technologies (www.zend.com) recently introduced Safeguard Suite, which helps enterprises manage the commercial licensing and distribution of open-source scripting language-based applications while protecting intellectual property. Doron Gerstel, president and chief executive officer at Zend, says more and more hosting companies are turning to these kinds of automated tools to ensure their operations are legal and efficient, and their platforms are license-friendly for content providers.

“Until today, hosting companies have focused primarily on server-based hardware and software services to enrich their offerings: bandwidth, disk space, scripting languages, database support, and so on,” Gerstel says. “Of course, it’s unavoidable that these basic services slowly become commoditized. License-friendly platforms are a no-brainer. Web developers are increasingly focusing on protecting their own intellectual property, and they are more hesitant to deploy on hosted sites if they cannot electronically license their code. In the open-source world, I’ve seen many of my customers limit their distribution intentionally, in order to protect and ensure their future revenue. Given it takes no direct or infrastructure costs to enable clients to protect their code, the choice here is obvious.”

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