Software audits are no longer a question of “if?” but “when?”
It’s about Intellectual Property
That percentage will grow rapidly in coming years, in no small part because it will mean millions of dollars in revenue for the software publishers. Penalties of up to $250,000 in statutory damages can be charged for each infringement found. Penalty costs can also include recovery of the software vendor’s attorney’s fees. No matter what your organization’s size, these costs can add up to painful totals in a hurry.
Software vendors do not sell a tangible, physical product, but a virtual product of intellectual property that is licensed for use by the end-user. This makes control of who is licensed to use this IP and who is not a thorny issue for all software vendors, especially when using the IP means one should have paid for it.
Hence, the reason why software vendors have software license compliance programs to audit their customers’ usage of their licensed software.
Complexity & Compliance
Software licensing complexity has a part to play in this as well. With so many variations on licensing models and structures, it’s no wonder that IT managers throw up their hands in surrender when faced with the numerous scenarios they face with multiple products and vendors. Their traditional focus is on maintaining and supporting the systems they have so that the business can function, not on remembering all of the licensing complexities involved with the software they buy and use.
License compliance tends to be a kind of power struggle between the vendor and the end-user. The software vendor wants to be in control of when their revenues come in and attempt to maximize their control through the audit clause in their contract. The end-user wants to control when they make their purchases, with most attempting to go through the requisition process only once per year while others make their purchases as they come across them.
Related to that, license compliance also tends to require a type of balancing act, both on the part of the software end-user as well as on the part of the software vendor. The vendor wants their revenues, but still wants to retain their customer base, so the balance tends to incorporate how to obtain the revenues and at the same time, keep the customer happy.
On the other hand, the end-user may likely be using more software than they have initially purchased, but since they only purchase new licenses once annually, they will wait to purchase additional licenses when the timing is right, running the risk that the vendor will not initiate an audit before that time.
Audit Cooperation
Being cooperative throughout the audit process will make the process go more smoothly and have less impact on the customer’s time and business. Of course, that does not mean they should agree to everything the auditors ask of them, but they should weigh carefully their responses to reasonable requests and avoid an escalation of rhetoric based on an emotional response. The auditors have a process to follow that may be flexible and it may not, depending on the vendor. It’s more or less the same process they use for all of their customers. Working cooperatively with the auditors to accomplish the scope of their audit eliminates the suspicion that is created when unreasonable responses are the result of reasonable requests.
An Ounce of Prevention …
Animus can help reduce your exposure to software vendor audits with its experienced leadership team. We believe a proactive approach to software license compliance will minimize your risk during any audit, and reduce security risks while improving the budgeting process and financial controls. Our proprietary methodologies and services will identify software licensing gaps within your enterprise, and our quick-start methodology provides quick results and peace of mind.
Animus Software Audit Support Services
- Program Review
- Audit Response
- Audit Preparation Plan
- Software Discovery & Analysis
- Software Audit Prevention
- Software Value Risk Analysis
- Software Asset Management
Experienced in Software Vendor Audits
Animus has a seasoned team with more than 500,000 hours of conducting audits or consulting during an audit. We bring a unique perspective on how to help you prepare for and participate in a vendor compliance audit. Whether the client just received an audit notification letter or is just proactively preparing for the inevitable vendor audit, we have intimate knowledge on how they got to this point, what they need to do now, and what they can do to prepare themselves for future audits. Our team has experience with software audits on many software vendors that conduct audits and have customer compliance programs.
Brochures
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