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The last quarter of 2017 has only just started, but many licence managers are already concerned with their annual planning for 2018. This is a mistake, since they might just give away cold hard cash. If the IT budget is not fully used up, your IT department will probably lose it afterwards.

Control your licence inventory now

A closer look at the company licence inventory might particularly pay off in the last weeks of the year. Do we have all licences we need? Are their licences in our inventory that no longer receive external support (e.g. Office 2007, Exchange, Visio)? If we are audited, would we pass with our licence inventory? The available budget is perfect to cover potential shortfalls that come to light during this inspection. These retain their value and are up to 50% cheaper than new software, while offering the same functionalities. Moreover, purchased used software does not incur running monthly usage costs. This will result in savings for next year as well.

Safely buy used software: The big plus

Our licences are not just cost-efficient, they are also safe. Licences that are traded by PREO are put through their paces by our legal department. This ensures that they pass each software audit. Our audit assurance guarantees this. Additionally, our customers are informed about the chain of title. With this disclosure, we inform the user, upon transfer, of the original type of contract of the software (incl. contract numbers), who owned the licence, and if they have properly uninstalled the software, as well as details on the update history. Our transfers are insured against transfer errors. The insurance covers potential financial damages of up to 10 million euro. (bt)

Act now

Our licence experts will gladly answer any questions you might have, free of charge and commitment.

Hotline: 00800.429 328 00

By Maximilian Vöge, Account Manager at PREO Software AG

Imagine that you can purchase your favourite used car at a super affordable price. The best thing about it: it’s brand new. No dent, no scratches, and no wearing parts that must be expensively replaced. That is exactly how used software functions. It provides all features and functions exactly the way it did on the first day of use. And it is really inexpensive.

In spite of the good price, which is often up to 50 percent less than that of the new product, our clients obviously make their reservations known. Even though the functionality does not change, there are some things to consider: of particular interest are the maintenance and support services.

If the company is interested in signing a support contract, this is possible for many of our used licences at any time. To this end, we cooperate with reputable IT system providers that can give our clients high-quality service with competent IT specialists.

In terms of security, used software is on equal footing with the new product in every way, because nothing changes regarding your right to repairs and updates. Through regular updates and patches from the software manufacturers, used software remains as secure as the new product.

If you are interested in our practically brand new “used products” at extra beneficial terms, feel free to contact our sales team. 00800-42932800 (mv)

By Michael Junker, Account Manager at PREO Software AG

Nowadays, the origin of a product is often important when buying many things. Where were the tomatoes imported from, where was our new car assembled, what were the cows fed before they landed on our plates? Knowing where and how puts your mind to rest – it is reassuring.

At PREO, we place great value on security when purchasing used software. Years ago, we decided to make information about the origin of the software transparent. This starts with disclosure of the rights chain. Our customers get to know who the previous owner was and the type of contract where the software originated. We also disclose the contract numbers to our customers. And most importantly: The written declaration that the previous owner uninstalled the software appropriately. This is one of the most important legal requirements, which is exclusively stipulated by the Federal Supreme Court and the European Court of Justice.

The comprehensive information we add in the licence portal for each licence provides additional assurance for our customers. This helps reduce your fear for the next software audit. I often hear that customers who buy software from PREO-Lizenzen have a “good feeling”. This makes me happy since I know that customers who pass the audit with our licences will always be happy to come back.

The licence manager’s job is complex. Broad software knowledge is just as important as detailed legal knowledge in the fields of copyright, product usage, and licence usage law. With the current trend towards virtualisation and cloud computing, new and/or additional contract forms and their individual usage rights are appearing on the scene. Licence managers must know precisely what type and number of software are being used in the company. And all of these should be retrievable at all times. The larger the company, the more difficult it is to keep track of everything. However, this is extremely important, because whether your company passes an audit or not depends to a great extent on the licence manager’s expertise.
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IT departments should be able to answer the following questions*: 

1. 1. Is the current inventory of PCs, servers, and other IT equipment retrievable?

1. 1. Are the licencing rights relationships that apply to the usage of virtual environments known? Is the hitherto applied usage right still suitable for proper usage in line with the licencing rights?

1. 1. How many different software applications are there in the company and are they all actually being used?

1. 1. Are the software procured centrally or decentrally and from where?

1. 1. Are the contract documents kept in a central location?

