The Attack of the Audit and Your Key to Survival

No company wants to face an software license audit, but especially smaller businesses without sufficient funds and the resources to protect themselves. Unfortunately, the question today as it relates to some of the big software licensing vendors is not if they will audit you, but when. While companies like Microsoft, Oracle, IBM, and SAP are respected for the quality of their products, they also have a reputation for their restrictive licensing contracts and abuse of audits to extract more money from their customers.

Because of this, your company must employ both preventative and protective measures to decrease the financial damage a software audit could cause your company. The best steps for combating the effects of audits from software vendors are simple. So what are some of the ways you can survive an audit?

1. Create a global “audit castle”

Many companies have begun to fortify their headquarters to keep out aggressive auditors. From education on legal rights to the institution of processes to deal with auditors, companies are increasingly working to protect their software assets and decrease the negative ramifications of an audit. However, a common threat that is often neglected is the protection of all foreign subsidiaries as well. Software licensing vendors use this to their advantage by attempting to start an audit from these foreign subsidiaries.

Some leaders in the industry have noticed that auditors, when they can’t get to the main headquarters of a company, will go after the subsidiary instead. The secondary office may not have the management or staff to handle the patches and upgrades that the headquarter has, so this would make them an easy target.

This plan of attack emphasizes the importance of creating an “audit castle” that encompasses not just your company’s main headquarters, but all subsidiaries and branch offices as well. Any small window of opportunity left open will be taken by auditors, so it is important for foreign managers to understand what they should do if approached by auditors. The best solution is for them to refer all auditors to the home office so that your company can deal with the audit according to your timeline and procedures, not the auditors’.

2. Know What Software Your Company Needs

Today software license audits are used less to extract financial gain over non-compliance and more to try and sell more products to clients. It would stand to reason, then, that your company can be prepared for this manipulation by understanding what software you actually have and need and what options are available. Rather than being told what they need by the auditing software company, a strong company will instead clearly communicate their specific needs in advance. This kind of practice will not only make the software licenser aware that your company knows what software it has but may also server to prevent the audit altogether.

3. Get Ready for the Cloud

Most major software vendors present enterprise cloud solutions as the sole commercial solution for audits. Increasing their cloud revenues keeps Wall Street happy and helps their bottom line, so it makes sense that software licensing vendors would try to sell as many licenses to cloud solutions as possible. However, their cloud offerings aren’t always the cheapest or best option for your company. It’s important to remember this when trying to find resolutions to an audit.

4. Know Your Rights

Almost all customer licensing agreements include the right for software vendors to audit their customers at least once a year. Each contract specifies how much time should be given as a warning before the auditing process actually begins. This varies from contract to contract, so make sure you understand how much time you are owed to get your records in order before the formal auditing process begins.

Some clients can negotiate the audit clause out of their licensing contract, but this is extremely rare. As such, it is best to prepare for compliance far in advance, so you aren’t surprised by an audit.

5. Explore All Your Options

Finally, your company should know what products you’re using and where to get maintenance and support for them. These services don’t necessarily have to be purchased from the licensing company, and in fact will often cost more money if you do so. Also, keep in mind, if your company is using an older version of a product, the licensing company might not even cover active maintenance and support for it—even if you’re paying for it.

Enterprise Integration, in our partnership with Eracent, offers automated solutions that help customers track hardware and software assets. ITMC DiscoveryTM delivers comprehensive lifecycle management including license harvesting, allocations and reconciliation, infrastructure monitoring and alerts along with a configurable dashboard to track assets and tasks. This solution also generates reports allowing your organization to perform continuous internal compliance audits. With Eracent’s offerings combined with Enterprise Integrations’ Service Delivery IntelligenceTM (SDI) companies can discover, map, and visualize all core components and know the health of the total business technology supply chain.

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