A guide to preparing for and defending software licensing audits

1. Defending Software Audits
Christiaan Murphy
SoftwareSpend.com

2. Before The Audit
Things to pay attention to when negotiating a software licence
agreement:
1. Licence Grant - make sure it covers your needs
2. Licence Metrics - make sure you can measure these
3. List of Entitlements - should be both clear and consistent with the
licence grant and licence metrics
Watch out for INDIRECT ACCESS. If there is a risk of this, then define in
the agreement and exclude it from definition of software usage.
Indirect access is the term used to describe a situation where users
access a software system through a separate application or interface. For
example: a web application which retrieves data from an ERP system.

3. Negotiate The Audit Clause
1. Exclude audits during the term of the agreement, or
only agree to audits in limited and clearly defined
circumstances.
2. Describe the audit process in detail including the
hoops the software vendor will need to jump through
to audit you: signing an NDA, complying with security
requirements etc.
3. Shift the burden of paying for the audit onto the
software vendor. Only accept to pay a share of the
costs if found more than X% non-compliant.

4. When The Audit Begins
1. Initial response should be formal, immediate and
sent by registered mail.
2. Take control: direct the process, define what you
will and will not do and impose a timeline.
3. Understand your contractual obligations to the
vendor.
4. Assess your entitlements and your exposure to a
licence compliance claim.

5. Negotiate Early In The Audit Process
1. Leverage your Account Manager (with whom you will
have an ongoing relationship) vs the auditors.
2. Agree how any licence compliance issues will be
resolved before they are discovered (e.g. discounted
prices rather than list prices).
3. Negotiate to be compensated for over licensing.
4. Negotiate no (or time limited) back-maintenance
fees.

6. Negotiating A Settlement
1. Be prepared for the pressure of the audit process.
2. Negotiate everything as you normally would.
3. Structure solutions with a view to repairing the
relationship.
4. Restrict future audits as part of the settlement.
Need More Advice On Audits Or Software Licensing
Go to Audit Guide at SoftwareSpend.com