1. 1. What happens to software that is no longer in use or is uninstalled? Is that regularly adjusted in the contracts?

1. 1. Can software also be installed by employees without permission?

1. Does your company have guidelines for handling software? Are these being complied with?

Knowledge of these matters has a concrete background: Before an audit, missing licence inventory due to sublicensing and mis-licensing can still be cost-effectively reconciled. For instance, with certified used software. Now, PREO is the right partner. For 10 years, our licence experts have been supporting reputable companies from different sectors as well as government bodies. What’s more, we guarantee audit conformity for our licences. Our legal department first puts the licences to the acid test. We work very transparently for our clients and disclose the rights chain. For our transfers, this contains proof about which type of contract the software originates from (incl. contract number), who the owners were, and whether they properly uninstalled the software as well as details from the update history. Our clients can retrieve this information online 24/7 in our licence portal. In spite of all these, should there be objections at an audit, our insurance will take effect. It covers whatever pecuniary damages might arise up to the tune of 10 million euros.  bt

*Source: Groll, Torsten: 1×1 des Lizenzmanagements. Praxisleitfaden für Lizenzmanager. 3rd edition. Hanser, Munich, 2016, p. 6.

1. Choose a reputable provider

When purchasing used software over the Internet, you run the risk of being confronted by irresponsible and untrustworthy sellers. Make sure you evaluate the dealer carefully. For instance, large-scale dealers are characterised by the fact that they share the licence transfer information with you and can always deliver, even for larger quantities.

2. Proper licence transfer

The most important thing when purchasing used software is the proper and complete transfer of the licences. The ECJ stipulates that software may only be resold if it is no longer used by the seller. Thus, make sure you get a written approval from the previous owner confirming that s/he has deleted all previous installations of the software.

3. Choose an appropriate software version

Both current and older versions are available on the used software market. Since the latest versions usually have significantly higher demands in terms of hardware and sometimes require a training period, the predecessor version is often the better choice in most cases. Here, the purchase of used software is often the only alternative since the manufacturers only offer the newest version, which would then require a downgrade. BT BT

The year is drawing to a close and, thus, the new IT budget is being considered. Before making cuts, because the budget will probably become too high, check if you won’t be able to increase your budget instead with the aid of licences no longer in use.

These four basic requirements must be fulfilled:

1. The licences no longer needed were initially brought to market in the EU or the EEA
The principle of exhaustion applies to all members of the European Union for used software sales. Exhaustion means that products that were brought to market in the EU or the EEA with the rights holder’s consent can subsequently be traded freely in this region too. After being brought to the market in the EU or the EEA, the right of distribution has therefore “run out” and resale of the software is legal.

2. Only purchased software can be transferred
Trading used software is only permissible if the software is one that was “brought to the market by sale”. Software from ongoing leasing or rental contracts cannot be resold.

3. Licences from volume contracts can also be partially sold
There has been legal clarification on this matter too. The licences in a volume contract are each regarded as individual usage rights that can be transferred independently. Therefore, it is possible to retain a portion of the licences and sell another. Client server installations are an exception to this rule.

4. Licences are made unusable before sale
Next, the licences to be sold must be made unusable. This can occur, for instance, through uninstallation and is documented in writing.

If you have unused software licences, now is the right time to sell them. On account of our many years’ expertise, we are the reliable partner for our clients when it comes to the purchase and sale of used software. We will make you a serious and sound offer for your unused software licences. Quick, straightforward, and legally certain. (bt)

1. You save money
Market analysts recommend purchasing used software as this will significantly reduce the costs you spend on software acquisition. Compared to new software, buying used software saves you over 50 percent in costs. Besides acquisition costs, the standardisation also reduces administration costs significantly. Furthermore, whereas your rent and cost for cloud models can increase unpleasantly with time, the cost of used software is onetime and transparent.

2. You get a high-quality product
Software does not wear, it remains valuable and always has the same features as on the day of the initial installation. Even the security updates from the manufacturer will still be available to you. The installation is just as straightforward as with new software and cloud models.

