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Customer Snapshot: Trial By Audit (Part I)

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Note: The identity of the following company has been concealed to protect the non-compliant.

Part I: Fast-growth Company Derailed by Software Audit Pains

A rapidly growing, Texas-based microelectronics manufacturing company learned the hard way about the difficulties of license compliance when it was targeted for audits by two software vendors within a very short period of time.

Specializing in the fabrication of mechanical systems used in construction, the company was expanding fast. In fact, its commercial success was so rapid that it was difficult for the company keep its eye on finer details—including software licensing practices. The Vice President of IT painted a solemn picture: “Our software inventory was still being tracked using an Excel spreadsheet. Written policies surrounding software piracy existed, but weren’t enforced. Nobody even knew how many computers we had.”

High growth profiles like this are a red flag to software vendors looking to enforce license compliance. In this instance, Microsoft made the first move, initially with a letter asking whether the manufacturing company had an automated software license tracking program and requesting a PC count to prove that their Microsoft licensing was in order. The IT department had to conduct the investigation manually, finally appealing to their supplier to provide printouts of their purchases so that license details could be compared to inventory data. It took over four months.

Luckily, Microsoft decided not to impose penalties and was satisfied with the company’s commitment to bringing their license counts up to date. Unfortunately this was not the end of their audit trials, and the next was far worse.

When a terminated employee reported the company to the Business Software Alliance (BSA) for being out of compliance with its AutoDesk software licenses, the IT department discovered that their AutoCad usage had increased by fifty percent without a corresponding license purchase, and without a means of preventing unauthorized usage.

The consequences were harsh. The company was “outed” in a BSA press release, spent costly time and resources managing the licensing and legal ramifications, and was fined $4500 per unauthorized user plus a multiplier based on the duration of use. The only mitigating factor was proof that the manager who installed the unlicensed software had signed the company’s software usage policy stipulating that only licensed software reside on the company’s computers. Had this not been the case, the penalties would have been much worse. This was the call to action for the company to rectify its licensing situation.

Read Part II of the story: Getting Back on Track.