Four Signs Your Software License Audit Process Could Be a Disaster 

The software license audit process is overwhelming. Make it easier by addressing these potential red flags in advance.  

How much influence do the risks and potential outcomes of a license audit hold over your company’s software purchasing decisions?  

How much does the software license audit process play into your current compliance activity and policies?  

If the answer to both isn’t “a lot,” it might be time to reconsider just how much risk your company is choosing to shoulder.  

Large B2B software vendors like IBM have turned audits into a billion-dollar subindustry, and that revenue comes out of the pockets of existing customers like you. The process can take over a year and is beset with fine points and small details, meaning things can go wrong in a flash, resulting in millions in fines.  

Here are four signs of trouble to look for in your organization and what you can do to address them before the audit notification letter comes. 

Issue 1: Your Company Isn’t Familiar with its License Agreements 

Procurement, software asset management, legal, ops, and your compliance team all play a different role in keeping your company compliant. Any gaps in understanding can quickly place your organization in noncompliant status. Make sure all relevant departments have an in-depth knowledge of the overall licensing landscape and the gotchas they can inadvertently walk into.  

Enterprise license agreements are dense by default, making it hard to build a level of understanding without teamwide hands-on experience. Instead of learning tough lessons through the actual software license audit process, carry out internal audits that mirror the process and allow your people to learn through doing.  

Working with an independent software licensing specialist can also help your company to gain a better understanding of its licensing posture and to plan for your software vendor’s unique licensing process. 

Issue 2: Your Company Hasn’t Fully Defined and Delegated its Audit Strategy 

Best practices like internal audits and external consultation don’t just build your company’s understanding of the software license audit process. They also help test and refine your strategy, the guiding software asset management framework, and each department’s ground-level response.  

Questions to ask as you build or reinforce your strategy include: 

• Who needs to be alerted when an audit notification comes in the mail?  

• What processes will each team handle once word arrives?  

• Which team is responsible for ensuring the audit request is legitimate under the terms of the agreement?  

• Who will take the lead on communication and software audit negotiation? How are these conversations documented?  

If you don’t have a clear view of every responsibility and kickoff action, you are handing your software OEM an opportunity to take even more control of the process. Build a protocol (and internal confidence in it) and give yourself a greater chance to build a successful defense.  

Issue 3: Your Company Isn’t Monitoring Common Audit Triggers 

Large software vendors have a reputation for keeping customers on their toes regarding audit timing. If you base your assumptions on when an audit will come solely on past experiences (“Last year they audited us X months before we renewed support”), there’s a good chance you’ll be blindsided.  

It pays to be aware of common software audit triggers and review them against both your recent activity and that of the software vendor. Alongside obvious potential triggers, like your company has a pending support renewal or has communicated plans to move to a competing vendor, other factors that seemingly have little to do with the software can also set an audit in motion. For example, when your company enjoys a surge in growth, a new account manager is assigned to your account, or your software OEM undergoes a change in ownership, the probability of an audit can increase.  

Issue 4: Your Company Isn’t Continually Documenting Entitlement 

They say the best time to plant a tree is 20 years ago and the next-best time is today. While you don’t have to go back decades, the same idea applies to gathering proof your company is entitled to use its software in the way it does. If you’re waiting until the audit notice arrives to put your paperwork together, you’re setting yourself up for a hectic audit experience at best and a highly expensive one at worst.  

What information you need to gather depends on factors like which vendor is auditing you and the software being investigated. Invoices, formal Proof of Entitlement documents, ongoing usage reports, and inventory data are four common things you will need.  

Regardless of which company you’re working with, make sure you print the terms and conditions of newly purchased software as soon as they’re available and store them in a secure location instead of retrieving digital copies from your publisher’s portal at the last minute.

With license audits, do sweat the small stuff 

Any company can incorporate greater vigilance and proactivity into its license compliance processes. But building in-depth knowledge of the software license audit process is a different story. Every vendor is different, and the tactics auditors deploy are as well.  

Wherever you are in your audit process, an independent software maintenance vendor like Origina can help you build a stronger defense. Before software megavendors charge you millions in software audit fines, talk to an expert who can make the challenging audit process easier before the notice ever arrives – and far less expensive when it does. 

Build a smarter IBM, VMware, or HCL licensing approach. Get started with our guide.