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Software Usage Data Transparency Eliminates the Pain of Software Audits

By Tracey E. Schelmetic, TMCnet Contributor

If you’d like to give your entire IT department a headache, just say the following two words: software audit. If you’re a customer of Microsoft, Adobe, Autodesk, Oracle (News - Alert), and SAP, chances are good that you’ve either recently completed an audit or are about to undergo one. These five vendors are responsible for the lion’s share of software vendor audits in the U.S., according to a study conducted last year by Express Metrix. The research found that 53 percent of respondent firms have been audited within the past two years, and that audits are more likely in larger organization. This doesn’t mean that small to medium-sized businesses are immune, however.

To reduce the pain, according to a recent blog post by Flexera’s Greg Holmes, companies should do everything they can to plan for a future audit. While it’s always going to be a nuisance, good planning can help reduce the cost, time and effort to the average company experiencing a software audit.

“Audits cost money—usually unbudgeted, when you don't have an accurate view of your license position and have to true-up at the end of an audit due to non-compliance.  They can also cost jobs and affect the quality of vendor relationships,” wrote Holmes.

They’re also not easy, since software usage usually lacks the type of transparency companies have with energy usage, for example, or telecom bills. According to Holmes, software vendors seldom have a clear view of a company’s license consumption. 

“A software audit is a rudimentary method that software vendors use to make sure that the contract you have with them is enforced, at least from their perspective,” he wrote.

Software vendors should emulate the business practices of utilities and increase the transparency of usage data to customers. Utility customers are seldom subjected to audits, because the energy suppliers make customers’ consumption very easy to track and understand.  Software consumption, on the flip side, can often be very difficult to measure and determine.

“Licenses have progressed from measuring the infrastructure, number of devices or users, and now measure peak capacity or size of server clusters where the software could potentially run, for example,” wrote Holmes. “Internal application metrics are sometimes used, and in some cases don't provide users or vendors the ability to know the level of use - such as concurrent licensing without any embedded measurement.  Software vendors also sign agreements with customers based on business metrics or other measurements outside of the software.  With cloud systems and SaaS (News - Alert) products, the ability to even measure or see this usage is becoming harder and more limited.”

Software companies should strive to help software asset managers at client companies keep better track of their own software usage. By helping procurement and asset managers measure their consumption along with extra things like overages, data center licensing and options and extras, software vendors can improve their relationships with their customers and help their clients better understand their consumption of software assets. Going forward, this may become a competitive point for vendors with similar platforms.