A Gartner survey revealed that there is an increase in license reviews and audits. In 2007, only 30% of respondents were audited. Place this in comparison in 2010 where 60% of the survey respondents were audited.

This means that the number of software license audit have doubled. In order to protect your business, you need to know how to protect your company from settlements and other unnecessary audits.

So let’s begin!

Select the Correct Licensing Structure

Picking the right licensing structure is important. There’s a myriad of options when selecting one that works the best with your company’s software asset capabilities is key.

If left unchallenged, the vendor will create as much license restrictions as possible. This can be in the form of sublicensing bans, geographical limitations, or precluding an outsiders use of the software.

Software customers can look at audit rights of a provider. While audit right is usual in almost any enterprise software agreement, buyers have to be able to negotiate the limits on audit duration, provisions, and intrusiveness for an equitable settlement.

Check for Mistakes

When it comes to software license audits, you need to view the report carefully for any mistakes. Look for any issues that you’ll be able to use to help lower or negate the settlement. There are some instances where customers have a reduced settlement of 90% when they challenged the auditors’ findings.

Look for counting issues when looking for auditing mistakes. Look for assumptions they’ve created in developing their analysis and what rules were applied when counting things such as processors an users.

These small mistakes might take in what wasn’t counted; you need to take note of that and look for any licensing language that can be interpreted differently. Finding holes in the auditor’s methods, findings, and interpretations will positively impact your settlement.

Create Settlement Negotiations

Robert Scott, the managing partner at law firm Scott & Scott, had recently litigated an audit case. During the case, the client was unable to document in writing all of the proper objections to audit findings.  

The judge’s position, Scott stated, was that if a vendor accuses you of compliance issues, it’s your legal right to document your rebuttal. Being able to take over settlement negotiations and putting the rebuttal in writing is important in surviving a software license audit.

Negotiate Future Terms

After you’ve reached a settlement, you have to shift gears and start building systems to protect your organization in the future. This includes creating an audit forbearance, where the vendor agrees not to audit you within 1-3 years.

In addition, fix any confusion within your contract, Scott continues. “There are a myriad of cases that reach the geographic scope where the licenses are solely for the United States, but the feature or software has been installed overseas. Most of the time, these companies don’t know that there is a geographical restriction.”

To solve this issue, make sure that you negotiate future terms with vendors. This will protect your company from having additional software license audits in the future.


Even if your business is successful, one software license audit can ruin your credibility. So by being proactive and checking for issues ahead, you’ll save your company thousands of dollars down the line.


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