Cherwell IT Service Management Blog
Resources, Best Practices, and Solutions for ITSM Pros

The Unknown Realities of a Software Audit

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In our recent blog post, Four Common Misconceptions About Software Audits, we revealed that the largest of companies are not the only businesses susceptible to a vendor audit. Our 2013 Software Audit Industry Report reveals that companies of just about every size are vulnerable, with 52% of companies over 500 employees having undergone audits in the last two years. In fact, 79% of respondents believe it is “just a matter of time” before they are audited. Given that audits are happening to companies of all sizes, the real questions are what are the impacts of software audits on businesses, and can deploying IT asset management (ITAM) tools help?

Software Audits Are More Time Consuming Than Expected

The amount of time and overhead consumed by software audits can be startling. Our Software Audit Industry Report reveals that 70% of respondents who work at companies that have been audited found the most challenging aspect of audits was the sheer amount of time required to gather the data demanded by the vendor.

While 45% of audited organizations were given a month or more to prepare after being served with the initial audit letter, 27% of companies had only one to two weeks to prepare, and 8% had fewer than seven days. But that’s only the beginning: nearly half of all audits took more than three months from receipt of the initial inquiry to the conclusion of the audit.

The amount of time consumed by audits is taxing to businesses and the productivity of their staff. IT professionals who are responsible for keeping the overall network running smoothly, implementing new technologies, and executing against strategic initiatives, must shift gears and dedicate the majority of their time to audit preparation and response. This represents a significant opportunity cost which extends far beyond true-up fees and non-compliance penalties a company may be required to pay when the audit is complete.

There are Ways to Reduce the Burden of an Audit

As daunting as the time and resource demands of a software audit can be, there is some good news. Our survey reveals that having in place an IT asset management (ITAM) tool to track license compliance can help. Companies that had such a tool in place prior to being audited generally found it to be effective in producing the required information. In fact, 46% of respondents report that their tool was “very effective” in providing information necessary for the audit; the vast majority of the remainder state that their tool was at least “somewhat effective.”

Perhaps more importantly, the study shows that companies with ITAM tools report a 32% lower audit rate over the past two years. According to an Ernst & Young survey of the eight major software vendors, the top reason ISVs audit their customers is to generate revenue. If you accept this premise, it stands to reason that if a vendor is aware a customer is making a good-faith effort to be compliant via implementation of ITAM technology and best practices, that customer is less likely to represent a significant revenue opportunity. In addition, customers that are able to quickly produce effective documentation of their license position immediately upon receiving an audit inquiry are less likely to be targeted with a full-blown investigation.

There Are Free, Full-Featured Software Compliance Tools Available

Software audits are both time-consuming and costly, and many executives don’t appreciate the toll it takes on their IT departments. The results of our 2013 Software Audit Industry report suggest that ITAM tools can both reduce the risk and help ease the burden of an audit. The good news is that it doesn’t have to cost much, if any, money to get started. In fact, we offer the Inventory Edition of our Express Software Manager product for free, offering software inventory and compliance reporting on up to 1000 machines. Users are entitled to use the product perpetually, with absolutely no strings attached. You might wonder why we offer all of this for free? It comes down to this: we don’t think any company should have to live in dread of software audits.

Still have questions about how to prepare for software audits, or what you can expect if you are targeted? We have a powerful community of industry experts who are waiting to share their decades of experience with you. Whether you have specific questions or would like to share your own experiences with software audits, our Software Audit Forum is the perfect place to get advice and exchange knowledge. Best of all, it’s totally anonymous.

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