Is Licensing Complexity Eating Your Customers' Budgets?

software license agreement


IDC have recently released 2016 predictions in the Software Pricing and Licensing division via this blog post. Not surprisingly, the research and market intelligence firm forecast 21% growth in the software subscription revenue in 2016.

The focus however, for this post is Prediction number 2; software license complexity is anticipated to indirectly cost organizations an average of 25% of their software budget.

Amy Konary, who penned the article mentions that software license “complexity leads to additional costs in part due to scenarios when organizations “license up” to mitigate compliance issues, but that costs can also result from non-compliance as well”.

The problem facing customers is derived from the challenges of inadequately understanding the license arrangements and managing software license installed base. This, Konary comments is in part due to the sheer volume and different types of contracts, which is ultimately leading to wasted budget on additional licenses or penalty fees.

It seems that pressure on vendors to reduce the complexity of their licensing arrangements has over the last few years been debated (see related article here), but based on this recent prediction, the problem still seems to plague organizations especially in regards to large enterprise level software contracts.

This is where the channel can play a vital role.

As VARs, you sit between vendors and the end customers, and are uniquely positioned to proactively assist your end customers to manage their software licenses in two specific ways:

Become the expert advisor on the software license arrangements of your specific vendors

For example, learn everything you can about the compliance conditions. The more time you invest in understanding these requirements the more you can pass this information on to more of your customers.

Since, it’s likely you manage multiple customers, you will have a “knowledge economy of scale”. By providing this service, you will immediately add value to them. 

Manage their software licenses for them

At, we hear a lot from resellers that their customers are asking them for help managing their multitude of IT assets. We always recommend they provide this as an additional service and many charge for the service.

We have resellers doing this today and as a result they are receiving a larger piece of the customer spend, higher customer success rates whilst maintaining very high renewal and under-contract rates. (Read the blog about this case study).

The benefit of doing these things for your customers are obvious. Build deeper relationships, which will lead to earning more opportunity.

In conclusion, based on IDC’s statistic, approximately 25% of customer budgets are being wasted due to a simple lack of understanding. Solving that for any customer would lead to increased available budget for other initiatives and undoubtedly a much happier customer!

To learn more about how can help you manage your customer’s assets, read our case study.

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