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Thought Leadership

How to turn audit defense into effective vendor management

By Rasmus Larsson | September 22, 2015

Software vendors spend significant time and money – which can amount to tens or hundreds of millions – in developing and maintaining software. Naturally they want to protect their Intellectual Property and ensure clients are adhering to their licensing rules. And, of course, paying for all the software they are using. Naturally the software publishers demand compensation, whether directly or via a third party, for unauthorized usage by the customer.It’s their bread and butter – they expect to be paid and want to protect revenue and often will do so via audits.

In fact, today many software publishers rely on customer audits to provide as much as 25% (and in extreme cases, even more) of their annual income. That’s partly because they’re auditing more (according to Gartner, you now have a 68% chance of being audited by at least one software publisher this year); partly because they are increasing the number of products and licensing types they are monitoring; and partly because they’re getting better at it.  

It’s also worth noting that the business drivers for audits have evolved in recent years, especially with the push towards cloud and subscription models. Many software publishers have found that audits can be a great way to ‘nudge’ their customers in the desired direction.

The flip side of the coin

In a sense, you could argue that being audited by a software publisher is in some ways their way of ‘customer management’ – making sure they get the maximum value from you. 

Well, how about we turn that on its head and looking at getting the maximum value out of them as a software vendor?  It’s what we often refer to as ‘vendor management’.

What does vendor management involve?

First and foremost, just as a vendor audit relies on a baseline of software install and usage data, reconciled against the organization’s entitlements, a proactive approach to vendor management starts with exactly the same dataset. Only this time you’re creating that dataset on your terms, with your preferred technologies and without an audit team breathing down your neck. Solutions like Snow License Manager can give multiple SAM (that’s Software Asset Management) stakeholders the ability to contribute to, and access, the relevant information on software and licenses across all the platforms in use on the network. 

More than that, a good SAM platform will give you the relevant data to make decisions on how to optimize your licensing and support agreements moving forward. 

Whether it’s automatically suggesting changes in license types to better reflect user behaviours (as in the Snow Optimizer for SAP Software solution) or identifying unused entitlements as part of volume licensing agreements, the right SAM solution is more about optimizing your situation that merely preparing you for being on the receiving end of an audit.

Turning vendor management into a ‘Business As Usual’ activity

Having this information puts you on the front foot, and whether you decide to sit on it until the vendor comes knocking or proactively drive your own vendor management agenda, the fact is that you have the upper hand in negotiations, as your conclusions are based on actual fact and not supposition.

The key is to not treat any Software Asset Management program as a one-time exercise.  It not only pays to be continually prepared, it pays to keep a constant eye on the important metrics, spotting both risks and opportunities to make adjustments that will improve the value the organization realizes from its software investments.

To learn how to not only implement a basic Software Asset Management strategy, but to adopt an effective approach to software vendor management, download our free guide to ‘SAM in an imperfect world or contact a Snow SAM specialist today.

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