What is a software license audit?

About: Licenseware specializes in license analysis automation and development to get licensing insights, from any data source, in minutes. Find out more about delivering better services on our website 👈

Software license audits are a process by which organizations review and evaluate their software usage to ensure compliance with the terms and conditions of the software licenses they have acquired. This can include identifying which software applications are installed, determining how many licenses have been purchased and are in use, and identifying any potential overuse or underuse of licenses.

One of the main risks associated with software license audits is the potential for organizations to be non-compliant with the terms and conditions of their software licenses. This can lead to legal and financial consequences, such as fines and penalties, as well as the potential for vendor-initiated audits that can be costly and time-consuming.

Another risk is the potential for organizations to unknowingly use software that is not licensed, or to use software in a way that is not covered by their current license. This can lead to unexpected costs and legal issues.

But… why? (i.e. What’s the reasoning behind it?)

The reasoning behind software license audits is to ensure that organizations are using software in compliance with the terms and conditions of their licenses. Software vendors rely on the revenue generated from licensing their software to sustain their business, and therefore, it is essential that they protect their intellectual property and ensure that their customers are using the software in accordance with the terms of the license agreement.

However, the relationship between software vendors and users has become increasingly fraught over the years, with both sides expressing mistrust and dissatisfaction with each other.

On one hand, end user companies have complained about aggressive licensing practices and audits by vendors, which they believe are designed to extract more revenue from them. This can include unexpected costs for additional licenses, audits that are costly and time-consuming, and penalties for non-compliance.

On the other hand, software vendors have expressed frustration with the high rate of non-compliance among their customers. They believe that many users are using software without proper licenses, or using the software in ways that are not covered by their licenses. This can lead to significant losses in revenue for the vendors, and it can also undermine the value of their intellectual property.

Both users and vendors have lost trust in each other because of these issues. Users feel like they are being taken advantage of, while vendors feel like they are not being compensated fairly for their products.

What should you do?

To mitigate this situation and minimise, organisations should focus on effective software asset management (SAM) and regular internal license audits. This can help organizations identify and resolve compliance issues, and it can also help vendors ensure that their customers are using their software in accordance with the terms of the license agreement. Additionally, vendors should communicate more clearly about license terms, and avoid aggressive tactics and penalties for non-compliance.

The good news is that the industry have evolved tremendously in the past 10 years and companies have plenty of choice when it comes to SAM tools or SAM services.

Psst… 👇

Need help in managing your Software Assets? Licenseware creates great SAM content, but even better SAM automations! 💪

Get Software insights in minutes today using our apps ⏱
Or book a call with one of our specialists 🧙‍♂️

If you find our articles useful, register for our monthly newsletter for regular industry insights 👇