Revenue leakage resulting from non-compliant behavior is a vendor’s nightmare. However, in most cases this is not due to evil customers (licensees), but due to process intransparency:
- The vendor’s licensing policy changed, while the customer is not aware/informed.
- The number of users/devices increased, but the licensing data has not been updated (deliberately or not).
- The license is expired or no longer valid.
Contrary to common belief, customers are usually equally committed to licensing compliance, especially in public traded companies. Otherwise, legal consequences may apply. In addition to that, customers want to identify not only under-licensing, but obviously over-licensing as well.
Since traditional license audits are prohibitively inefficient and expensive, vendors are looking into more automated solutions, which not only helps them identify violations, but also allows them to react in a flexible, not necessarily aggressively restrictive way.
Identifying non-compliant installations might be challenging, depending on the business model and the installation scenarios. Typically, issues arise not during the initial activation, but due to subsequent changes (license lifecycle). A more traditional approach upon (license) change looks like this:
- Change happens: the customer buys a new seat/feature etc.
- The vendor’s back office generates a new license key.
- The customer installs the new license key.
- The vendor deactivates the old license key.
Such an approach is not only difficult to automate, but also particularly error-prone. A more modern and automated approach looks like this:
- Change happens
- The vendor’s back office updates the license data. No new license key is necessary.
- The affected installation syncs the license parameters from the licensing server.
While such an approach minimizes license breach, it does not eliminate them, since the underlying cause might be different. Your licensing solution should be able to identify all defined cases. For this you will almost always need an online licensing solution.
How vendors deal with licensing violation, depends on the scenario. Denying access/usage is simply not always an option, especially in mission critical applications. Therefore, your licensing solution should (at least) allow you to:
- Show relevant warnings in the UI.
- Send relevant emails.
- Allow an (adjustable) freeride period, before ultimately denying access.