3. Used software is secure
The Federal Supreme Court and the ECJ have defined the prerequisites for legal trading of used software. Our licences are checked accordingly. And we even take this a step further with our internal security system, “Safe3-System”. When you buy from us, you get comprehensive information about the type of contract where the software originated (incl. contract numbers), the previous owners, whether they had uninstalled the software properly, as well as details on the update history. All information is always available to you in the licence portal. We provide full transparency to ensure 100% auditing security. BT

Even ten years ago, analyses by the Gartner Group* showed that companies with a functioning licence management system can achieve cost reductions of 30 to 50 percent. Since then, many large companies have professionalised their licencing portfolios with SAM tools. Medium-sized companies face major challenges, in that structures which have evolved over a period of many years must be rethought and altered. But young, dynamic companies are also affected. The biggest challenge for start-ups is often that they must constantly adapt their business processes to new and emerging requirements during the fast stage of development.

When it comes to the area of licencing, this starts with undefined internal procurement channels and installation processes, often lacking central archiving of all contract documents, plus employees who independently load programs onto their PCs. Unused licences are usually not redistributed or sold ¬- should a software producer announce an audit at this stage, then the extent of absent licence management will only then truly become palpable.
In order to be “compliant”, the number of licences and the installations need to be constantly balanced, the licencing situation must be transparent and utilisation should match with the contents of the contract. As a last resort, there is the risk of high back-payments if an audit reveals a sub-licencing. In most of the software manufacturers’ standard terms and conditions, you will find the “five percent clause”. This stipulates that if more than 5 percent of a software product is deemed to be under licenced, then the company must pay the costs for both the additional licencing as well as the audit.

Therefore, you should buy a system that records all the licences your company owns: both the licences that are currently in use and those that are unused and stored away. Should you notice an over/under licencing situation during this review, then we would be happy to assist you. You can also purchase a large number of second-hand software licences from us within a short period of time. Our licences are less expensive than new goods but just as reliable: They will pass software audits, which is what our 100% audit security stands for. And should you find yourself over licenced, we will take on your excess licences at a good price. A chat with us is always worth your time. (bt)

Management Update: IT Asset Management Stages Form the Stairway to Success, 10 September 2003, Autorin: Patricia Adams IGG-09102003-01

By Chris Schlensog, Sales Manager at Preo Software AG
SaaS is booming. The reasons for this trend are obvious: customers are enthralled by the service offerings, like maintenance, extolled by the manufacturer and an initially, apparently inexpensive monthly fee with full usage rights from the first day. However, many companies do not take into consideration that opting for subscription models takes away independence and freedom of choice, because renting software licences means being dependent on the software manufacturer. Should they decide, for instance, to raise monthly fees, you are at the mercy of this decision. In addition, you are often bound to the contract for a long time – usually three years. Should your company’s software requirements change within this period, it will be difficult to react to such a change.

Another problem is data security: from time to time, clients store sensitive company information on software manufacturers’ external servers. Used software is a real alternative here. Advantage 1: You have data sovereignty. Advantage 2: You retain cost control and an overview of your software. You only incur one-off acquisition costs. There are no hidden costs from support or maintenance. Advantage 3: When purchasing used software, you are not bound in the long-term. Advantage 4: Purchased, used licences are your property. This gives you flexibility. You can resell it at any time and even earn money with it, because used software is recoverable and does not wear out.

Corporate software costs can increase rapidly through cloud and rental models. Swedex had a similar experience. Three years ago, the company opted internally for a Microsoft cloud model. “Over the three years of using the cloud model, our costs have doubled”, says Markus Schlichting, Head of IT at Swedex. “This means that the bill for the coming three years would amount to another 400,000 euro. This was simply too much for us.”

After comprehensive research, and legal inspections by lawyers, the company decided for used software by PREO Software AG. The references of other reputable companies, as well as the rulings of the BGH (German Supreme Federal Court) that set the legal conditions for trading in used software that PREO complies with, convinced Swedex. Another decisive criterion was the »Safe3System«, and the praised audit security in particular. “If the licences we purchase through PREO are ruled at fault because of a transfer error during an audit, any damages incurred will be covered by the insurance, up to a sum of 10 million euro”, resumes Markus Schlichting, Head of IT at Swedex , “this gives me a safe feeling.”

Swedex required a large number of licences, including server and Office licences. PREO provided the desired products at a good price, resulting in great savings for the Essen-based producer of office supplies. “The overall licence savings for my company amount to almost 100,000  euro”, states the IT manager after a quick calculation. “Moreover, the price of used licences lies at only 47 per cent of those of new products. This means significant savings for us, with the same functionalities.” Mr Schlichting is very satisfied with the handling of the transaction and “would recommend PREO at any time.”