The Software License Pit, and Its Perils

Workbook: Do you have a sound software-asset management plan? It could be costly if you don't.

Does your company want to buy more software than it needs? Of course not, you answer. But just a few years ago, overspending on licenses was a popular "strategy" to avoid fees for illegal application use.

"Companies were saying, 'we don't want to risk being out of compliance, so let's buy extra licenses to avoid penalties and fines,'" says Gartner senior analyst Patricia Adams. It seemed like an easier fix than installing software to manage inventory, she says.

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"Companies are freeing up 500 or 1,000 desktops or laptops, yet are still paying maintenance," says Adams.

Unfortunately, it's nearly impossible to revise an existing software contract or obtain a refund, Gartner says, although some vendors will provide credit for future purchase, or allow downsizing provisions to contracts.

Companies should mostly focus on preventative planning by setting up software and policies for asset management. These tools will also help companies discover and stop unauthorized software use, a practice that can cost dearly.