6 Signs of an Upcoming Publisher Audit

December 16, 2014
Editorial Staff

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Editorial Staff

Just like jury duty, a car accident, and increasing gas prices, a software audit is almost entirely unavoidable. When software vendors come knocking on the door and requests a license compliance engagement, there’s simply nothing your organization can do but accept the challenge and do what you can to mitigate costs.

As illustrated in this TechRadar article by Snow Software’s Jelle Wijndelts:

  • 90% of software vendors admitted their compliance program is a source of revenue
  • 10% use audits as a strategy to secure 10% of overall revenue
  • In 59% of cases, vendor audit specialists are incentivized as sales commissions

Consider the points below to ensure you are prepared the next time a vendor requests an audit:

1.  Previous Audit Lays the Foundation for a Follow-up Audit

Being audited in the past greatly increases your chances of being audited by the same publisher again. Once the audit is concluded, the customer is compliant for the moment, but the publisher assumes the customer has not put any proper license management processes in place to ensure long-term compliance. Furthermore, the publisher received an incredible revenue increase through the audit, so it benefits their bottom line to return for more.

2.  A Separate Publisher Catches Wind of an Audit

Similarly, if you have been audited in the past by one publisher, your chances of being audited by a separate publisher over the next 12-18 months are greatly increased. Although publishers shouldn’t be sharing confidential customer audit information, it logically follows that once you’ve been audited by one publisher, another will seize their opportunity to do the same. They will assume that if you are noncompliant with one set of software, then you are more than likely noncompliant across the board since audits indicate poor license management with a lack of efficient Software Asset Management (SAM) processes.

3.  Mergers, Acquisitions, and Divestitures

When two companies merge, dozens of balls are being juggled, many of which are dropped since proper focus is being spread too thin on multiple issues. Software publishers assume licenses are being overlooked throughout the M&A process. Software compliance issues are bound to emerge because of the complicated nature of aligning each other’s license entitlements. Here are some quick preventative measures to consider when undergoing a merger, acquisition, or divestiture:

  • Request a list of all contracts, EULAs and invoices
  • Obtain a list of the acquiring company’s license entitlements
  • Perform a GAP analysis of software deployments versus the obtained license entitlements

4.  Business Intelligence and Analytics

This one is simple, but commonly overlooked: just as you have sophisticated analytics to identify prospective clients, so too do compliance teams maintain analytics on their customer purchases. Compliance teams compare the size of your software portfolio against your competitors’, and if you have a comparatively small license pool compared to your counterparts of a similar employee/device count, then they will grow suspicious as to how you’re utilizing less software for the same amount of employees/devices.

Furthermore, compliance teams are experts regarding which products and license metrics are the most difficult to understand and maintain. If they know your organization does not have a dedicated person with specialized knowledge around your entire pool of software publishers, then they will assume you do not have all your proverbial ducks in a row.

5.  Press Reporting Organizational Instability

This one is cruel, but nevertheless presents opportunity flags for publishers to request an audit. Compliance teams research financial news, press releases, and quarterly/annual reports looking for signs of financial stress or large scale hiring. Essentially, if your organization is undergoing significant changes, then you are likely not focusing on proper SAM.

6.  Publisher Sales Rep Suggests the Audit

According to a survey conducted by KPMG in 2013, the most common reason for a software audit is a result of the publisher’s sales rep suspecting you are not compliant. This might occur if you were negotiating a large software purchase but declined the transaction towards the end of the process. And since the sales rep acquired a lot of information about your company throughout the transaction, he might ask himself, “if they required a large quantity of software to complete ‘x’ project, why back out last minute if the software was essential to their business?” As mentioned previously, an audit is an easy way for a publisher to obtain revenue while also solidifying your contract for another term.

With a proper Software Asset Management (SAM) practice in place, you can ensure that any of these ensuing auditing signs can be avoided, or at the very least greatly mitigated. We are taught that being in at least one car accident is almost guaranteed throughout our entire driving careers, so it is best practice to wear a seat belt whenever you drive in order to mitigate any risks of injury for should the accident occur – use this same preventative mindset when it comes to publisher audits.

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