The number of software audits requested by software publishers
and their trade groups including the Business Software Association
(BSA) and Software & Information Industry Association (SIIA)
will increase dramatically in 2012.
We are witnessing an increase in the number of prospective
client calls and a surge in our software defense case load during
the fourth quarter of 2011. Based on a number of factors including
worldwide economic conditions affecting software publishers'
revenues, businesses can expect to receive more software audit
requests in 2012 than ever before.
The ITAM Review, July 4, 2011, Gartner, a leading technology
research company , reported in March 2011 that 61% of their survey
recipients were audited by at least one software vendor in 2010.
This number was the highest percentage of any comparable Gartner
survey. Respondents identified the following companies with the
most audits: IBM (41%), Adobe (40%), Microsoft (35%), and Oracle
(17%). The Gartner Survey Analysis is available for purchase
The trend among the major publishers is to increase the
frequency of software compliance audits for customers of all sizes.
IBM has boldly embarked on an initiative to audit all customers
world-wide while Microsoft has considerably increased audits
conducted by its Global Compliance Group evidencing a considerable
shift in philosophy from recent years. We are also seeing increases
in reseller auditing including IBM OEM agreements and Microsoft
As companies finalize their budgeting for 2012, they should
include funding for software asset management and implementation of
Scott & Scott, LLP recommends the following:
*Create Standardized Agreements With Publishers: Many companies
do not realize that they have leverage when negotiating license
agreements with publishers. In fact, companies can incorporate less
one-sided terms into software license agreements with the
assistance of their own legal counsel. Favorable provisions can
include "no audit" clauses or voluntary
"true-ups" to reduce the costs of compliance management
and the total costs of ownership.
*Retain Proofs of Purchase and Keep Accurate Records: Contrary
to popular belief, trade associations and publishers only accept
dated proofs of purchase, with an entity name matching that of the
audited company. Anything less will fall short of publishers'
mandated proof of ownership and therefore, repurchase of the assets
in question may become necessary.
*Choose Integrated, IT Asset Management Tools: Asset management
should be built into every company's ongoing business processes
to ensure that this process and license compliance become core
competencies. The ability to conduct routine reconciliations is
required to ensure software license and Sarbanes-Oxley
*Obtain Expert Assistance in the Event of An Audit: Audit
defense is most effective with the representation of specialized
legal counsel to avoid the common mistakes that may jeopardize a
company's legal position. Any automated discovery that is
conducted under the supervision of legal counsel will be protected
by attorney-client and work-product privileges, should an
out-of-court resolution not be possible.
Because many software publishers are focusing on license reviews
to increase revenues, companies should actively review their
compliance with licensing terms. Companies that are proactive with
their software asset management programs can minimize the time
necessary to respond and reduce the potential exposure that
typically results from a software audit.
About the author Rob Scott:
Robert represents mid-market and large enterprise companies in
software license transactions and disputes with major software
publishers such as Adobe, IBM, Microsoft, Oracle and SAP. He has
defended over 225 software audit matters initiated by software
piracy trade groups such as the BSA and SIIA. He is counsel to some
of the world's largest corporations on information technology
matters including intellectual property licensing, risk management,
data privacy, and outsourcing. Robert ensures that Scott &
Scott, LLP continues its focus on cost-effective strategies that
deliver positive results.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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