For 20 years, I’ve run, or been working with software vendors conducting software audit. While those software audits are good for vendors, who frankly deserve to be paid for the creative works with which you run your business, I’ve also realized those audits do nothing to help organizations proactively ensure license compliance in the first place.
So today, I’d like to share my five top learnings from working with software vendors. More importantly, I’ll pinpoint what you can do, as an end-user organization, to dramatically lower, if not eliminate the impact from these audits.
- Vendor software audit will not go away anytime soon. Gartner suggests 68% of all organizations will receive at least one audit letter this year, up 14% from just three years earlier. Sure, there are predictions that software will only be available in the cloud thereby reducing the number of audits performed – however movement to the cloud only changes the licensing model. Current cloud (SaaS) adoption suggests most organizations will have a hybrid environment resulting in different types of licensing for different use cases. Also, need I mention the difficulty and confusion with server licensing?
- Vendor revenue from audits will continue to rise. Over the years, I have seen not only an increase in the number of audits conducted, and globally, I’ve seen smaller and smaller vendors enter the ‘businesses. Let’s be clear, these are ‘businesses within businesses’ there to make a profit. If the financial return were not there, vendors would be scaling back these operations.
- Many end-user organizations tend to ‘trust’ the vendor audit report. For those organizations without a dedicated ITAM manager, many trust the vendors own data. However, how do you know the installation report is accurate? Of course, you want to get the vendor out the door as quickly as possible, but without dissecting the vendors approach, how do you know? Further, without proper processes and tracking in place, how will you also know whether the entitlements being reported to you are accurate? As an example, I’ve worked with organizations and found that vendors do not always correctly search their CRM systems for all entitlements. For example, if your organization has a shortened name, is the vendor also searching for the shortened name, as well as the full name (and with and without the “Inc.”)? While this may not be intentional by the vendor, the organization should always be in a position of knowing by tracking its entitlement data correctly.
- Company costs. Simply put, vendor software audit are distracting from the running of your own business. The end-user organization has to commit resources to addressing the vendors’ inquiries – which are many. Not only does the whole process need to be managed, who is going to review the work the software vendor performs, the accuracy of the data, the entitlement data? Further, once that is complete, who is going to manage the actual settlement and ensure the audit is resolved with a clear closure (e.g. agreement on what is legal from this point forward). Clearly, managing the vendor takes resources away from existing projects and tasks – costing the end-user organization further dollars (which should also be tracked).
- Proactive compliance by the end-user organization. For 20 years, I’ve seen how vendors have matured their audit programs to maximize their revenue but have not seen end-user organizations implement processes to reduce, or ideally, eliminate non-compliance. Reducing or eliminating a vendor audit allows you to focus on your business and achieve your goals – versus meeting somebody else’s goals. I have seen organizations spend hundreds of thousands, and millions of dollars, simply to get out of the hole. If organizations committed themselves to being proactive and put a portion of those audit fees into a proactive compliance program, they would reduce their exposure from audit and decrease their overall IT costs. How? We’ll explore in a future video/blog, but here is a teaser:
- Secure an executive sponsor for an ITAM program
- Agree to the scope of your ITAM program and goals you want to achieve
- Look at your existing tools and processes. 1E has a suite of solutions designed to assist you, including tracking unused software
- Based on your goals, implement those tasks and areas that align with your goals
- Track your progress – report savings/reduced risk/progress back to the executive sponsor.
There is no hero during a vendor audit. However, you can be a hero when audits start to decrease, or the findings from those audits start to get smaller and smaller. You can also be a hero when you find ways to reduce IT costs to the business, allowing the business to reinvest those savings into the business rather than into the hands of software vendors.