The Role of Engineering License Management in Divestitures

Role of Engineering License Management in Divestitures

In industries where engineering licenses are staple IT assets, divestitures can be a complex and lengthy process. Further complicating the process is that most business leaders want to finalize divestitures within 12 months or less—a stark contrast to the traditional timeline that could span years.

The intricacies of managing software licenses—ranging from ensuring compliance and handling licensing costs to managing permissions and navigating vendor audits—further challenge the separation process between the parent company and the divested entity. A comprehensive license management in divestitures helps ensure a smooth transition and success post-separation.

License Management in Divestitures: Why The Need

During a divestiture, an IT manager faces a variety of challenges across strategic, operational, and compliance areas. License management in divestitures enable organizations to gather and analyze license usage data and generate insights to help face the following challenges:

Business Continuity and Alignment

Aligning IT strategies with the divestiture’s business goals is challenging due to the scale of necessary adjustments. The IT systems of the divested entity may have been tailored for the parent company’s objectives. Moreover, dividing and allocating licenses between entities without compromising operational efficiency adds to the complexity.

Asset Management and Segregation

Conducting an inventory of all IT assets involves identifying all software, hardware, and data assets owned by both the parent company and the divested entity, which may be intertwined. Segregating shared data while ensuring software license compliance with legal and privacy regulations can be difficult, as data may be stored across various systems and locations.

Software Compliance with Vendor Agreements

Thorough review of software contracts requires a deep understanding of complex licensing agreements, negotiating and managing Transitional Service Agreements (TSAs), and ensuring that both the parent company and the divested entity remain compliant with licensing terms post-divestiture. License management in divestitures equips organizations with the data needed for negotiating license transfers, new acquisitions, or amendments to existing agreements.

Risk Management                                                  

Simultaneously, IT managers must proactively identify and mitigate risks associated with divestiture. They also need to team up with other departments, particularly IT security, to protect against cybersecurity vulnerabilities.

Cost Management

Engineering licenses and divestitures can impact an organization’s IT budget. Managers must carefully plan and prioritize license expenses related to divestitures, such as new licenses, data migration, and contract renegotiations to ensure continuity and minimal disruptions.

Audit Shakedown

When companies announce plans for divestiture, vendors often conduct audits to check software compliance with licensing agreements. Sharing licenses with the divested entity without explicit permission is a common oversight. This can lead to significant fines if explicitly expressed in the contract.

Navigate Divestiture Licensing Challenges with Open iT

Open iT, a pioneer in software license management solutions and services, can help organizations streamline their critical due diligence and help facilitate their journey.

Open iT’s flagship solution, LicenseAnalyzer, enables companies to dive deep into their software licenses and leverage granular visibility into license utilization. This capability allows organizations to capture beyond the surface data, metrics, and insights that help inform their decision-making process.

Identify Key Licenses

License management in divestitures contributes greatly to a detailed inventory of an organization’s existing software licenses and how these licenses are being utilized across different departments. With such visibility, Open iT identifies which licenses are critical for ongoing operations and which can be divested.

Minimize Compliance Risks

Open iT’s analysis helps ensure that all software licenses comply with existing agreements. A preemptive compliance check minimizes the risk of costly audits and non-compliance penalties during and after the divestiture process.

Strategic Planning for License Transfers

With insights into the licensing landscape, organizations can strategically plan the transfer of licenses to the divested entity. Open iT’s detailed reports can guide the negotiation of Transitional Service Agreements (TSAs) and other arrangements to ensure a seamless transition of necessary software assets.

Vendor Negotiation Support

Armed with data on license utilization and needs, organizations can approach software vendors from a position of knowledge. Open iT’s insights support negotiations for license transfers, the acquisition of new licenses, or amendments to existing agreements, ensuring terms that align with the strategic objectives of the divestiture.

Drive Divestitures with License Usage Insights

Engineering license management in divestitures provides insights that guide organizations through the stages of planning, preparation, implementation, and ultimately, post-divestiture success. Open iT empowers companies to accelerate the divestiture process while maintaining the integrity of data-driven decision-making, ensuring a smooth and successful transition.

Contact Open iT today to discover how our expertise in license management can assist your organization in efficiently preparing for and navigating through a divestiture.

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