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Licence audit - preparation, risks and opportunities
Anyone who uses software from Microsoft & Co. must sooner or later expect that the manufacturer will want to carry out a licence audit. Companies should be prepared for this scenario. Otherwise there is a risk of high costs and other inconveniences. Find out everything you need to know about licence audits and how to stay in control of your software licences in this blog post.
The global study "The Compliance Gap" shows that in 2018, 37 per cent of software installed in companies was not or not properly licensed. This not only entails security risks due to outdated software versions, but also the risk of being confronted with high claims and legal consequences from the manufacturer in the course of a software audit.
Software manufacturers are aware of the fact that in most companies there is "something to be gained" from licence audits. Accordingly, these are also carried out consistently. Those who take a preventative approach to licence audits and adapt their licence management accordingly can prevent licence audits from becoming a cost trap - and also significantly optimise their expenditure on software licences.
What is a licence audit?
A licence audit is a procedure to determine whether software products have been properly and quantitatively acquired by companies and are being used in accordance with the contract. Manufacturers or licensors of software products are entitled to check whether their customers are complying with the contractually agreed licence conditions for the use of their products. This check takes place as part of a software audit. Licence audits are carried out on a random basis or in the event of concrete suspicion of unlicensed software use.
Licence violations can have serious consequences for companies: Depending on the extent, high payments for subsequent licences may be due. Some manufacturers reserve the right to claim retroactive maintenance costs for licence use in previous years. In addition, claims for damages can also be asserted.
Who can carry out licence audits?
Audits are carried out either directly by the software manufacturer or by external interest groups such as the BSA (Business Software Alliance). The actual implementation of the audit can vary depending on the scope and complexity of the software solutions. In advance, the company is informed by the manufacturer or licensor in a letter that the legally compliant use of its products is to be audited.
Legal bases and licence audit clauses
Software manufacturers have a legitimate interest in reviewing the scope and intensity of use of the software licences used in the licensees' companies. The exact regulations for licence audits can be found in the respective software licence agreement. Licensees should make use of every opportunity to negotiate the content of the audit clause in such a way that economic and legal interests are safeguarded.
Software audit checklist
Specifically, licence holders should pay particular attention to the following points in licence clauses:
- Reasonable notice period
- Performance during the licensee's normal business hours
- Duration, scope and number (e.g. no more than once a year) of licence audits
- Determination of the auditors, such as licensor, licensor's partner, auditor, licence management company
- Specification of the audit content
- Safeguarding the licensee's trade and business secrets
- Safeguarding the licensee's confidentiality and data security
- Confidentiality of the audit results
- Assumption of costs
- Liability of the auditor for potential IT performance problems
- Legal and economic consequences of over- and under-licensing
What to do when a licence audit comes?
In order to avoid high costs in the course of a licence audit, companies must prepare comprehensively for software or Microsoft audits. This starts with the conclusion of the contract, as this is where the framework conditions for software licensing and therefore also for corresponding licence audits are defined. In addition, companies also need a professional concept for the handling of the audit through to the acceptance of the audit report and possible complaints.
Various preventative measures can be taken to avoid unpleasant surprises during a licence audit. The focus here is on effective software asset management (SAM). This refers to the identification, monitoring, management and optimisation of software licences and usage within the company. By using SAM tools such as Aagon's licence management software, companies can maintain an overview of the software they use and avoid problems caused by under- or over-licensing.
Procedure and implementation
Once the general process of the audit and formalities such as questions about data protection and non-disclosure agreements have been clarified, the actual audit begins. The licence agreements and terms and conditions are checked first. The installations of the individual software solutions and their usage history on the computers are then checked. The data collected is used to determine whether the company has all the necessary licences and whether these are being used correctly. The results are presented in a final meeting. The auditor can make recommendations for problem solving if necessary.
Weigh up possible objections
Companies are not always legally obliged to comply with an audit request from a software manufacturer. It is important to check whether the request is based on contractual agreements or audit clauses. If it turns out that this is not the case, companies can refuse to carry out a licence audit.
How do companies benefit from software audits?
While licence audits are often perceived as a nuisance or risk factor, they offer companies an opportunity to subject their software inventory to a detailed review and thus optimise both their software licence costs and their IT security. A licence management solution provides clarity as to whether there is under- or over-licensing in the company or whether licences are no longer being used and are therefore causing unnecessary costs. Licence agreements can therefore be reliably adhered to - even if licence terms are constantly changing.
Consequences of under-licensing, violations and additional claims
If sub-licensing or other breaches of contractual agreements come to light during a software audit, companies must expect legal consequences due to a copyright infringement and considerable penalties. There are often also high costs for claims for damages and legal advice. In addition, costly re-licensing becomes necessary, as companies are usually dependent on the previously under-licensed software for their day-to-day business.
Licence management as a precaution for licence audits
Unlicensed software has numerous disadvantages for companies. In addition to security risks, there is also the threat of high costs for re-licensing and, in the worst case, legal consequences in the event of a licence audit. Studies show that companies can reduce their annual software expenditure by up to 30 per cent by using SAM solutions and licence management tools. When it comes to licence management, solutions such as ACMP Licence Management provide the necessary transparency that companies need to proactively shape their licence management and remain completely relaxed when a licence audit is just around the corner.
Disclaimer:
This text is intended to provide a general overview of the topic of software licence audits and does not claim to be exhaustive. For further information and specific recommendations for action, Aagon recommends seeking appropriate legal advice.
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