That big software audit you’ve been dreading? Yeah, it’s coming, it’s real, and it’s sooner than you think. But why, oh why, do we even have to face these in-depth software inspections in the first place? How hard can it be for them to just take your word that every software license on your system is perfectly up-to-date?
As you probably know, that’s not how things work with audit management. In this article, we’ll tell you why these audits are essential, and how to be ready when the time comes. You don’t want to be caught off guard because things can get costly, fast.
But first, let’s take a small detour and walk through the basics.
What is a software audit (and why does it matter)?
In simple terms, a software audit is a type of software review in which an independent party assesses compliance. And what is IT compliance? It can be:
- Contractual agreements
- Other criteria
- All of the above
Software audits are a process where vendors assess whether an organization is using their software in an agreed-upon way. As a rule of thumb, these processes take place every 1-3 years, depending on the vendor.
But what’s the “agreed-upon way?” In a nutshell, it means that software compliance (codified in a license agreement) should adhere to the strict parameters within said license. In other words, it’s a set of rules for software usage. Plus, licenses have an expiration date too, so vendors are also making sure you’re not trying to slip an expired license by them.
So, all in all, software audits are going to be about compliance (both with licenses and industry standards); and general quality assurance.
Internal software audits
Until now, we mentioned external audits, conducted by people outside the company. However, as part of audit management, the smart thing to do is to use audit management software to conduct your own internal audits from time to time.
By taking a prescriptive approach, you can tackle compliance issues as soon as they appear, and so be prepared for external audits — avoiding freaking out when the audit request comes. In this sense, Aaron Davenport gave great advice on Episode 6 of Ticket Volume, our tech podcast, that can be applied if you conduct regular internal software audits:
"The first thing you do [when you receive an audit letter] is you say, 'Okay, is this something I should be concerned about?' Because of contractually, you may have a no audit clause, they might not even legally have a right to audit you. So you might want to read real quick before you make that quick response of, "Hey, uh-oh, I got an audit letter.
That's what they want you to do. They want you to get scared. So my first thing is to say, don't panic. You may owe them money, you may not owe them money, but they don't know as much about your environment as you do. So get your facts straight."
Some extra tips for an internal software audit include having the support from other departments or teams — such as compliance or risk department — and, as we mentioned before, acquiring a software asset management tool. The latter will let you map your hardware and software inventory, and have a software license monitoring strategy in place, among other things.
The importance of audits
From a vendor-side point of view, the main purpose of audits is to spot any compliance gaps, places where a certain bit of software is not being used as intended. And if that happens an auditor finds it, they’re going to be walking away with your lunch money, guaranteed.
An internal software audit, on the other hand, serves additional purposes that are about optimizing operations.
As a general rule of thumb, though, a software audit will help you by:
- Making sure you reduce the number of inactive licenses. That means that there’s money (that you could be funneling elsewhere) being spent unnecessarily on software licenses. This is a budget-saving strategy.
- Additionally, audits make sure your licenses are up-to-date. Outdated licenses can be even more costly because they could lead to legal issues if you’re caught using software you’re not supposed to (this is why software license monitoring is so important). In fact, even if you’re not using the software or the license has expired, the only way to actually end a contract is to contact the software vendor. Don’t sleep on this.
- Find out possible areas for improvement. Audits can help you find out whether the tool you’re using is healthy, or if it’s in need of updates. Audits, especially internal ones, will help you make sure that you spot what’s working and what’s not, and act accordingly. And, as you know, quality assurance is not just an internal thing, but something you’re going to be going over with frequently with your software vendor(s).
- Find out whether you need any new tools. This part is about assessing the health of existing tools, as well as what additional tools could fill in the gaps. Also, here’s where you perform compatibility checks to make sure that the new additions are going to mesh nicely with your current systems.
- All in all, it’s about saving money. You’ll cut costs by removing software that’s not running well (or not running at all), and you’ll get newer, better software that ends up minimizing losses in the long run.
Planning for a software audit in 5 steps
The next part is getting ready for that software audit. When the time comes, this checklist will help you be prepared and understand that you’ve done your due diligence with regard to compliance and software management.
Let’s take a look.
1. Keep an open line of communication with your vendor
Communication is key to understanding each other’s needs and pain points. And that’s why you should always keep talking to your vendor and let them understand what you need.
Additionally, if you ever require their assistance (and you will), they’ll have a much faster response time and fewer questions when time is of the essence. For instance, when you’re expanding (or shutting down part of your operation), your vendor will be able to respond much more accurately if they’re apprised of what’s going on.
2. Conduct your own audits
You shouldn’t wait until that external software audit is breathing down your neck until you get a move on. Proactivity is a survival strategy, and you should definitely see it that way. In fact, if external audits are once a year, we recommend running your own audit monthly.
Remember, proactivity saves money and post-hoc tears.
3. Ownership is more than a buzzword
Your auditors are going to require proof of ownership, and it’s best to be prepared for that. Don’t just make decisions willy-nilly, seek consultation before you start purchasing licenses like crazy just because you think you need them. This is one of the parts where you may want to employ third-party auditors to help keep you on the right track — and not making rash, off-the-cuff decisions.
This leads us nicely to the next point.
4. Partner up
An asset management partner is a great way to keep your head above the water. If you’re a little lost in regards to how a proper software audit is conducted, then they’ll help clear up any questions you have — for a price, of course.
Regardless, having a partner who knows everything about licensing regulations and each step of the process is probably more valuable than what we can state here. And you know that the alternative is basically bleeding cash.
5. Software asset management plays a key role
A software asset management tool, an integral part of budgeting software and keeping tabs on your licenses. If you’ve got the right tool, then it’ll help you spot any license issues before they become an even larger problem. Not only will they help you reduce overspending, but they’ll also keep you from having to pay extra if you missed an expired license.
In a way, you can view SAM tools as a sort of external partner that will key you in on crucial issues and provide accurate reporting where needed.
InvGate Insight is one such invaluable tool. By helping you keep tabs on all licenses, both active and inactive, you’ll easily be able to see whether you need to tighten the screws, license up, or keep things as they are. Plus, it’ll give you a complete bird’s-eye view of all of your IT assets, making it not just a godsend for compliance, but also for ITAM in general.
But seeing is believing, and we also think you deserve a fair shot at upping your software management game. Give it a shot for thirty days and you’ll know we mean business.
Software audits are part of the life of any IT organization. And that means you have to be ready when the time comes. Proactive measures, more than everything, will save you the time and money you desperately need to keep your business thriving, growing, and improving.
And not just that, they can be seen as a way to proactively mitigate the risks of things going awry. So, it’s not just about keeping auditors happy, but about making constant checks for errors or structural weaknesses.
And that’s not just something you’re doing because you’re legally entitled to; it’s just part of playing the game in a smart, sustainable way.
So, embrace the audits. If you play things right, they’ll work in your favor rather than against you.