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Minimizing the Pain of a Software Audit

Ernst & Young predicts that the average vendor’s software audit requires about 200 hours; in complex organizations, that time can escalate to as much as 5,000 hours. You work for a software vendor, where executives are pushing your audit team to generate revenue by finding non-compliance issues. At the same time, they also want you to educate clients on how best to manage their software assets. Your clients don’t want to talk to you; after all, you’re the bad guy. How can you improve customer service when you’re the last person your clients want to see?

As a software company, you have the right to protect your intellectual property, but you have to recognize that your clients hate software audits. As more developers enter the applications space, your clients have more options than ever when they shop for software. Balancing good client relationships with your company’s profit margin can create long-term good will while still protecting company revenue and IP. The key is to change to a “trust but verify” approach.

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Why Your Clients Hate Software Audits

Although you probably aren’t as universally despised as an IRS auditor, you’re still the villain when it comes to software licenses. Before your visit, keep in mind why your clients hate the auditing process:

  • Licensing schemes are confusing. Software vendors are always updating and rebranding their products. Plus, Microsoft has one model for licensing, and IBM has another. To make matters even more complicated, technology companies are always buying each other, but clients may not know which company acquired another. Therefore, they may not know whether Omniture products now fall under Adobe vendor agreements.
  • IT needs are complicated. Many clients don’t understand the intricacies of virtualization and server consolidation the way that you do, and they also don’t understand how much of an effect these processes have on software licensing. They would much rather focus on their core business activities than try to wrap their brains around software licensing in a cloud environment.
  • Internal control is tough. Decentralized purchasing within your client’s organization causes problems related to software licensing. For example, an IT employee may download a free trial version of your software but may then forget to upgrade to a paying license. When you start your audit, you may find that software, but the IT employee who downloaded it may be working for another company. Your clients can’t control everyone within their organization, no matter how much it frustrates you as the software vendor.
  • Internal audits take too much time. By the time your client company scans its network for your products, reconciles all of the data and compares its usage to your licensing agreements, valuable time has elapsed. They’ve usually scrambled to do this right before the audit, so they’re already cross about how much time your audit has leeched from their workdays.

“Trust but Verify” for More Painless Audits

Both software vendors and their clients can benefit from a “trust but verify” approach instead of onerous software licensing audits. In exchange for using an application, an organization agrees to provide usage data so that the software company can monitor compliance and automate auditing. Instead of coming in and auditing “just because,” you can decide whether to perform a more extensive audit by looking at the following questions:

  1. Is the organization exceeding the terms of the agreement? If so, is the overuse serious enough to warrant a full-blown audit?
  2. When does excess usage happen? For example, is the organization breaking the agreement during peak business volume times or during certain seasons?
  3. Where is the excess usage centralized? Does a certain company user, department or branch violate the agreement regularly?
  4. What are the implications for future agreements? How can you provide value to your clients by adjusting their licensing based on how they need to use the product?

If you don’t have something in-house, then invest in a software monetization solution that can allow you to monitor how your clients use their software licenses. You’ll generate the licensing revenue that your bosses want while becoming an approachable and trusted resource for clients.

About the author: Tony Gillingham has extensive experience with license monitoring and auditing. He recommends software licensing products from SafeNet for the “trust but verify” client relationship.

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