How to manage your software licenses to avoid or mitigate the burden of license audits

Admit it. You never read those license agreements when you buy software. You know you should. But they’re what, 70 pages of legalese? Who’s got the time? You know you have to agree to the company’s terms to use the software. So you click “Agree.”

My guess is that 99.9% of us are guilty of not reading the fine print in the EULAs, or End User Licensing Agreements. Software licensing needs its own paperwork reduction act, and some finite standards and regulation. Until then, the software companies are going to regulate you, and that’s cumbersome.

Where It Becomes a Problem

When you license software, you agree to run the software on a certain number of computers. You agree to lots of other things as well, varying with the software. If your organization isn’t keeping close track of its technology assets (like software licenses and hardware), you’re running a big risk.

Software manufacturers can require an audit of your licenses and installs—and charge you big bucks if you’re using more licenses than you’ve paid for.

What’s in It for the Software Vendor

People buy software in many different ways now, or they use open source software or free services online instead of paid software. So, software companies have been looking for new forms of revenue, and thus we have the software usage audit. Software manufacturers used to target big enterprise for audits, but now they’re focusing on small and mid-sized businesses.

Microsoft is well known for its software audits, and practically everyone has Microsoft licenses in their technology inventory. (Audits aren’t limited to Microsoft, though. Other companies regularly audit software usage, too.)

How You Know You’re Busted

Here’s what happens: You get an email from Microsoft Software Asset Management (or a similar department from any software manufacturer) requiring a complete accounting of your software and hardware. In some cases, it appears as a demand to pay a fee for the improperly licensed installs already in your organization.

An Ounce of Prevention…

When you’re audited, having all your info easily available helps a lot. Just as importantly, keeping track of your software licenses means you won’t accidentally buy licenses you don’t need.

Unless your organization has fewer than five people, it’s not enough to have a spreadsheet with the license info. Many licenses are dynamic or subscription-based, and depending on your organization’s asset and computer admin policies, you also need to know when users download new software. Different licenses cover different uses. Some are internal only (such as a license for developing software), while others allow you to make software available publicly to your clients. Even worse, software companies change EULAs from time to time. Nice.

Start with a full inventory of your hardware and software assets. You’ll need to know:

  • Serial numbers
  • Purchase information
  • Which machines use which license
  • Expiration dates of licenses
  • Virtual or physical machines
  • For servers, how many processors and cores

Keep the box when you buy physical software, and the receipt for any kind of software purchase. Label boxes, license records or the inventory with information to show you which machine uses which license.

There’s a lot to keep up with. For many mid-sized and large businesses, having a software asset management database makes a lot of sense. These software tools can run on your network and manage software licenses for you, alerting the user when a license is up for renewal, and creating reports that demonstrate your actual usage.

In addition to your software, you’ll need to track active and inactive laptops, workstations, servers, and other devices like firewalls, routers, printers, wireless access points, and more.

Your system should track these kinds of details:

  • Who uses which device OR the purpose of the device
  • Which device was the software installed on
  • When does the software expire
  • Is it eligible for an upgrade to come into compliance?

There’s no get-out-of-jail-free card—Software audits can cost you a lot of time and money, particularly when you’re unprepared for them. Get your software assets under management now so you’ll be ready when the auditors come to call.

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