Divesting & Recycling - Software Licence Assets

Having proved its worth within the Private arena, Discount-Licensing.com Ltd throws its hat into the Public ring, yielding savings and residual benefits for Government & other Public sector IT Budgets...

“Pre-owned software licence?!?”…the response that echoed throughout the IT industry when the idea of realising a residual value or saving a £value from disused Microsoft software licence assets first reared its head in 2004.  It was an understandable first reaction to an asset where the separate relationship between the ‘software’ and the ‘licence’ had gone unnoticed by both Private and Public organisations, as well as the software vendors themselves. 

Taking advantage of the manufacturer’s own licence transfer provision, a secondary software licence market was born whereby organisations could take advantage of the discounted prices and/or divest its disused software licence assets.  While there are numerous software vendors and each will have different types of licensing programs and Licence Agreement terms, the most commonly known product is Microsoft’s perpetual ‘volume’ software licences (‘Open’, ‘Select’ & ‘Enterprise’), which is aimed at small, medium and large organisations and so for the purposes of this article, we will therefore refer to Microsoft.

What is a software licence?  A Microsoft ‘volume’ software licence is a separate asset to the software, PC or media disc.  It permits the owner to install and use the software on a desktop PC, laptop or IT device.  Private and Public sector organisations will either rent a ‘subscription’ or purchase a ‘perpetual’ Microsoft volume software licence in order to ensure its business is compliant in the eyes of software manufacturer.  A company may purchase multiple copies of Microsoft ‘Office’ due to expansion, licence compliance, migration or other business driven necessities. 

How does it work? If a company stops using its software, it can divest its ‘perpetual’ software licence assets to another company and obtain a residual value.  Alternatively, organisations can save on their IT budgets by purchasing a pre-owned software licence product to ensure licence compliance ongoing.  This is only possible with ‘Perpetual’ licences that by definition ‘last forever’ and whereby a sale of a software licence asset has occurred between the software vendor and the original customer.  Note that ‘Subscription’ software licences cannot be traded as a ‘transfer of ownership’ has not occurred.  

Remember that there is no physical product here.  The software licence asset is initially created by Microsoft in the form of a set of unique serial numbers that will have been purchased by the original Microsoft customer.  As a prelude to divesting software licence assets, organisations need to understand their current licence situation in terms of what has purchased against what is installed as well as what is being used.  It is then possible to establish whether an organisation is under or over-licensed.  This can normally be facilitated remotely without the necessity for timely site visits.

As with private sector businesses, Microsoft’s own transfer provision within its Licence Agreement T&C’s, permits the ownership of a disused software licence asset to be transferred from and to public sector organisations.  The software manufacturer is informed of every transfer using its own ‘Notice of Perpetual Transfer’ documentation in accordance with its transfer requirements. There is no copyright infringement in the eyes of the software manufacturer as its own transfer provision is adhered to.

Current situation. Discount-Licensing.com Ltd, previously known as ‘Disclic Ltd’, created the first pre-owned Microsoft software licensing market in 2004 by initially divesting Microsoft software licences from the UK Insolvencies and then recycling those assets to private sector business around the world.  Discount-Licensing.com has worked closely with Insolvency Practitioners such as KPMG, PwC, Deloitte, Ernst & Young to realise financial returns for creditors.  It has also generated additional revenue for solvent businesses seeking to divest their disused, and often overlooked, software licence assets. 

With the recent well publicised reduction of IT budgets, Government and Public sector bodies have an opportunity to stretch their funds by divesting disused software licences or save money by purchasing pre-owned.  As experienced within the private sector, cuts in IT budgets do not serve as a sufficient reason to remain non-compliant or sit on unrealised assets in the eyes of the software vendor.  To date, the public sector has yet to explore all the options regarding what it does with disused Microsoft licence assets as well as where, and at what price, an organisation can purchase additional licences when migrating or finding itself in a non-compliant position.

What next? 
Establish whether your organisation has any disused licences to divest or whether your under-licensed situation can be resolved at a lower price compared to your conventional Microsoft reseller.  Send your details through to Discount-Licensing.com at procurement@discount-licensing.com or sales@discount-licensing.com and one of their software licence specialists will respond to your enquiry.  Alternatively, call Discount-Licensing.com on +44 (0)1283-525959 and for further information, visit their website: www.discount-licensing.com.