The Provance Blog

The Provance Blog will provide you with expert advice, insights and opinions in regard to IT Service Management, Microsoft, Microsoft Dynamics 365 and Microsoft System Center.  

Negotiating Leverage in Software Audits


Given the increasing frequency of software license audits, it's just a matter of time before you are contacted by one or more vendors. You need to be as prepared as possible for the inevitable software audit, and minimize the potential risk  of non-compliance. There is a significant power dichotomy between software vendors and the purchasing organization. Software assets typically pass through separate teams in purchasing, legal, IT support and other departments. Complex usage agreements tend to only be revisited annually at best, or more likely every three years. Software vendors maintain extensive knowledge of their agreements, along with dedicated account managers and legal teams with extensive knowledge of your organization. Software management is their business. Many of the traditional tools of negotiation are blunted in a software contract renewal. Vendors understand that switching costs are high – the removal and redeployment of applications, retraining for users, as well as for support – and can easily amount to several times the purchase price of the software. Your software ‘purchases’ are just licenses to access and use the software. With very few exceptions you do not "own" the software and cannot resell it. Support options are limited, as third party support options are rare.As well, in many cases ongoing support is required to maintain compatibility with other applications. Negotiating leverage after an audit or at the scheduled renewal period can be greatly diminished. Your real power in will be rooted in clearly understanding your current software asset position, and planning for your future software upgrades and revisions. Understanding your current position will allow you to assess where software, and its maintenance, is required or not, as well as to understand and identify competitive opportunities for replacement. Organizations need to plan ahead for the inevitable software audit. Information beyond just the count of installed licenses is essential to support effective negotiation. An active Software Asset Management (SAM) program, including automated software inventory and usage details, controlled purchasing and contract entitlement will provide you with certainty in your software license position. Establishing a SAM program will take time, however will cut the costs of preparing for the audit, and allow you to maximize your negotiating leverage and deliver the best value for your organization.



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