License 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 license 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 license audits and how to stay in control of your software licenses in this blog post.

The global study "The Compliance Gap" shows that in 2018 37 percent of the software installed in companies was not or not properly licensed. This not only poses security risks due to Outdated software versions but also the risk of being confronted with high demands and legal consequences from the manufacturer in the course of a software audit.

Software manufacturers are aware of the fact that there is "something to be gained" from license audits in most companies. Accordingly, these audits are carried out consistently. Those who take a preventative approach to license audits and adapt their license management accordingly can prevent license audits from becoming a cost trap - and also significantly optimize their expenditure on software licenses.

What is a license audit?

A license 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 using the contractually agreed License conditions for the use of their products. This check takes place as part of a software audit. License audits are carried out on a random basis or in the event of concrete suspicion of unlicensed software use.

License violations can have serious consequences for companies: Depending on the extent, high payments for subsequent licensing may be due. Some manufacturers reserve the right to claim retroactive maintenance costs for license use in previous years. In addition, claims for damages can also be asserted.

Who can carry out license 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 license audit clauses

Software manufacturers have a legitimate interest in reviewing the scope and intensity of use of the software licenses used in the licensees' companies. The exact regulations for license audits can be found in the respective software license agreement. Licensees should use 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, licensees should pay particular attention to the following points in license clauses:

Reasonable notice period
Execution during the licensee's normal business hours
Duration, scope and number (e.g. no more than once a year) of license audits
Determination of the auditors, such as licensor, licensor's partner, auditor, license management company
Specification of the examination content
Protection of the licensee's trade and business secrets
Safeguarding the confidentiality and data security of the licensee
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 license audit comes?

In order to avoid high costs in the course of a license 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 license audits are defined. In addition, companies also need a professional concept for handling the audit through to the acceptance of the audit report and any complaints.

To avoid unpleasant surprises during a license audit, various preventive measures can be considered. The focus here is on effective software asset management (SAM). This refers to the identification, monitoring, management and optimization of software licenses and usage within the company. Through the use of SAM tools such as the License management software from aagon, companies can keep track 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. First, the license agreements and terms and conditions are reviewed. 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 licenses and whether these are being used correctly. The results are presented in a final meeting. The auditor can make recommendations for remedying problems 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 license audit.

How do companies benefit from software audits?

While license audits are often perceived as a nuisance or risk factor, they provide companies with an opportunity to review their software portfolios. undergo a detailed examination and thus optimize both their costs for software licenses and their IT security. A solution for License management provides clarity as to whether there is under- or over-licensing in the company or whether licenses are no longer being used and are therefore causing unnecessary costs. License agreements can therefore be reliably adhered to - even if license terms are constantly changing.

Consequences of sublicensing, infringements and additional claims

If sublicensing 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 relicensing becomes necessary, as companies are usually dependent on the previously sublicensed software for their day-to-day business.

License management as a precaution for license audits

Unlicensed software has numerous disadvantages for companies. In addition to security risks, there is also the threat of high costs for subsequent licensing and, in the worst case, legal consequences in the event of a license audit. Studies show that companies can reduce their annual software expenditure by up to 30 percent by using SAM solutions and license management tools. Solutions such as acmp license management provide the necessary transparency in license management that companies need to proactively shape their license management and remain completely relaxed when a license audit is imminent.

Disclaimer:
This text is intended to provide a general overview of the topic of software license 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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