Many companies and governmental organizations are choosing to outsource the administration of their Information Technology (IT) departments. As this practice increases in popularity, and outsourcing contracts change hands, at least one additional layer to the IT administration onion, ERP and accounting software, and more specifically accounting software licensing.

Accounting Software

Transferring Accounting Software from one outsourcer to another

When it comes to the ERP and/or accounting software system piece of a company’s infrastructure administration, usage and functionality of an organization’s ERP accounting software package is intricately connected to licensing structure and ownership. Some considerations:
1.    Accounting software licensing provisions and maintenance terms can be prohibitive to the outsourcer’s effective IT administration on their client’s behalf.
2.    The outsourcer must be a formally designated agent for the client.
3.    Maintenance and security certificate administration related to the accounting package in conjunction with the Internet and intranet can be tied to and affected by the original purchase.
4.    Legacy issues associated with previous outsourcer. Compliance issues can also arise out of creative licensing solutions.
Software licensing issues are often affected by a number of factors. The five items listed above can affect the client and the outsourcer in the following ways.
1.    Some software and hardware providers do not allow for the third party procurement of their products on behalf of their client and may present a problem to administrators if licensing cannot be transferred to the new contractor.
2.    This often involves a formal process and paperwork without which licensing compliance is null and void. The status is not transferable and re-filing is often required.
3.    Maintenance and security certificates (metered) used on an Internet site may have originally been purchased directly by the client.  Administration of these contracts and certificates may be designated to a particular individual in the company and while certificates may be moved around between servers, doing so will be difficult if originally purchased by the client company and often results in nullification and expiration of certificates has real life consequences. Electronic transfer of funds can be rendered inoperable when certificates expire and Internet sites are brought down.
4.    If an outsourcer has won a contract from another outsourcer, non-transferable licenses will have to be re-bought and should be factored into the transition budget. 

The process for transferring software licensing and security certificates is not often a simple one. As with any asset, identifying inventory is the first step. A thorough self-audit is essential. It is also a safety net with regard to outside auditors.

Creating a database for licensing agreements, security certificates, maintenance and service agreements will allow for effective management of renewal schedules for maintenance and software agreements and minimize the downtime caused by unexpected expirations.

Accounting software and ERP software system licensing is highly dynamic. It is important to work as closely as possible with the legacy organization to know special licensing provisions or cost–saving measures that may have been taken that can affect or create licensing transfer issues.  Having expert licensing professionals on staff is well worth associated consulting fees for a smooth transition. 

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alr857