Software License Audits and Penalties Are Up: True That
December 11, 2012 Alex Woodie
If you’ve been asked to “true up” with your software vendor for exceeding your application license allotment following an audit, you’re not alone. According to a recent IDC report commissioned by Flexera Software, software vendors are getting more aggressive and seeking more compensation from customers who use more software than they pay for.
According to IDC’s report, titled “2012 Key Trends in Software Pricing and Licensing Survey,” more of what organizations spend on applications is coming in the form of “true up” penalties that they must pay to software vendors following an audit. How much more? By one account, there’s been a 12 percent increase (from 26 percent to 38 percent) in the number of organizations reporting that a portion of their application spending (11 percent or more to be exact) is associated with “true up” penalties.
Here’s another shocker from the survey: bigger companies get audited more often, and end up paying higher penalties. Only 10 percent of all companies in the survey pool (334 companies of all sizes in the US, the EU, and Australia) reported being audited three times in the last two years. But 25 percent of companies with revenue greater than $1 billion reported being audited three times over that period.
And here’s yet one more shocker: the biggest software companies have the most aggressive audit policies, yielding “true up” penalties that often range from $1 million to more than $10 million. Microsoft, the biggest software company in the world, is the biggest software auditor, too. Of those companies that have been audited, 51 percent have been audited by Microsoft in the last year, followed by Oracle (27 percent), IBM (24 percent), SAP (22 percent), and Adobe (19 percent). Companies cited in the “other” category include Attachmate (5 respondents) and Autodesk (2 respondents). (Infor, once again, gains no attention from the mainstream analysts–but in this case it may be a good thing.)
So what’s Flexera’s role in all this? A year ago, the Schaumberg, Illinois, maker of InstallShield and InstallAnywhere software installation utilities embarked upon a new effort to promote the use of software identification (SWID) tags within software installed by those two utilities. SWID, proponents say, helps organizations better track their use of software, including reducing instances of using more than paid for, and cutting down on “shelfware,” too. (SWID also has the potential to identify software pirates, but that’s another story.)
“Never has the need for software license optimization been more pronounced,” Flexera senior vice president of marketing Randy Littleson states in a press release. “Organizations face tremendous challenges tracking and managing software licenses and reconciling that use against their software license agreements. If existing license management strategies aren’t significantly reducing or eliminating painful software true up penalties, [then] optimizing the software license estate often eliminates or significantly reduces that risk exposure.”