8 Simple Steps to Surviving a Software Licensing Audit (Hint: Cloud File Sharing Can Help!)

by Andrew Mullen on February 23, 2016

It happens every day. A business receives a letter from Oracle, Microsoft, SAP, IBM, or another software vendor, informing them that they have been selected (targeted?) for a software audit. What now? Now is not time to panic. Now is the time to consider your options, prepare for the audit, and make sure that your business comes out a winner. Here's how.

1. Understand What Auditors are Actually Looking for

Surprise! You've been served with notice of an impending software licensing audit. What now?

Auditors are most commonly looking for companies that are abusing their licensing agreements. They are really out to get those businesses that do it willingly and blatantly, but they will definitely frown upon practices that allow it to happen incidentally. Audits can also identify where you've over-purchased licenses, so if you aren't habitually abusing your licensing privileges, you're already a long way toward surviving the audit.

2. Convene IT, Legal, and Other Stakeholders

Gather IT, legal, operations, and departments using the vendor's products. Have legal examine the papers sent by the vendor as well as your software license agreements to determine exactly what rights the vendor has to audit, what restrictions are in place, etc. Now you're on solid ground and know where you stand.

3. Consider Hiring Outside Legal Counsel

If your internal legal staff is well versed in HR law, mergers and acquisitions, real estate, or other legal disciplines, you might consider hiring outside council that has knowledge and practical experience handling software licensing laws.

4. Establish Parameters for the Audit

Their right to audit does not give them 100% access to anything and everything they want to poke through. Establish parameters for the auditors. Your confidentiality is as important as their right to collect fees for the use of their products.

Your business has the right to establish reasonable parameters for the vendor. For example, exactly how will the audit play out? When can the vendor conduct the audit? Obliviously, it isn't fair for auditors to barge in during your year-end closeout or other hectic times and expect full cooperation. Also, discuss with your legal team what the scope of the audit will be. There are parts of your network and systems the vendor likely has no right to barge into. Your confidentiality is important, too.

5. Know Your Options: Opting Out or Negotiating Out

While you (probably) can't legally continue to use the vendor's products and deny them the right to audit, you can offer them a place to shove their products, thereby dodging the trouble and liability of an audit. If it's software you can reasonably and practically do without, you do have the option to toss their product(s) and go with another software vendor. This isn't an option if your business depends on the software for critical work, but it is an option if you can do without it, or if there is another viable option from another vendor.

6. Avoid Destroying Records or Deleting Software

If you are going through with the audit, resist the urge to hold a house cleaning in advance of the auditors' arrival. This just makes it look like you have something to hide. You're better off facing up to oversights, negotiating a reasonable settlement, and mending your ways in the future.

7. Begin a Self-Audit

You can definitely conduct a self-audit in conjunction with the vendor's audit. This does two things: it helps assure that they are honest, transparent, and fair; and it also helps you identify areas where you've over-bought or under-bought any software products (either theirs or another vendor's).

8. Take Steps to Protect the Business Against This and Future Audits

As the saying goes, an ounce of prevention is worth a pound of cure. An excellent way to keep your software usage under control, assure that you have adequate licensing, and that your processes are transparent is to centralize your databases and applications and empower cloud file sharing for your workforce and users. For instance, you can use Microsoft Azure to establish a centralized infrastructure, providing both desktop and mobile workers (and even customers or third-party vendors) access via cloud file sharing.

FAST™ products are specifically designed to work with Microsoft Azure for fast, secure file sharing and a stellar user experience. See an overview of CloudFAST™ here.

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