Software audits: how do they work and how do you protect yourself?
Software audits are a proven revenue model for Software vendors and a costly surprise for customers. How does an audit work, which Software vendors conduct them, and how do you protect yourself?
- 24 June 2025
- 5 min
A Software audit is an unexpected and costly surprise for many organisations. A Software vendor announces an inspection, requests access to usage data and the outcome often leads to additional charges. How does it work and how can you protect yourself?
How does a Software audit work?
Almost every Enterprise Software contract contains an audit clause. This gives the Software vendor the right to verify whether you use the Software in accordance with the licence agreement. An audit usually proceeds in three steps:
Notification: the Software vendor or an external audit firm sends a formal announcement.
Inventory: you provide data on installations, users, servers and environments.
Outcome: the auditor compares the actual usage with your licences. Discrepancies result in additional charges.
Why are audits becoming more common?
For large customers, an audit almost always yields something for the Software vendor: licence models are complex, rules change and few organisations maintain an up-to-date licence overview.
The likelihood of an audit increases when a contract renewal is approaching, your organisation has grown or merged, the Software vendor has been acquired (such as VMware by Broadcom) or the licence terms have changed.
How can you protect yourself?
Keep an up-to-date licence overview. Know what you have purchased, what is installed and how many users are active.
Read the audit clause. How much notice is required, how long can the audit last and who bears the costs?
Do not respond immediately. You always have time to respond. Seek guidance before sharing data.
Negotiate the outcome. Even if discrepancies occur, additional charges can be discussed; the Software vendor wants to maintain the relationship.
How SoftVaro helps
SoftVaro maps your licence position so you can approach an audit well prepared. When a notification arrives, we immediately start thinking along with you.
Frequently Asked Questions
The most commonly asked questions on this topic.
What is a Software audit?
A Software audit is a formal inspection conducted by a Software vendor or an external audit firm to verify whether your organisation uses the Software according to the licence agreement. Audit rights are included in almost all Enterprise Software contracts.
Which Software manufacturers conduct audits?
Large Software vendors such as Microsoft, Oracle, SAP, IBM, Adobe and Autodesk regularly conduct audits. Smaller Software vendors do so less often, but contractually retain the right.
What are the consequences of a negative audit?
Additional charges, sometimes at higher rates than a normal purchase. Furthermore, there is often an obligation to immediately acquire extra licences, with little room for negotiation.
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