A software license audit is a check of your usage of software licenses. All software licenses include an audit provision.   Software vendors exercise their rights to conduct audits to counter a growing software piracy issue for perpetual and subscription software.

What Is a Software Licensing Audit?

A Software Licensing Audit can be specifically defined as follows:  the practice of analyzing and identifying potential issues with the application of your software licenses. In other words, if you use a vendor’s software without paying for a license to do so, you could be in violation of that company’s intellectual property rights.  The audit is conducted to help the vendor determine if their software is being used without a license.

Most software vendors attempt to take a friendly approach to verifying software license usage so this does not have to be a terrifying ordeal.

How to Prepare For A Software Audit

When you receive a letter from a software vendor or even regulatory agency that you will be subject to a software audit, most people tend to panic. Many people tend to relate this feeling to the feelings of other people who had gotten an audit letter from the IRS.  This is understandable, as the software licenses you have are the backbone (along with your employees) for your daily operations.

So, what is the best way to prepare for such an audit?  The steps outlined below are a good place for you to get started with:

1. When you actually receive the letter:

Once this comes into your snail mail inbox, make sure that you share it with the appropriate parties within your company.  No need to get everybody involved, as this will simply lead to more chaos, panic and confusion.

2. Contact your license provider immediately:

Determine how many licenses you have purchased and ask them if they are certified to provide support during the licensing audit. If they are not, find an expert immediately. This is an essential step in successfully surviving an audit. The trained expert will guide you through the process step-by-step and help you by completing an independent license check on your behalf. They are also trained to help you meet the minimum requirements if you don’t already do so. In some cases, they may even be able to help you reduce your licenses while maintain compliance.

You don’t want to tackle a software licensing audit without the help of a seasoned professional.

3. Contact your attorney:

If the software audit is from the Business Software Alliance or a regulatory agency, contact your attorney.  BSA audits usually have a financial penalty associated with them.   If the audit is from the software vendor, usually these can be handled by your IT staff.  It all depends the tone of the notice.

4. Work hand-in-hand with your expert:

Once you and your team have it clear in your minds what is being asked of you, you will need to collect and assemble the data that will clearly answer the questions and concerns that the software vendor has.  Once again, only provide the data that is required, and nothing more. Follow the guidance of your expert.

5. Let the expert lead the process for you:

Once the last step has been accomplished and your expert has sent the response to the software vendor, after a period of time, you will receive a response from the vendor. As before, let the expert handle all the discussions.

6. Remember the lessons learned:

After you have survived the software audit, the next step is trying to avoid having to go through another one.  Therefore, at this point, it is very important to document the entire process as it has transpired, and perhaps even conduct your own internal audit to make sure any other software licenses are “up to snuff”.


Overall, this blog has examined what a software audit is, the reasons why it is done, and how to prepare for it.  Our next blog will look at a real-world scenario, that is, how to prepare for and respond if you receive an audit letter from Microsoft.