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Software License Audits and Why You Need One

by | Sep 22, 2023

Software plays a role in nearly every modern company. While an audit of software licenses may seem optional or unnecessary, investing the time to get a handle on exactly what software your organization is using can help your company save money and provide legal protection in the long run. This article includes a software audit definition and provides best practices to help prepare for the process.

What is a software license audit and why is it important?

A software license audit checks whether an organization is complying with the terms and policies of all software licenses in use. The audit assesses all software licenses, checking for under-licensing, over-licensing, or unauthorized use. Software audits are essential to ensuring your business is efficient with resources and mitigating the risk of fines or legal action.

A software license audit can be as simple as pulling together a complete listing of all software used by an organization to build the next year’s budget or a more formal inquiry performed by internal or external auditors who are familiar with software use. While internal audits can be effective, a third-party auditor may be more thorough. The goal of the auditors is to find areas to improve software usage, avoid legal action, and give recommendations for enhancing the software’s quality of work. Think of it as a routine checkup for software licenses.

Violations of software licenses can include activities such as:

  • Installing one license on multiple devices
  • Making unauthorized copies of software
  • Using virtualization with the incorrect type of license

If a company is found violating its software license agreements, the software vendor could charge fees or invoke legal penalties.

Benefits of performing a software license audit

Plenty of reasons companies should perform software licensing audits exist. The benefits are outlined below.

Maintain software quality

Regular audits of software ensure your company is using top-of-the-line software. By checking the quality of each software application, auditors can recommend areas of improvement and upgrades as necessary. The audit may determine you need to invest in new software to save the company time and money.

Remove unused licenses

During the audit process, auditors may uncover licenses not being used properly, or expired licenses. Knowing what licenses your company has purchased and how they are being used is critical to determining your software budget. Spending money without actually using the benefits of purchased software isn’t useful. An audit helps identify useless licenses so the team can remove them as needed.

Improve business operations

It’s important to conduct a thorough analysis to verify if the software you are considering is compatible with existing software in your organization. You don’t want to waste time adapting software that won’t integrate into your operations properly. Audits help ensure all purchased software will enhance business operations.

Create a better software budget

Auditors will point out if the company is paying for redundant software or even software not being used at all. Once your team has a better understanding of what types of software are being used by which department, you can determine your budget and where you can potentially save money or create more efficient processes.

How to prepare for your software audit

The software audit process is complex. Use these software audit license tips to ensure accuracy and completeness:

Define the audit scope

Before the software audit takes place, you need to know the objectives and scope of the audit. Figure out which software licenses and devices are subject to the audit and choose a time in which it will take place.

Ask yourself the following questions:

  • What software products may be audited?
  • What locations may be audited?
  • What legal entities may be audited?

IT managers should communicate clearly with the auditor about expectations.

Create an inventory of software

When preparing for a software license audit, compile all of the relevant documents and data in one place. All of the data should be labeled clearly and easily accessible to the auditors. Ensure your software inventory is complete and traceable.

Additionally, you should find all contractual documents and research the contractual framework. This maps out the rights and obligations of both the licensor and the licensee. Understand the enforceability of this data and how it impacts your organization.

Compare all licensing data

While preparing for a software license audit, compare all of the collected data with what was requested by the auditor. IT managers should strive to find any inconsistencies in the information before the auditors do. Search for things like expired or duplicate licenses. Resolve these issues before sending the completed data to the auditor.

Using the software audit best practices above will allow the auditors to evaluate your company’s software licenses with as little stress as possible.

Use a SaaS spend management software

The best way to ensure efficient software spend and smooth software license audits is to use a SaaS spend management tool like Stackshine. The software makes the audit process more efficient, saving your team time and stress.

With Stackshine, you can centralize your data and easily analyze software costs. All of your software data is organized and accessible in one place, saving your team time when creating an inventory and ensuring accuracy. SaaS spend management software quickly provides current spending and utilization data so you can report where your company’s funds are going at the click of a button.

Summary

Software audits are on the rise as technology use continues to grow in the business world. Manually organizing data and creating reports takes time your team could be spending on more valuable projects. Add Stackshine to your list of software license audit tools to simplify the process. Book an intro call to learn more about how Stackshine can help streamline SaaS management for your organization.

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