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7 Crucial Steps To Prepare For A Software License Audit

7 Crucial Steps To Prepare For A Software License Audit

It’s finally happened. One of your software vendors has notified you that it will be conducting an audit of your software licenses. It’s possible that you have never dealt with a software license audit before and you’re not quite sure what to do. The software license audit can be one of the most dreaded parts of software license management.

Is your organization in compliance with your software license agreement? How closely have you been monitoring your software license usage?

It can be a stressful situation. You’re probably well aware of the potential consequences your organization could face if it is found to be misusing its software licenses.

According to a recent article on cio.com, software vendors are stepping up their software audits due to decreased revenues. They are hoping to recoup some of the revenue that is being lost. This means your company could end up helping them replace lost income if it isn’t in compliance with its license agreement.

However, a software license audit doesn’t have to be nerve-racking. If you are adequately prepared, you won’t have anything to worry about. This post will discuss some of the things you can do to make sure you will have nothing to fear from a software license audit.

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What is a Software License Audit?

A software license audit occurs when a software vendor decides to take a full inventory of the amount of licenses your company has purchased and compare them to the amount of licenses that are actually installed on your computers. A vendor will typically do this if it has reason to believe your organization may not be using their software licenses appropriately.

When the vendor conducts its audit, it is looking for evidence that your company has installed more licenses than it has purchased. They are also looking for any indication that the licenses are not being used in the way they are intended.

If the vendor finds that your organization has installed more licenses than is allowed, it could have severe consequences. It may require you to not only purchase the extra licenses, but also pay hefty punitive fines. In cases that involve more egregious violations (piracy), it could involve full-blown legal action and even jail time!

If your company is not managing its software licenses effectively, it could be in danger if a vendor decides to conduct an audit. That’s why it’s essential that your organization is prepared.

You Must Be Prepared

Fortunately, there are ways you can make sure your organization is ready to undergo an audit. If you follow the tips Preparation Chalk Shows Groundwork Plan And Readinessoutlined in this article, you will be in a much better position to deal with an audit.

As a matter of fact, doing your due diligence when it comes to managing your licenses can keep you off of the vendor’s radar. You might be able to avoid having to do an audit in the first place!

Take A Proactive Stance

If you do get notified that your company is going to be audited, don’t just sit and wait for it to happen. In some cases, you may be able to address any issues beforehand.

The vendor doesn’t necessarily have to have all the power in this situation; you should make sure that you are able to take a look at the vendor’s findings before the settlement. In this way, you can make sure that the vendor’s audit has not missed any licenses that you are actually entitled to.

Vendors aren’t perfect and they can make mistakes. Don’t assume that their findings are final.

Understand your License Agreement

Take a close look at your license agreement. It would be a good idea to have your legal counsel review it with you to make sure you have a full understanding of what your rights are. As a matter of fact, this should be done before an audit even happens.

The more educated you are, the better the position your company will be in. Having a comprehensive knowledge of your license agreement will help you avoid making costly mistakes with your software licenses.

Prepare in Advance

One of the keys to preparing for a software audit is to act preemptively. In short, audit yourself instead of waiting for the vendor to do it.

Even if you already have an effective system for managing your licenses, you should still conduct periodic audits of your software license usage. Doing this has several advantages.

It can test the reliability of your current software license management policy. If there are serious flaws in your management system, an internal audit should uncover it. This gives you the chance to fix any issues.

If your audit turns up any discrepancies between your software license purchases and usage, you have another advantage. You can act on this information proactively. Contact the vendor and preemptively work to solve the problem. Doing this can help you avoid the hefty fines and legal issues.

Also, when you conduct your own audit, it can give more insight into how your licenses are being used. In some cases, you can figure out how to use your licenses more effectively.

Have a Centralized Information Hub

Many organizations have the information on their software licenses scattered throughout the company. Software license data should be kept in one place. This makes it easier to keep track of your licenses and make sure your company is remaining in compliance. It can also help you figure out if you have too many licenses, which is something that could help you save money for your company.

Know How Many Licenses have been Purchased

Creating a central information hub is essential. In addition to that, you must develop an effective way to keep track of the software licenses your organization has purchased. If you aren’t keeping track of this, it will be much harder to prevent noncompliance.

This means that you will need to make sure you are recording each software license purchase. Create a system that allows your organization to keep detailed records each time you need to purchase licenses. This will make license reconciliation easier.

Create a System for Monitoring Use

When you have a better handle on keeping track of your software license purchases, you must create an effective system for monitoring the use of your software licenses. This means you need to make sure you know how many licenses are actually installed on machines.

In addition to knowing how many licenses are installed, you need to figure out how each license is being used. It’s very likely that you will find cases where a license is installed on a particular machine, but isn’t being used much, or at all. When this happens, you can reclaim the licenses and allocate them to other users who actually need them. This doesn’t just help you keep in compliance, it also helps you save money.

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Software audits are a very serious matter. If you are not managing your software licenses efficiently, it can be costly. Many organizations have had to write large checks to software vendors because they didn’t take the time to carefully monitor their software license use.

Don’t make this mistake. Make sure that your Procurement Organization is ready for a software license audit.


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