Software Audits: What you don’t know will hurt you

Sponsored By: COMPAREX

There are a few inevitabilities in life: death, taxes and, for those in IT and procurement, software audits.

“The likelihood of a software vendor audit has risen steeply,” says Jason Mackay, general manager of Comaprex Canada. “Vendors have been building greater capability to conduct audits. Meanwhile many organizations lack the knowledge needed to deploy their licenses with confidence.”

Use of the cloud increases software licensing complexity, and so the risk of non-compliance continues to climb. Relationships with vendors can become blurred in the cloud, demanding increased vigilance. “It’s become harder for organizations to keep track of software assets due to adoption of virtualization and hybrid IT. The pace of innovation is so quick and it’s hard to keep up with their license needs.”

“It’s a real challenge in the marketplace.”

Vendors conduct software audits to help their customers become and remain compliant. It is also, of course, a significant revenue generation opportunity for them.

Surveys and studies over the decade have found software audits on the rise around the globe, and Mackay notes Canada is no exception. “We’ve seen a far more aggressive approach in Canada by major vendors, who are very actively pursuing compliance and audit checks.”

A costly mistake

An audit that finds a software license shortfall—or even instances of software use outside of its licensed use—can result in significant fines above the cost of paying for the unlicensed software in use. These fines can amount to up to $1 million.

Surprisingly, the heavy cost of such penalties isn’t top of mind for IT managers. A 2014 surveyed by the Business Software Alliance (BSA) found malware and security risks to be the main reason IT managers want to avoid unlicensed software use. Even still, less than half of those managers—just 48 per cent—were confident their organization’s software licenses were properly managed.

The BSA estimates unlicensed software accounts for about one-quarter of the software installed in Canada. This number is based on comparing software deployed against the number of licenses shipped or sold. At the same time, however, some the software deployed, licensed or not, is duplicating functionality or not actually being used, Mackay notes.

And costlier to business

The audit itself can have a huge impact. “We’ve seen organizations have eight, 10 or even 12 audits over the course of a year. Some are fast and fairly simple, but others can cause projects to grind to a halt and delay them for months,” Mackay says.

“If you’re faced with just a couple such software audits, it can have a dramatic impact on productivity.” He adds that penalty payments also eat away at budgets, causing the cancelation of some projects.

The answer, of course, is better control and governance through Software Asset Management (SAM). Unfortunately, the cost of entry for SAM in terms of people, tools and processes is too steep for most organizations.

“It’s a huge, huge investment,” Mackay notes. “And it provides little value back to the organization, compared to investing in innovation.”

A better way

Managed SAM as a service can provide that governance while avoiding the investment. Mackay points to COMPAREX’s SAM2GO. The solution captures the software assets deployed and determines which are being used. It then reconciles them with the organization’s purchases. Rather than try to develop their own capabilities, organizations leverage COMPAREX’s seasoned licensing experts and extensive database of software assets and licensing data.

“Organizations don’t usually become non-compliant with their software licenses on purpose,” Mackay points out. “There is often a gap in communications between procurement, legal and the teams deploying technology. IT builds projects, but aren’t trained in contractual agreements and software compliance.”

It’s for that reason, he suggests, that some CIOs and IT managers chose to over-purchase licenses to be safe. They still don’t gain the visibility required for governance and control of software assets.

This motivates forward-thinking organizations to embrace managed SAM as a service. “It not only helps with licensing and compliance, but to reduce the number of vendors through deduplication of software.”

“So, ultimately, even the likelihood of there being a software audit is reduced.”

This is the third in a five-part series on COMPAREX Softcare. For an overview on the solution, view the first blog in the series.

Learn More: Navigating the Cloud and Software Asset Management with COMPAREX Solutions


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Jim Love, Chief Content Officer, IT World Canada

Sponsored By: COMPAREX