Mid-Sized Companies Targeted for Software License Audits

Moving to the Cloud Fails to Alleviate Licensing Issues, Survey Finds

LOS ANGELES--(BUSINESS WIRE)--Mid-sized companies were more frequently subjected to software license audits in the past three years, and more than half of audited companies paid up to $1 million in software-vendor fines, according to a new survey sponsored by LicenseFortress, an independent software asset management company.

Of 283 IT professionals surveyed, 69% reported that their enterprise was subjected to a software compliance audit in the past three years. While just over half of small companies (under 250 employees) escaped audits, 83% of mid-sized enterprises and 77% of the largest organizations – 1,000 or more employees – were examined by their software vendors.

“The lack of compliance with software licenses makes these audits a big financial risk for companies of all sizes, especially for mid-size and large enterprises. The audits are a lucrative source of revenue for software vendors because enterprises inadvertently violate the license agreements and lack the internal controls to spot and correct issues,” said Dr. Michael Corey, Co-Founder and Chief Operating Officer of LicenseFortress.

The 2022 Survey on Enterprise Software Licensing and Audit Trends was conducted by Unisphere Research, a division of Information Today, Inc. The survey of database managers, developers, CIOs, and IT directors – selected from the readership of Information Today’s publication, Database Trends & Applications – sought their views and experiences with software licensing audits.

Other survey findings included:

• Microsoft was most active in the past three years, conducting audits of 64% of respondents’ enterprises, followed by Oracle (41%) and IBM (27%).
• Companies audited by Oracle incurred the highest fees, with 15% required to pay $1 million or more in non-compliance fees. Meanwhile, 12% of respondents said their companies paid Microsoft more than $1 million, and 11% paid that amount to IBM. Overall, 29% paid $1,000-$99,000; 25% paid $100,000-$999,999; and 10% paid more than $1 million in fees to a software vendor as a result of license violations.
• Despite the financial risks, a majority of audited companies did not seek outside assistance to guide them through the process. While many depend on tools or software asset management to support their efforts, a majority fail to keep track of software changes on a continuous basis.
• The issues most identified during an audit
  • 32% used or activated unlicensed features
  • 31% had issues around virtualization
  • 25% did not purchase enough licenses
  • 23% purchased or were using the wrong license types
• The move toward cloud-based applications and databases failed to alleviate software compliance issues for a majority of those surveyed. About eight in 10 reported an increase or no change after moving to the cloud. Only 21% say the cloud has reduced their compliance issues.

“There are many great reasons to move to a cloud-based application and database portfolio, but don’t expect it to resolve software compliance issues. Software compliance audits will continue to be a financial risk for companies as long as they fail to continuously monitor software changes within their enterprise,” said Dean Bolton, Co-Founder and Chief Architect of LicenseFortress.

About LicenseFortress

LicenseFortress is a software asset management company providing real-time monitoring, license compliance, and legal experts to guard against costly software licensing audits. Its independence from software giants, combined with its financial and legal guarantees, positions LicenseFortress as a strong and unmatched SAM service for organizations seeking solutions to manage the complexities of software license compliance. Founded in 2014, LicenseFortress is headquartered in Los Angeles and serves customers globally.