JACK HANSON at Olympic College brought a consortium of colleges to the table to negotiate software licensing agreements.
Oct 08 2008

Lessons in Licensing

Higher education finds ways to negotiate and manage software licenses.

Jack Hanson, executive director of IT at Olympic College in Bremerton, Wash., joined forces with other colleges to hammer out a joint software agreement. John Krallman, director of information technology acquisitions at Virginia Tech, in Blacksburg, constantly negotiates and reviews contracts with software vendors to try to get the best possible terms and prices on products.

Software may be a fact of life in academic settings, but negotiating the licenses necessary to obtain and use it is complicated and takes some thought. The effort crosses legal, technological and administrative boundaries and requires officials to possess a mix of technical know-how and horse-trading skills. Universities and colleges have learned to adapt their own strategies to deal with the inherent complexities of their environment.

It’s Different Here

“We’re not the corporate world,” says Thomas Trappler, director of IT licensing for the University of California, Los Angeles, Office of Information Technology. “Most universities are decentralized and negotiate at least part of the time for licenses that will reside on machines owned not by the institution but by students and faculty,” he says. Vendors can start out negotiations assuming a tightly controlled, highly centralized IT environment that uses technical automated licensing and activation.

Universities, advises Karen Billings, vice president of higher education at the Software and Information Industry Association in Washington, D.C., should approach licensing negotiations with potential software vendors as a long-term, mutually beneficial partnership, rather than as a sales transaction.

Those tasked with negotiating and managing software licenses in colleges and universities have found ways to improve their ability to get a fair price and favorable terms and to better manage licenses to effectively comply with those terms.

Keep It Simple…

The variety of licensing terms and arrangements possible in a higher education environment are nearly uncountable: Who will use the license and for what purpose? What is the time period covered by the license? How many users will be covered by an enterprise license, and what happens if that number changes in the time period involved? How many machines can the software reside on under a single license? How will the upgrade path be handled?

Hanson works with a state consortium of 34 community and technical colleges. The group recently leveraged their number to negotiate a deal with Microsoft. One condition the groups hammered out involved how to count licensed users. Now, instead of tracking how many users install a particular program throughout the year, Hanson and others in the group make a single count of users on a single day in the fall and then pay the resulting price — even if the number of users increases afterwards.

“We may be asking for flexibility and a sweet deal,” Hanson says, “but higher education provides a cadre of students that know their products and will one day influence software purchases in the workplace. So there’s a hidden benefit to a relationship with higher education.”

…But Not Too Simple

Many schools automatically purchase a site license, assuming that the demand will eventually justify the up-front price. That could end up being an expensive proposition, says UCLA’s Trappler, who suggests that when a particular software program is in its infancy and the demand for it remains unknown, software officials should weigh the pros and cons of both a site license and what’s known as “true-up” pricing.

If there’s enough demand, a site license usually guarantees the lowest price per unit, simplifies administration and assures school officials that users comply with the licensing agreement. A true-up agreement allows vendors and schools to negotiate a fixed price for licenses based on projected volume. “My office will collect the orders throughout a quarter and, at the end, report the number of sales to the vendor and then make an order at the negotiated price,” Trappler explains.

A true-up license is most appropriate when software officials are unsure about demand for a new product. “If we feel like we’re just scratching the surface on the initial purchase and we think it might grow, the true-up is probably the better way to go,” Trappler says. “We may pay more per unit, but we don’t have the higher up-front investment.”

Think Out of the Box

Perfection can be elusive when setting up licensing agreements, according to Krallman. The closest he’s ever come to it was a year ago when he helped broker an innovative arrangement with the manufacturer of a high-end development tool for test, measurement and control that had recently become a requirement for all Virginia Tech engineering students.

The new mandate translated into a distribution of 1,600 copies of the program for each incoming freshman class, or a total of 6,000 to 7,000 users each year within the College of Engineering alone.

The software, which costs upward of $5,000 off the shelf, comes standard with a concurrent, or shared, license. Krallman and his team, however, worked with the vendor to get a traditional one-year license with an upgrade path that would ensure that all students stay current with the software through their senior year. The two parties also agreed to work together to develop a distribution solution that would disconnect the shared features of the software. With these changes, the price dropped to just $40 per license.

Additionally, relying on license management software and several customized applications, Virginia Tech’s software acquisition team developed an effective method for managing high-volume license distribution that’s easy for everyone.

Automate Wherever Possible

Procurement organizations rely on an array of off-the-shelf and customized systems and processes to keep up with software management. Olympic College uses Microsoft Configuration Manager 2007 to automatically inventory all machines to determine whether they are in compliance with their licensing agreements, and also has developed a series of highly regulated and managed processes that notify IT when certain licenses are due for renewal, says Hanson.

Virginia Tech keeps a tight rein on student licenses by integrating its internally developed point-of-sale system with the school’s enterprise directory, a network software distribution system and an application that writes purchase and compliance rules on the fly.

Krallman explains: “If an engineering student wants to purchase the latest version of a particular software program, for example, they can log into our network software distribution system using their personal identifier and the system automatically knows that they’re a student currently enrolled in engineering, that they bought the engineering software bundle in 2005 and that, based on our rules, they’re eligible to buy the most current version of that software. At that point, they’ll view a link that they can click on to purchase the software.”

First Line of Defense

  • Create an acceptable use policy that outlines the school’s expectations about copyright and ownership issues.
  • Put the document on the school’s website for easy reference.
  • Encourage an open- door policy for student questions.
  • Encourage and promote regular student review of policy.
  • Promote awareness of the policy with direct student e-mail.

Taking License

Virginia Tech employs unique app for licensing.

Virginia Tech has set up another innovative software licensing and management application for its students and personnel.

Users log into the Virginia Tech license manager, which calculates an algorithm based on their hardware identification. They then go to an internal website, log in using their personal identifier and type in their machine name and the license code generated by the license manager.

The application then translates the information into an XML file and puts it into a queue on the license manager, which is later run during a batch operation by software acquisition personnel to generate actual license keys. At that point, the application disconnects shared features of the program and e-mails the keys to the student, along with instructions on how to install their product.