Strategic Software License Management During Divestment for a Major Utility Company

Companies engage JNC’s services for a multitude of reasons and clients like *Novextur have benefitted from long standing relationships of trust and value for many years. The combination of expert guidance, comprehensive, effective solutions, and excellent, ongoing customer support fosters client loyalty and repeat engagements.

In 2023 Novextur, a leading utility company, embarked on a strategic divestment of one of its business units. This divestment required meticulous planning and execution, particularly concerning the management of software licenses. The client sought expert support to understand the licensing requirements for the divested entity and to ensure compliance and optimal resource allocation post-divestment.

Challenges

In the context of software license management, divestment presents substantial challenges due to the complex disentanglement of shared licenses and software agreements. Ensuring compliance, transferring ownership, and re-negotiating contracts are intricate tasks that add layers of difficulty to the divestiture process.The primary concerns that Novextur faced were:

• Determining the number of software licenses required by the divested entity.
• Assessing the availability of licenses to be allocated to the divested entity.
• Identifying potential risks associated with license allocation.
• Avoiding excess or redundant licenses post-divestment, ensuring neither the divested entity nor the parent company were left with unnecessary or insufficient licenses.

The Solution

To address these challenges, JNC adopted a multi-phase approach:

1. Initial Licensing Position Assessment: The process began by evaluating the overall compliance situation through a comprehensive report detailing all owned licenses and their usage status. This foundational step provided a clear view of the current license allocation and utilization.
2. Divestment Analysis: We conducted an in-depth analysis to understand the division of licenses between the divesting entity and the parent company. This involved gathering data and conducting workshops with stakeholders from both entities to identify the current and future software product usage based on their respective roadmaps.
3. Alternative Licensing View: An alternative perspective on the licensing needs of the divested entity versus the surplus licenses available with the parent company was developed. This comparison highlighted any discrepancies and gaps in license allocation.
4. Gap Identification: Through this analysis, we identified specific scenarios where the divested entity required licenses that the parent company could not spare, and conversely, where the parent company had excess licenses.
5. Negotiation Facilitation: The insights from our multi-faceted analysis enabled the entities to engage in informed discussions and negotiations, both internally and with SAP. This facilitated a mutually agreeable solution regarding the transfer and retention of licenses.
6. Final Report: The process concluded with a detailed report outlining the confirmed impact of the divestment on both parties. This report provided a clear understanding of the licensing landscape post-divestment, ensuring both entities were prepared for the transition.

Conclusion

Our strategic approach and thorough analysis helped Novextur navigate the complexities of software license allocation during the divestment process. Key outcomes included:

• Identifying £1 million worth of software impacted by the divestment.
• Successfully reallocating £650,000 worth of software to the divested entity without negatively impacting the parent company.
• Highlighting £150,000 worth of unused software that remained with the parent company.
• Preventing £150,000 worth of software from being transferred to avoid compliance risks for the parent company.

Overall, JNC ensured that the parent company avoided non-compliance and unnecessary additional software purchases, thereby optimizing the licensing strategy for both entities post-divestment.

*Protecting our clients’ confidence is of utmost importance at JNC. While our case studies are based on true projects, we have used fictitious names and removed or changed other identifiable details