Perplexing software issues spawn Accordo

By ADAM GIFFORD

What software is on your company network? How many people are using it? How many licences have you paid for?

More importantly, if Microsoft, Novell, Oracle or Peoplesoft come asking, do you have an answer?

There is also the vexed question of what electronic business-to-business applications - where you may give scores of suppliers or customers access through the internet to your databases and core applications - do to your licensing agreements.

The increasing complexity of software licensing is the reason former Software Spectrum general manager Vicky McCullough and colleague Sheryl Ching set up Accordo Group in May last year.

As specialist consultants on all licensing aspects of software purchasing, Accordo has since picked up a solid client list in the corporate and government sectors.

"We help organisations rationalise and manage their licence portfolio - so far we have not been to one customer who pays for everything it uses," Ms McCullough said.

Accordo has so far detected $10 million in unpaid licences. That was usually not because of deliberate avoidance, but because systems were not put in place to manage licences.

"Now all the vendors are getting extremely serious about making sure customers pay for what they are using," said Ms McCullough.

"In a mature market, that's the next logical step for vendors to take.

"Novell is instigating audits. Oracle has said a percentage of its revenue will come from making sure the integrity of contracts are held up.

"We help customers mitigate risk quickly, quietly and cost-effectively."

Ms McCullough said much of Accordo's work involved advising organisations on the practices and processes which should be in place, such as recording any new software users on an asset register and ensuring that information was passed on to the vendor.

The company also suggested how software could be rationalised, and how the licensing regime could be renegotiated. All these measures had so far saved customers an estimated $6 million over the past year.

Ms McCullough said industry analysts, the Gartner Group, had estimated the intangible costs of software could be as much as 35 per cent.

These included how much the particular licences cost to administer, how much continued compliance cost, and the legal and organisational costs which resulted if the vendor called an audit.

Accordo was formed after Ms McCullough helped a major Software Spectrum customer work out the best way to manage its Microsoft licences.

"I spent hundreds of hours helping them architect a solution, and when we finally got the right answer, they asked six resellers to bid to ensure the process was competitive."

She said she thought there was "something fundamentally wrong" with that situation.

Accordo allowed companies to get advice from a party which did not have the vested interest in the transaction a vendor or reseller might have.

"We are there as the customer's advocate, so they know when the deal is done it is a good deal," Ms McCullough said.

"We understand the business models vendors work on, and we bring to the table a very educated customer.

"We call software licensing a black art, and we are living and breathing it every day of the week. A corporate customer looks at this every two or three years."

She said industry trends such as the development of ASP (application service provision) would make it even more complicated.

While the technology to deliver "apps on tap" is available now, uncertainty over appropriate licensing and revenue models are holding back acceptance.

Some software vendors are pushing for partnership models, where they collect a share of the profits generated using their software. Others want something for each transaction, or a monthly rental based loosely on current earnings over the product's lifetime.