Software audits rise as recession bites vendors

Vendors ramped up licence auditing last year, becoming more strict on compliance as the downturn hit product sales, according to Forrester
Written by Tom Espiner, Contributor

Companies saw an increase in licence auditing last year, as the recession prompted software vendors to crack down on compliance, according to analysis firm Forrester.

In addition to increasing their audit activity, meant to identify under-licensing, vendors focused harder on finding causes of non-compliance, the analyst firm said in a report released on Monday.

"I think the economic downturn is a factor," Forrester principal analyst Duncan Jones said on Thursday. "Software companies say: 'We are not getting the same levels of revenue from discrete [software] projects, why don't we switch resources into compliance?'. Companies are replacing revenue they are not getting from their normal activities."

Technological changes such as virtualisation have also driven the increase in audits, said Jones, as the complexity of those technologies makes it harder for companies to be sure they are using them properly.

Forrester's research is based on reports from its customers over the past year, as well as from new clients in the process of being audited.

Jones warned that while some audits had found justifiable grounds for complaint, some auditors were being over-scrupulous in achieving targets. Forrester said that some audit teams exploit technicalities and loopholes, for example.

"Audit teams will look for the biggest revenue opportunities," said Jones. "The problem is that some individuals tasked with a target get over-enthusiastic in applying the letter of the law."

Jones gave the example of one audit that had found a piece of server software which the client was unaware it had. The server software had probably been installed by the vendor, Jones said. The client was billed for having the software installed, even though it had not used the software, and did not want it in the first place.

"The software company said: 'It's installed, you must pay'," Jones said.

However, many software audits are reasonable, he added. He cited an example of a business that had a licence for Microsoft software by installation, but which had lost track of how many systems were using it.

"The software was on CD and had been installed on multiple devices," said Jones. "The IT manager had thought purchasing had been keeping track of the number of installations. They hadn't. It was a case of miscommunication." Microsoft asked the company to become compliant, which they did by purchasing more licences, said Jones.

Forrester recommends that companies should not agree to be audited until they have taken independent advice.

Editorial standards