The SCG Blog

Why Do Smaller ISVs Fear Auditing Customers?

December 17, 2016


Jason Swan
Managing Director


Picture this: You, as an independent software vendor, sell business solutions to Santa’s Claws, a small, but thriving vending machine manufacturer that specializes in those delightful machines with the claws that (don’t ever) grab stuffed animals. Joe Santa, the owner, loves your software, and takes pains to make sure his 80 users are licensed appropriately, and that he is within his entitlements.claw-machine.jpg

Another customer, who shall remain unnamed, purchased 50 licenses for 80 users. Say one of those under-licensed users logs a support ticket, and jumps ahead of thoughtful Joe and his incredibly good users.

Now Joe feels like one of those kids who pumped $10 in quarters into one of his machines only to come up empty.

The age-old way to ensure every user at your customer is licensed properly –the software licensing audit – isn’t a friendly phrase for the smaller independent software vendor. While large vendors are shoring up internal teams and sourcing help for regular audits of their customers (one study put the average number of audits for companies with more than 500 employees at 4 annually), smaller independent software vendors are still reluctant. They have long viewed the audit as the first step to angering, and eventually losing, customers.

But not performing regular audits of your customers’ software assets could do more harm than good – undermining the superior customer service you’re trying to protect. Spotty software compliance enforcement not only hurts your bottom line, but your customers. That includes everyone from compliant ones like Joe – who are losing out on service and additional innovation spend that could be generated from nonpaying customers – to noncompliant customers.

Under or unlicensed customers may not even know it

At many of your customer sites, users may not even be aware that they’re using your software illegally. Nearly 83 percent of unlicensed users fall into this category, according to research from Microsoft and Adobe (Adobe’s Corporate Director, Global Piracy Conversion Team, Richard Atkinson discusses this in a webinar he did with our partner, V.i. Labs called “How Adobe Protects Customers From Software Piracy”).

There’s a host of problems that presents to your customers.

For one, those users could unwittingly be inviting security threats into the company’s network. That jeopardizes not only your customer’s business, but OEM suppliers who may be a part of the business process leveraging that pirated license.

Entitlements that aren’t matched to user needs could also mean that work is being done outside of the system, undermining the very integration and data quality that investing in enterprise software is meant to ensure.

And without a complete inventory of software assets, users can’t maximize licensing terms, or accurately plan upgrade projects or additions of new functionality.

An audit request shouldn’t have your customer running to Google to look up a competitor. Audits can help customers maximize licensing spend and functionality, decrease security and brand vulnerability, and ensure accurate and efficient business processes.

User intelligence software makes audits less scary

The audit isn’t the disruptive, months-long, resource-intensive process it used to be. For most US-based companies, gone are the days of lawyers marching through the doors, rifling through mountains of paperwork and parking themselves on-site in a conference room for months on end looking for signs of noncompliance.  A formal audit notification need not even contain the “a” word – but be framed as a “usage assessment,” with the aim of “better optimizing deployments.”

Most audits can even be done remotely. With tools like piracy business intelligence software, vendors can pinpoint user location, usage history, the number of unique machines, and system and network attributes – providing clear and actionable data to approach customers with. Vendors can even embed in-application alerts that tell customers they are using an illegal copy, and direct them to a place where they can buy a legitimate one. In fact, with that data, software vendors can reach out to these customers to encourage compliance without initiating an audit.

Having that data makes it much more collaborative, and creates a situation where the engagement is viewed more as a dialogue, and less as a dictate.

Smaller independent software vendors need not fear auditing their customers, but instead view the engagement as a way to protect the vendor itself and its customers.

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