Enterprise IT: Preparing for a software audit starts with being proactive

What corporate IT executive wants a software audit? What department has the time or the resources to undergo an unexpected compliance audit from a major enterprise vendor or the biggest software players?

Corporate IT faces daily pressures to deliver critical services to the business. A software audit saps resources from already lean mission critical business functions. Most corporate IT departments lack a centralized way to manage software license and compliance information—especially for high-value enterprise applications. That’s because software licensing is almost never something that IT execs think about on a day-to-day basis.

Yet software audits are on the rise. So much so during recent economic times that business analysts have cautioned their clients about the activity. For example, Oracle can, at any time, perform a software audit to determine if there are any disparities between their customers’ software licensing agreements and the actual implementation of the company’s software products. An annual “true-up” is typically written into every Oracle contract. Plus, some analysts have said that the threat of a software audit can be an effective sales technique.

Face facts: software audits are expensive and risky

You need to know the best ways to avoid these inevitable, time-consuming, and costly information hunts. Why? Because analysts have warned that enterprises should assume that within the next few years they will be approached by at least one vendor for a software audit. Some have predicted that about 40% of mid-size and large businesses can expect an external audit, with the risk of fines. An audit itself can be as much as 15% of the corporate IT software and maintenance budget.

Best practices: avoiding a software audit altogether by being proactive and information savvy

First, having the right information is essential. This can give you confidence as you enter the software audit negotiation but can also, given the granularity of detail, give you an opportunity to save money. Second, having information is one thing, but you also need ready access to the right information. If it takes several days or a week to retrieve and assemble, that information is costly no matter how granular it is.

When organizations don’t track their software license usage, they risk more than being on the losing end of a software audit, they risk buying the wrong number of licenses and investing in shelfware. A costly budget buster.

Software license management tools offer direct way to optimize usage to specific license terms and control software spend for enterprise level applications, like SAP, Oracle, and engineering applications - the applications that are most likely to be audited and where IT departments most often lack detailed information. Centralization is also important because you as an IT manager need to be able to see software usage across the enterprise, watch the usage trends, and compare this to contract terms on a regular basis.

Some software license management tools will also connect this detailed usage data to license terms and the organizational structure, based on your business rules. For example, to compare usage by job function, geographic region, or other criteria and then correlate that to product functionality. Pulling centralized data like this within hours of being notified of a software audit can better your chances of success and may even, given the right circumstances, prevent the software audit altogether.