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9/2/2014
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5 Signs You'll Face A Software Audit

When vendors spot these red flags, they may use them as reasons to run a licensing audit.

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Software vendors have automated ways to monitor usage of their products, and the larger the company, the more they pay attention to "red flags" that it may be time to run an audit, says IDC's Amy Mizoras Konary. Here are five customer events that Konary says can tip a vendor to do a software audit:

1. Your company is involved in a merger or acquisition. Things can get messy amid such consolidations. Companies might consider calling in software vendor compliance teams for help in sorting out what software is licensed and needed, and what new buying discounts they might get.

2. You're doing virtualization and private cloud deployment. Get a clear understanding of virtualization licensing terms before you start spinning up virtual instances. Unaware administrators can scale up your licensing obligations in a hurry if you're not careful.

3. Your company is growing but not buying more software. "In some situations the sales rep may say, 'They've grown a lot' or 'They did this particular deal, so we should audit them because they should be spending more money with us,'" Konary says.

4. Your top licensing expert leaves the company. Just when you're ill-prepared to document and defend your compliance position, don't be surprised if that's when the audit letter arrives.

5. You're not managing your licensing position. If you betray uncertainty in dealing with software vendors or, worse, defiant-but-vague confidence that you "must be overspending," don't be surprised if those vendors want to verify your compliance position.

Related stories:

Software Licensing: Move From Defense To Offense

Cloud Won't Cure Licensing Woes

Get the entire Sept. 2 issue of InformationWeek -- no registration required.

 

Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio

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D. Henschen
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D. Henschen,
User Rank: Author
9/3/2014 | 4:20:34 PM
We're not questioning the value of software
As I wrote in the preamble of the main article, "Software Licensing: Move From Defense to Offense,"...

"Let's start with the understanding that software is incredibly valuable and that vendors spend lots of money to develop software functionality. They deserve every penny that's due to them under their stated licensing terms."

And as stated in this "5 Signs" story, companies sometime invite audits in complex situations such as mergers and acquisitions because it helps them iron out why they have and what they need. Your point is well taken that this list would be helpful in other scenarios. The point of the main article is to understand your software needs and how they are changing. What you bought five years ago might be very different from what you need today.
zerox203
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zerox203,
User Rank: Ninja
9/3/2014 | 3:40:05 PM
Re: 5 Signs You'll Face A Software Audit
These are great tips to be mindful if you're weary of a software audit. It may be fun to paint vendors as malicious folks out to bust you for the smallest mistake, but the truth is that they're just doing their jobs and trying to plug up cost sinks the same way we are. This list helps to show why - of course you'd want to keep an eye on a big company using your product or service while they're going through a merger. Something good (or bad) might come out of it for you! There's also legal compliance to factor in - they can't always just look the other way, even if they want to. As Li Tan pointed out, we ought to think of audits as a fact of life.

Come to think of it, this list could kind of serve as a template for how to avoid many unfavorable situations, couldn't it? If your chief officer of anything leaves, you should be on the lookout for trouble in that area (chief security officer(s) spring to mind first). 'Going through a merger is pretty much a catchall for potential headaches. The tip about not buying software works for this too - if you're doing more of 'X' that requires 'Y' but not finding yourself with that much 'Y', keep your eyes open for something you may have a missed. For example, if you're not finding that bad training is causing people to fall for social engineering attacks, it might be because you're not noticing them. I think I'll commit this list to memory.
Charlie Babcock
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Charlie Babcock,
User Rank: Author
9/2/2014 | 2:12:08 PM
This is theater, keep an understudy in the wings
The notion that you're susceptible to audit after your top licensing expert leaves hadn't occurred to me. I asked myself whether a software company could actually track that, and of course, there would be ways they would do so. So Keep an understudy waiting in the wings and document everyting before the expert exits.
D. Henschen
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D. Henschen,
User Rank: Author
9/2/2014 | 10:14:21 AM
Audits don't happen by accident
Software companies use software and human intelligence to figure out when the time is right for an audit. Sometimes software customers actually ASK for an audit, as when there's a big, messy merger or acquisition and they need to get a handle on the new licensing position.
Li Tan
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Li Tan,
User Rank: Ninja
9/2/2014 | 9:52:41 AM
Very good summary
This post is short but a very good summary for the situations that we may face software audit. The software audit is a common practice in formal, especially big enterprises.  The audit may become even more necessary under the circumustances mentioned in this post. In this case, we just need to face it and get ourselves well prepared.
Li Tan
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Li Tan,
User Rank: Ninja
9/2/2014 | 9:52:39 AM
Very good summary
This post is short but a very good summary for the situations that we may face software audit. The software audit is a common practice in formal, especially big enterprises.  The audit may become even more necessary under the circumustances mentioned in this post. In this case, we just need to face it and get ourselves well prepared.
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