Software Vendor Audits are still present, and they’re not going anywhere

License Dashboard recently released the 2020 ITAM Community Survey results which highlighted some surprising figures, including the rate at which software vendors are apparently still auditing. Despite software vendors reducing their in-house audit teams and audit activity not appearing in the news as much, the data collected from our survey tells a different story.

Audits have always been the main driver behind implementing a Software Asset Management (SAM) solution, but more recently SAM vendors have been marketing the other benefits of effective license management, meaning auditing has taken a back seat. Our ITAM Community Survey revealed that 59% of all respondents have been audited in the last two years and 36% in the last 12 months, showing that vendor audits are still very much around. Audits have been a source of revenue for vendors in the past but they also need to ensure their intellectual property is protected and being utilized correctly within the remit of their terms and conditions.

The ITAM Community Survey revealed that Microsoft is the biggest concern for software licensing overspend. This stands to reason with it being the most used software from our survey respondents, however there is a perception in the industry that Microsoft isn’t focussing on licensing compliance. This is incorrect and organizations need e a fully robust SAM strategy for installing, managing and utilizing Microsoft software correctly.

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The good, the bad, the ugly of software audits

The Good

We could argue that no good can come from a software audit, but they do produce accurate data around your IT estate and potentially highlight some significant cost saving opportunities. Having a clear view of what your organization has installed and what is actually being utilized means you can remove any unused software and potentially reassign the license elsewhere in the organization. Organizations can also smoothly plan and execute company-wide software upgrades to ensure standard software throughout their IT environment.

Understanding your software footprint will help filter out any historic software that is scheduled to be replaced, which will improve your employee experience. If your employees are on the best possible software to do their daily jobs with fewer support calls, and fewer potential security vulnerabilities.

Another good point to come from a software audit is that once you return to business as usual and have addressed the areas of concern, you can start to optimize your software by removing unused installs, reharvesting licenses, and amending duplicate accounts to and save the organization money. You will also be in a stronger position to negotiate contracts upon renewal dates, and, possibly the most important, you’ll be prepared for the next audit.

The Bad

An old tactic for becoming audit ready was to purchase extra licenses, making sure the organization can’t be found to be non-compliant, but this can be just as detrimental as not having enough licenses. Unused licenses are an unnecessary cost from the offset but could also come with additional support, maintenance or upgrade costs depending on the contract you have in place.

On the other hand, if you are found to be non-compliant, you are unable to negotiate the cost of aligning your licenses to your software installments. To avoid a fine on top of the licensing costs you’re going to have to agree with the vendor’s price list. Working with vendor specific licensing specialists will help you understand your licensing rights, for example a Microsoft Licensing Specialist will be able to identify any areas of your EULA or Software Assurance where you are in fact covered. Knowing and understanding the lingo for each vendor is a skill not many of us hold but leaning on internal or external teams will stop you from getting burned by the vendor when paying for the uplift in licenses.

The final bad point we will raise here is the overall cost of severe non-compliance. Gartner states that the average cost of a software audit is $500,000 and that doesn’t include the recovery months and potential stock falls from bad publicity.  Let’s face it, no one wants to be in that position.

The ugly

The ugly parts of an audit highlight just how much one interaction can impact on your organization. Responding to a software audit takes time and resource away from business as usual and can impact on daily jobs and planned projects if you are unprepared. Every experience will differ, and the question is similar to ‘how long is a piece of string?’ but we asked some esteemed ITAM consultants “how long can a vendor audit last?” and the responses were surprising:

“Aim for six weeks, but some can last six months.”

“One I was brought on to lasted 12 months – six without a consultant and six with.”

“The shortest audit I have dealt with lasted three months but the longest 15, and one customer I worked with was continuously audited by the same vendor for close to 3 years.”

The Campaign for Clear Licensing highlights that the average software vendor audit lasts seven months.

According to these responses, an organization needs to consider whether they can afford to take anything from six weeks away from business as usual, up to 15 months. That’s just dealing with one vendor too, there is no guarantee that you’ll only receive one audit request with any given time frame. In fact, if there is publicity around your organization’s audit, you may find that this prompts other vendors.

How do we remain audit focused but reap the effect SAM benefits?

Organizations being purely prepared for software audits are managing their software assets in a reactive way, and that can take a hit off the overall revenue. However, implementing an audit centric approach to managing your IT environment ensures you are in the best possible situation when you receive an audit request without deviating from business as usual, and means you can take advantage of the benefits of effective license management.

Ensuring your entitlements align to software installments and your SAM data is presented in a clear, readable and actionable format will take you beyond compliance and into reduced IT costs, standardized software throughout the organization and solid project plans to move your organization forward.

To read more about software audits and our industry’s biggest concerns, download our 2020 Community Survey.

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Ben Murden

Ben Murden

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