Quest Software Audits: Commercial settlement through an ELA?
Our article series on Quest software came to an end. In the previous weeks we walked you through the most common compliance issues seen when using the software Quest provides and explained how these can impact your organization. Now you know what are the potential compliance issues, how to avoid them, but do you know what to do at the end of an audit?
Usually, after a Quest software audit, a commercial resolution in the form of an Enterprise License Agreement (ELA) is quite often proposed by Quest itself. But how does such an Enterprise License Agreement work? What are the pros and the cons? This article will provide more clarity on these questions.
Enterprise License Agreement
Generally, Quest software offers an Enterprise License Agreement to its larger end user organizations for the Benchmark Factory, Toad and Spotlight software programs. The term of the agreement differs but is usually entered into for the period of 3 – 5 years. During this term, the end user obtains the right to make use of the programs included in the Enterprise License Agreement in an unlimited capacity.
At the end of the term, the unlimited deployment right stops, and the end user has two options:
- extend the unlimited deployment right for another period (e.g. 3-5 years) or
- convert the actual deployment in perpetual licenses going forward (without any additional fees).
How to convert or certify your ELA?
In order to convert your unlimited deployment rights into perpetual quantity based licenses at the end of the ELA, you are required to send a report towards Quest within a period of 30 days after the expiration of the ELA.
This usage report needs to include – and should take into account – the following:
- You are required to report for each installation of the Quest software:
- the machine name
- user ID
- file path
- license key
- You are required to report each individual user or device accessing the software installed in a virtualized or shared environment (such as a Citrix server) as one license deployed, and the total number of users accessing the software in each virtualized or shared environment such as a Citrix server.
Quest offers, but it’s subject to their approval, the option to request Quest itself to assist in accessing, pulling and/or obtaining all the information needed for such usage report. In short, you can ask Quest to perform an audit on your infrastructure at the end of the ELA.
What happens with my existing licenses?
Many organizations obtain individual (quantity based) licenses from Quest (or from authorized resellers) before entering into an Enterprise License Agreement. These existing licenses may either have an active support maintenance contract or not. If and when an organization wants to enter into an ELA, Quest will first bring all the existing licenses back under an active support maintenance contract: “Reinstatement”. This includes all the licenses that are sold to your organization as well as to the affiliates of your organization. Then, all these existing licenses will be subsumed into and made a part of the ELA with one support maintenance stream going forward. The termination of support maintenance fees for individual licenses is therefore no longer possible if your organization entered into an Enterprise License Agreement.
What happens if my organization gets acquired?
In case you have entered into an ELA with Quest software and your organization gets acquired by another company, then Quest would obviously not want to just extend its unlimited deployment rights to the acquiring organization without any additional fees. If additional fees are applicable is however depending on the size of the company that acquires your organization.
If, at the time of the acquisition, the acquiring company has less than 15% of the number of employees of your organization, then no additional fees are required.
If, at the time of acquisition, the acquiring company has more than 15% of the number of employees of your organization, then additional fees are required.
The additional fee to allow the acquiring organization to make use of the ELA is called the “Combination Fee”. The exact amount of such “Combination Fee” is not defined in the ELA. This fee will be a “mutually to be agreed upon amount” and is based on the amount of time remaining in the period of the ELA and the size of the acquiring company.
What happens if I acquire another organization?
In case you have entered into an ELA with Quest software and your organization acquires another company, then Quest would obviously not want to just extend its unlimited deployment rights to the acquired organization without any additional fees. If additional fees are applicable is however depending on the size of the company that your organization acquires.
If, at the time of acquisition, the acquired company has less than 15% of the number of employees of your organization, then no additional fees are required.
If, at the time of acquisition, the acquired company has more than 15% of the number of employees of your organization, then additional fees are required.
Similar to the situation when your company is acquired by another organization, the “Combination Fee” is not defined in the ELA but will be a “mutually to be agreed upon amount” and is based on the amount of time remaining in the period of the ELA and the size of the acquired company.
An Enterprise License Agreement or Unlimited License Agreement can be an interesting and attractive option to large enterprise organizations that have a challenge to manage their software compliance position and/or enterprise organizations that expect a considerable growth of additional deployments in the next years, and they may financially benefit from such an agreement.
An ELA however remains at all times restricted. The agreement only provides an unlimited deployment right for a limited amount of Quest programs and is limited to the legal entities and/or majority owned subsidiaries applicable upon the start of the agreement. Although many end user organizations enter into an ELA to resolve a non-compliance situation, such ELA actually does require an end user to setup proper software license management and software asset management processes.
This article was published on 03-04-2019
Richard is one of the managing partners at B-lay. He started to work in the license management industry in 2004 and worked for almost 10 years at Oracle as regional director of compliance. He uses his knowledge of enterprise software vendors (such as Oracle, SAP, IBM and Microsoft) to educate, equip and enable software end users in their challenges regarding proper software license management. Richard holds a master’s degree in IT, from University of Amsterdam in the Netherlands.