By: Steffani Lomax

For the past several years, software audits have been on the rise – to the point where every organization is at risk of receiving an audit request letter.  A recent Gartner study of 228 participants at the 2011 IT Financial, Procurement and Asset Management Summit indicated that 65% had undergone a software license audit at some point during the previous twelve months.  Given these statistics and the likelihood of an audit, what is the best thing your organization can do in anticipation?

The answer is prepare.  Having tools and processes in place that generate both the Business Intelligence and Business Analytics you need to determine your Net License Position with all your software vendors is the best way to be ready if that letter arrives.  Preparation is the key to a successful software audit outcome.

One large organization I worked with earlier in my career did not have tools or processes in place to help them understand their Net License Position with their vendors. Each time they received a software audit or true-up request, they went through a fire drill, gathering information manually on software licenses deployed and using spreadsheets for tracking.  It literally took man-years to prepare for an audit!  It was totally unproductive for the company to remove resources from other core business initiatives and re-allocate them to audit preparation tasks.

On the subject of preparation, John Wooden, a member of the Basketball Hall of Fame as a player and a coach, and arguably the most successful coach in college basketball history, had this to say:

“Failing to prepare is like preparing to fail.”

Demonstrate Your Company’s Knowledge of Software Licenses

When your organization receives an audit letter, you will need to respond.  If the response demonstrates that your company is organized and has an in-depth understanding of software licenses deployed vs. entitlements, the auditor may lose interest.  Auditors are paid to uncover non-compliance situations – potential revenue-generating opportunities for the software companies – so they will not want to waste their time with a company that has solid controls in place to manage and optimize their software licenses.

Software license audits can be delayed.  When an audit request is received, the proposed date or time frame  may conflict with critical initiatives and deadlines.  Often times an organization can postpone an audit for months, which can provide more time to prepare for the event.

The bottom line is to make sure your organization is well-prepared in advance of receiving a software license audit request.  Preparation is the recipe for success and will alleviate stress and unnecessary fire drills along the way!

In my next blog post, I’ll review how vendors select companies to audit.

Have a great week!

Tags: IT asset management, software asset management, software audits, software license audits