Software vendor audits block software market competition and hinder customer innovation

Research conducted by the Campaign for Clear Licensing has found that audits conducted by software vendors such as Microsoft, Oracle, SAP, Microfocus and IBM are blocking competition and hindering innovation in the IT department.

The findings are based on a survey of 170 worldwide ITAM, SAM and Software Licensing professionals.

Wasting time defending audits

Software audits have become a business as usual feature in the IT department with the average audit taking an average 194.15 working hours to resolve with a duration of 7.13 months. IT departments are wasting time trying to interpret licensing terms and defending audits rather than exploring competitive solutions or reviewing their true requirements.

The underlying issue is two-fold:

  • Vendors are routinely using audits to generate revenue. Whilst copyright theft is a real issue in some countries and vendors have a right to get paid for their software, vendors are commonly abusing their copyright protection powers, along with vague and out of date license metrics, to exploit revenue-making opportunities.
  • IT departments are mostly reactive to software audits and have not allocated enough resource for managing software as an asset, despite the massive amount spent annually on software, maintenance and subscriptions.

Oracle maintains atrocious audit reputation

The Campaign for Clear Licensing Survey asked which vendor was least helpful during audits, such as using aggressive behavior and focused only on short-term revenue.

Oracle was voted worst vendor during the audit process, followed by IBM and Attachmate (now Microfocus). This is perhaps not a surprise for experienced IT professionals. A similar study back in 2010 also found Oracle, IBM and Attachmate the most aggressive (Note: HPE Software customers should be wary of aggressive Microfocus audits in the light of their agreed merger in 2016).

Using audits for cloud sales

The Campaign for Clear Licensing survey also asked participants which vendor is the most helpful vendor in terms of audits (constructive, takes the long term view and offers help and guidance). Microsoft came out on top, followed by IBM and Autodesk.

A friendlier but equally time-consuming approach is the ‘review’ process adopted by vendors such as Microsoft, whereby previous compliance misdemeanors might be overlooked as long as the customer adopts the software publisher’s strategic products, in the case of Microsoft in 2016: Office 365 and Azure.

In an interview in July, Microsoft stated that they “didn’t want to punish customers for honest mistakes”. This is of course to Microsoft’s advantage because by leaving previous compliance issues unresolved, the customer maintains a low maturity in terms of asset management and is numb to their real usage, leaving them open to lucrative reviews by Microsoft in the future.

Whilst less aggressive, this approach is still anti-competitive and it assumes the vendors cloud solution is the most viable option.

Thwart audits before they begin

The Campaign for Clear Licensing urges organizations to adopt proactive Software Asset Management practices to thwart audit requests as they arise and prevent the huge waste of time and energy spent on defending audits.

Through trustworthy data and transparent licensing terms, organizations can put themselves in the driving seat in software contract negotiations and strategic direction rather than leaving themselves exposed to the whims of the software vendor’s commercial goals.

Stamping out anti-competitive behavior

The Campaign for Clear Licensing also calls upon worldwide governments and lawmakers to review the activities of large software publishers to ensure they are not abusing their dominant position to stifle competition.

By regularly inflicting time consuming audits and opaque license programs, customers vendors are prevented from making free market choices to more innovative alternatives. Licensing complexity is limiting innovation both in terms of customer development and freedom of choice.

About The Campaign for Clear Licensing (CCL)

‘Campaign for Clear Licensing’ is an independent, not-for-profit organization campaigning for clear licensing, manageable license programs and the rights of business software buyers.

CCL Audit Census

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The purpose of this survey is to investigate current software audit activity.

We also look at the role of the big four audit firms (Deloitte, EY, KPMG and PwC). Are they adding much needed independent scrutiny to the process or are they getting in the way, hindering the progress of software publishers?

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Thank you,

Martin Thompson,

Campaign for Clear Licensing (CCL)