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Effective License Management Can Strengthen the CIO-CFO Partnership

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Here’s an interesting article about the relationship between CIOs and CFOs, written by Scott Rosenberg of Miro Consulting. In the column, Rosenberg asserts that CIOs and CFOs frequently don’t see eye-to-eye not because of competing agendas, but because budget is typically prioritized and allocated based on the profitability of any given division. Ironically, therefore, CIOs often find themselves with inadequate budget to effectively accomplish the initiatives intended to support those very groups.

What does this have to do with software license management? Well, one issue that compounds the problem is that all too often, organizations are vastly over-licensed on software. However, CFOs, who are preoccupied with opportunities to reduce unnecessary spending, don’t have the expertise or tools to identify such problem areas. If CIOs can bring this problem to light, they can strengthen their partnership through a shared agenda and free up precious funds by renegotiating license agreements that more closely reflect actual software usage.

To this end, Rosenberg suggests that CIOs work collaboratively with CFOs to negotiate software license agreements. The end result is improved ability to influence decision-making, assurance that IT budget is invested wisely, and a stronger working relationship. Here are Rosenberg’s tips for CIOs:

1) Prepare well

  • Perform a periodic internal software audit to find out where your organization is both under-licensed (the primary concern of most executives) and over-licensed; most businesses find multiple instances of both. (To do this properly, you’ll need a tool that provides both PC inventory and software metering functionality.)
  • Become intimately familiar with company business objectives and priorities. According to Roseberg, “Failure to understand where the business is going – short- and long-term – will lead to nonessential purchases of software, resulting in thousands of dollars worth of “shelfware.”
  • Work with your CFO to plan and allocate the IT budget with an eye toward process, metrics, and vendor/contract review.

2) Be wary of “pre-packaged” discounted SLAs

Your CFO may be tempted to purchase more software than is needed in order to secure a significant discount. But if that software sits idle on shelves or desktops, the money you spent unnecessarily may be far more than what you think you saved.

3) Build flexibility into your software licensing agreement (SLA)

If you believe your organization’s IT needs or priorities may change, be sure to negotiate terms that provide you adequate flexibility. Consider points such as length of contract, number of seats, number of modules, payment terms, opt-out clauses, and more.

In summary, bringing the CFO into the license negotiation process may not only help the CIO obtain what’s needed to deliver on IT’s corporate obligations, but also increase the likelihood that money isn’t needlessly wasted on unused licenses. These improvements alone represent one of many steps CIOs can take to reduce traditional conflict between finance and IT and foster a healthy understanding of the respective challenges of each.