What is a Software Audit?
Today, most companies rely on dozens, if not hundreds, of different software tools. Each of these products comes with its own licensing terms, and ensuring compliance with those terms is precisely what a software license audit sets out to do. An audit verifies whether your organization uses the software according to the license terms.
Software vendors like Microsoft, Oracle, or IBM can initiate audits, outsource them to third-party firms, or conduct them internally through an internal software audit.
If a software audit uncovers license violations, your organization could face steep penalties and reputational damage. In extreme cases, the financial consequences can be severe enough disrupt business operations.
That's why it's critically important to regularly perform internal audits, maintain an accurate software audit log, and stay on top of licensing terms.
Overview of Common Software Licensing Models
Understanding how different license types work is essential to avoid costly mistakes during a software license audit. Here are the most common models:
- User-based License – Assigned to a specific user, regardless of the device. Example: Microsoft 365.
- Device-based License – Tied to a specific piece of hardware. Example: OEM Windows licenses.
- Subscription License – Monthly or annual fee for access to software. Example: Adobe Creative Cloud or Salesforce.
- Perpetual License – One-time purchase of a specific software version. Example: DaVinci Resolve.
- Core/CPU-based License – Licensing based on server hardware specs, often used in enterprise environments. Example: Oracle Database.
- Concurrent (Network) License – A shared pool of licenses used by a limited number of users simultaneously. Example: AutoCAD network licenses.
How to prepare for a software audit
Build an Internal SAM Team
Establish a dedicated Software Asset Management (SAM) team, or designate an individual, to oversee license tracking, policy enforcement, and software audit readiness. Their job includes running internal software audits, maintaining a current software audit log, and ensuring software usage stays compliant.
Run a Comprehensive Software Inventory
You can’t manage what you can’t see. To assess your compliance, you need a complete and accurate inventory of all deployed software. Tools like ALVAO SAM can help automate discovery across your IT infrastructure, track installations, and identify compilance gaps that could cause issues during a software license audit.
Example: ALVAO discovered 150 installations of Microsoft Visio, but your organization only owns 100 licenses, which triggered a red flag in your software audit log.
Perform License Reconciliation
Matching software installations with valid licenses is key. However, having the right number of licenses may not be enough; it is essential that the right type of license is assigned to the right software version or usage scenario. Accurate reconciliation simplifies your next software audit and reduces your exposure.
Example: You have 100 licenses of Microsoft Visio Standard, but inventory shows that 20 users are running Visio Professional, which requires a different license tier. This mismatch can trigger compliance issues during a software license audit.
Maintain Complete License Documentation
Keep all relevant documentation in order - purchase invoices, license keys, end-user license agreements (EULAs), and support contracts. A centralized software audit log within a modern ITAM/SAM tool ensures that all license data is audit-ready and easy to retrieve during a software audit.
Software Audit Is Here
You've received an official software audit notice from a vendor. Auditors will request technical and legal documentation, which typically includes:
- Software inventory – Including product names, number of installations, version numbers, install dates, and usage stats.
- License documentation - This may includes invoices, license keys, digital certificates of authenticity, etc.
- User and device list – Mapping of software to individual users and hardware, plus data on remote access, BYOD, or virtual desktop usage.)
- Proof of license transfers – Required if licenses were acquired from a reseller.
Auditors may also review your internal policies for software deployment, access restrictions, and previous internal software audits. They’ll likely examine your software audit log to verify historical compliance and any corrective actions taken.
Software Audit Report
The software license audit concludes with a detailed report outlining your software usage and compliance status. While formats vary by vendor and organization size, a typical report includes:
- A list of audited software and associated licenses, including counts and usage types.
- Identified non-compliance issues (e.g., unauthorized installations or over-deployment).
- Recommended remediation steps and a cost estimate for resolving gaps, including back payments and potential penalties.
Conclusion
In the digital age, software audits are an inevitable part of running a modern IT operation. However, with well-defined processes and the right technology in place, such as regular internal software audits and a maintained software audit log, they won't be a headache. With ALVAO Software Asset Management, you gain full visibility into your IT environment - making it easier to track installations, stay compliant, and be fully prepared for any software license audit.