Software audits: how do they work and how do you protect yourself?

A Software audit is an unexpected and costly surprise for many organisations. A Software manufacturer announces an audit, requests insight into usage, and the outcome often leads to additional charges. How does it work and how do you protect yourself?

How does a Software audit work?

Almost every Enterprise Software contract contains an audit clause. This gives the Software manufacturer the right to check whether you use the Software according to the license agreement. An audit usually proceeds in three steps:

1. Announcement: the Software manufacturer or an external audit firm sends a formal announcement.

2. Inventory: you provide data about installations, users, servers, and environments.

3. Outcome: the auditor compares actual usage with your licenses. Differences lead to additional charges.

Why are audits increasingly common?

For large customers, an audit almost always yields something for the Software manufacturer: license models are complex, rules change, and few organisations keep an up-to-date license overview.

The chance of an audit rises as a contract renewal approaches, your organisation has grown or merged, the Software manufacturer has been acquired (such as VMware by Broadcom), or license terms have changed.

How do you protect yourself?

• Keep an up-to-date license 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 may the audit last, and who bears the costs?

• Don't respond immediately. You always have room to respond. Get guidance before sharing data.

• Negotiate the outcome. Additional charges are negotiable even in case of discrepancies; the Software manufacturer wants to maintain the relationship.

How SoftVaro helps

SoftVaro maps your license position, so you go into an audit well prepared. When an announcement arrives, we immediately think along with you.