Mid-Sized Companies Targeted for Software License Audits

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

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220927005134/en/