The SCG Blog

Software License Auditing: Five Reasons Your Customers Will Thank You

October 27, 2015


Jason Swan
Managing Director


I sat at my desk, hesitating to press send. There are few things that give me pause when trying to sell something I think will accelerate a client’s business, but this was different. This was an audit request.

Now, like many sales professionals, I used to think that requesting an audit of my customers was not only a shortcut down the road of self-destruction but an open invitation for my competitors to displace me.

That was until I led a client through a software licensing audit of a multi-billion dollar company (which by the way had been the client’s customer for nearly two decades), and that multi-billion dollar company was actually grateful for the intervention.

You see, this company, like so many others in the manufacturing space, had grown substantially over the last few years through global acquisitions. Such growth positioned it as a leader in its industry, but also made it difficult to gain a global view of licensing usage. It left the business open to wasted spend and increased risk.

The benefits that an audit ensured for this company are relevant for any company growing rapidly through a global acquisition strategy.

Why Audits Help Your Customers

1. Audits Can Reduce Total Cost of Ownership
With acquired companies across the globe, the company struggled to get a complete picture of its licensing landscape. Without such an inventory, it couldn’t optimize licensing usage terms, meaning it was likely paying more in annual maintenance and support fees than necessary. Our audit was an opportunity to re-examine licensing usage, take advantage of new terms and reduce total cost of ownership.

2. Audits Can Reduce Vulnerability to Security Threats
Many of this business’ acquired companies were overseas in more remote regions, in which it turned out that employees were using pirated licenses. This introduced a host of vulnerabilities into the network, and an internal security risk as these employees unknowingly welcomed threats beyond the firewall.

3. Audits Can Ensure Strong Brand Value
Consumers consistently rank corporate social responsibility as a key driver in their view of the brand. The possibility of unethical licensing practices could jeopardize not only that view, but relationships with OEM suppliers whom the illegitimate software is unwittingly touching.

4. Audits Ensure Standardization in Business Processes
The value of standardized systems is in the integration of business processes and data quality they ensure. Without a full picture of its software assets, this company didn’t know whether all of its subsidiaries were using the latest version of the software, or whether work was being completed outside of the system in an inefficient manner.

5. Audits Guard Against Unfair and Inconsistent Budgeting Practices
Units reporting legitimate licensing usage had budgets tied up with paying their correct licensing fees, while other departments, which underreported fees, did not. That meant projected technology spend for innovative projects was disparate and inaccurate across different subsidiaries – a burden that almost always affects US-based operations negatively.

Why Audits Help You

Technology has changed monumentally since many of these deals were first signed. A lot of the contract work sits in paper-stuffed files that haven’t been reviewed in years. Auditing gives the vendor an accurate, and more importantly digital, record of a customer’s assets, enabling the vendor to recover lost licensing revenue, while providing a platform to ensure accurate future tracking. Auditing opens the door for upsell possibilities because the budgeting responsibility often spans lines of business, and doesn’t rest squarely with the CIO, freeing up money for innovation.

Within four months, the vendor was poised to recover several million in previously undiscovered revenue, while the customer had maximized its licensing spend and functionality, significantly decreased its security and brand vulnerabilities, and ensured efficient and accurate business processes.

It’s why the audit is nothing to be afraid of.

Pitching a Software Audit Customers Won’t Fear

1. Be firm, but not unreasonable. My Letter to the VP of Compliance first thanked the customer for their business and laid out the terms of the engagement.
2. You don’t need to say the “A” word. Nowhere in my first correspondence did I use the word “audit,” but framed the engagement as an “ongoing customer success program,” to “outline license usage in all subsidiaries” to help the company “better understand deployments and maximize ROI.”
3. Ensure strong executive support: Most of the team was more than willing to cooperate, but one division head was less than enthusiastic. Strong support from leadership meant that this division was compelled to cooperate, and what could have been a major impediment to success became nothing more than a brief nuisance.

Interested in learning more about software licensing auditing?  Contact us and we can discuss how we are helping other software vendors drive new revenue using this strategy.

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