Every piece of software installed in your organization comes with a license prescribing what can or cannot be done with the purchased software. It is very important for an organization to fully understand the terms of their software agreements in order to steer clear of any potential legal entanglements. 

Software audits safeguard the interests of both vendors and users. Vendors are protected against piracy, exploitation of single-user software, infringement of copyrights, etc. Users enjoy piracy-free systems, and they know the status of utilized or un-utilized software. In addition to licensing the software correctly, organizations have also paid for and installed software that is unused or is rarely used.

What many organizations fail to realize is that this unused software can cost their business millions. As this 2015 Aberdeen Essentials report reveals, of all the software deployed in an enterprise, 28% goes unused or barely used. This amounts to a loss of nearly $224 per PC.

Furthermore, the number of license audits being conducted by leading software vendors is increasing. A 2012 Gartner report reveals that the likelihood of going a whole year without receiving at least one such audit request by a software vendor is only 35%.

Types of Software Audits

A software audit can be either internal or external. Internal software audits are executed by either an in-house team or a team of consultants, whereas external software audits are carried out by external parties. Internal audit reports are used by an organization to check what software is installed across the organization and how the deployed software is utilized across the network. This gives an organization a chance to reassign the unused software, adjust its usage, and manage any internal shortcomings.

External audits are conducted by vendors or other third parties to ensure that the organization’s system is free from under-licensed or pirated software products. If any under-licensed or pirated products are detected, the vendor may demand to resolve the matter immediately, which may result in serious consequences or an unexpected expenditure for the organization.

There are generally two types of software audits:

Software Assessment Management (SAM). SAM is also known as ‘self-audit’. It refers to a set of IT practices that involve managing and optimizing the purchase, installation, utilization, maintenance, and disposal of the software being used within a work place, ensuring that clients are in compliance with their software agreements.

Legal Contract & Compliance (LLC). An LLC is issued to an organization when the organization refuses to conduct SAM. LLC is a non-voluntary audit. The Business Software Alliance (BSA) conducts all LLC audits.

How to prepare yourself for a Software Audit

1. Take a Proactive stance. If you do receive an LLC Audit, do not simply accept the audit terms, process, and results. An LLC notice is sent to the organization from the BSA before conducting an LLC Audit. If an organization realizes that they haven’t complied with regulations, they should approach the vendors and make settlements as soon as possible.

2. Conduct periodic in-house audits. Your organization should conduct timely in-house software audits. Self-audits must be conducted at least twice a year, perhaps even more frequently if the software system is large or complex. Various automated software asset management tools can help an organization identify the applications that are under-utilized or unused. These tools can also help you maintain your software inventory, leading to a smoother audit process.

3. Communicate with your vendor. Organizations must inform their software providers that they take software audits seriously, and have incorporated rigid measures in order to adhere to the software compliance agreement as much as possible. This will not only build trust and goodwill, but also may deter vendors from auditing your organization in the first place.


pic     Lucjan Zaborowski is the Head of Digital for 1E. He has over six years of experience in multi-channel digital acquisition, and is keen to learn and stay up to date with the latest marketing trends.

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