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More software audits soon?

The Coronavirus has caused considerable economic dislocation. The hope that the spook will end soon is understandable, but there could be more software audits on the part of the manufacturers in the period thereafter.
Markus Oberg, ProLicense
July 9, 2020
This text has been automatically translated from German to English.

To a greater or lesser extent, every company on the market will try to recapture its sales - and for some, any means will do. On the one hand, there are the classic instruments for increasing sales, such as special offers, bundled discounts and other customer promotions - or simply more sales pressure. But software vendors have another arrow in their quiver that others don't: Software audits.

As the virus spread further, all companies that were able to do so sent employees to their home offices to reduce the risk of infection. However, not all software products allow this so easily according to the license conditions.

In some cases, other metrics of the licenses are required, for example, if an employee no longer sits at his workstation in the case of a device-based license, but now operates the application via another device.

Even IT structures that have changed specifically may require different licenses on an ad hoc basis if, for example, DBAs move databases to more powerful machines due to increased online access.

If the license requirement also depends on the hardware, i.e. the number of processor cores used, as is the case with Oracle databases, it becomes significantly more expensive.

Even less software asset management can lead to software audits or to problems in audits. Employees try to do the best they can under the circumstances from their home offices, but this is not always possible without restrictions.

Less coordination and perhaps colleagues absent due to illness lead to less SAM. It is easy for mistakes to occur in dynamic situations like these, which can end up being expensive.

Putting money on the table and then taking it back has always been a strong trigger for audits. Right now, companies are postponing investments for the future or looking for their luck in free freeware.

But the sales staff of the software manufacturers also have to meet their sales quotas and will increase the pressure. If this does not help, sometimes the remedy of a software audit remains.

If contracts are not extended by the customer, it means a deep intervention in the financial structure of the software manufacturers. Support revenues must be secured in any case, because this is where the big money is made on the manufacturer side.

Support margins for software giants are usually well over 90 percent. Those who do not renew contracts should definitely expect a software audit in the future.

In the coming weeks and months, there will also be many reorganizations of companies. Some will sell off parts of their business, others will make acquisitions, and some will file for insolvency and be taken over in whole or in part out of insolvency.

This leads to significant licensing and compliance implications for companies. The problem is that software vendors often know both sides as their customer - the buyer and the purchased company.

They then recognize on the basis of their own documents that the contracts cannot match. This is followed by a software audit, which is based on a concrete initial suspicion and would therefore also be permissible under the German Civil Code.

But even pure internal reorganization for cost reasons in companies may require a change in licensing, which must be responded to immediately.

At the height of the crisis, we will not see more software audits. On the contrary, we hear in the market about audits that have been postponed. But in a few weeks or months, this will change. Companies should prepare for upcoming audits despite all the difficult requirements.

Markus Oberg, ProLicense

Markus Oberg, Software Audits, Oracle Licensing Consulting, SAP Licensing Consulting at ProLicense.

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