Mike Austin explains what to do when you receive an auditor’s Estimated License Position (ELP). He defines an ELP as typically an Excel workbook summarizing discovered deployments vs. owned licenses and stresses that the auditor’s ELP is not automatically correct: auditors make assumptions when data is incomplete, can double-count users across sources, misapply licensing rules, and assemble complex multi-tab workbooks that require careful cross-tab review. He warns that ELPs often contain hundreds of thousands to over a million rows, that review windows may be very short (e.g., 5–10 business days) and should be negotiated for extension, and that reviewing the auditor’s ELP against your own ELP is a negotiation where you must challenge assumptions before settlement. The video closes by pointing to a follow-up on negotiating final settlements.
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Hi there and welcome back. In this video, we're going to talk about what happens when you're handed the auditor's findings. Most vendors call these an estimated license position or an effective license position. Usually you'll hear the term ELP for short. The ELP is usually an Excel workbook that takes all the data that was collected from the discussion in the last video and assembles it into a workbook that shows you what's been deployed and where, and then creates what's called an estimated license position, where they compare your deployments to your licenses owned and in a summary somewhere show you anywhere where there's shortfalls usually, but even also places where you have more licenses than what you have deployed. Quite often organizations think that because these audits are being conducted by the publisher themselves or by an independent third party auditing firm, that they're absolutely correct. That is a bad assumption to make because the publisher or the auditor does not understand the uniqueness of your environment. And where the data doesn't provide a full picture, they're going to make assumptions about the licenses required or what's going on in your environment. It's your job to dig through all that data to find where those assumptions are made and make sure that they're not punitive to your company. One of the key things to know is that just because an auditor has handed you an elp, it's not set in stone. There's going to be a lot of information in there. Small companies of only a couple of thousand users may have hundreds of thousands of rows of data to review. We've seen, and it's not uncommon to see ELPs that have over a million rows of data that need to be reviewed in order to make sure that they're accurate and correct. Another really important thing, depending on how you negotiated the timelines, they typically give you a very small window of time to review these ELPs, sometimes as small as five to 10 business days. That may not be enough time. So when you start to look at the elp, be prepared to go back and negotiate an expansion of the timeline in order to make sure that you have adequate time to correctly review this. Back in the first video we talked about creating your own elp. Now is the time to compare that ELP to the vendor auditor's ELP to see where there's any differences. You're going to want to investigate each of those differences to figure out why and to see who was right and who was wrong. One of the things I always tell people is that an ELP Creation or the data collection science, it's going out and actually counting things. An ELP review is part science, part art, and the art part is negotiation. So don't forget that nothing in this ELP is set in stone. This is a negotiation and it's where it begins. So let me talk about a couple of things that we typically see in ELPs that cause challenges. One of the first things is these are Excel workbooks, usually with multiple tabs. A lot of the times data in one tab correlates to data in a second tab and people don't actually recognize that. So if you don't understand how tab A corresponds to tab B, you're not going to understand how a license position is put together. So these are not simple, straightforward documents where all the information is simply laid out. It's very complex and often they're interlaced. The second thing is that a lot of the times they're trying to make sure that they have everything in your environment. That's the auditor's job. But where that becomes a problem is when they start taking multiple sources and piling those multiple sources on top of each other. An example might be they may take your active directory records along with your HR records and look for unique individuals. If the licensing is done user based, the problem is they may not dedupe that. So if in one system I'm Mike Austin, and another system I'm Michael Austin, it may very easily double count licenses for me. So that deduplication process becomes very, very important. The third thing that we see quite often in elps is that the licensing rules are not applied in the most accurate manner. They simply apply licenses however they see fit. It's your job to actually go back and review how the licenses have been applied and making sure that you're taking the biggest advantage of your licenses as possible. Final thing I want to talk about is that this is a negotiation. So one of the things you're going to want to do is ensure, particularly if this is an auditor handing an ELP over to the vendor, that you've negotiated as much as possible out of this ELP before the handoff and the final phase, which is settlement. So often we've seen organizations where they feel that these ELPs are incorrect, but they didn't quite know how to defend themselves through it, so they just handed them off. An actual example of this is a client that handed off an ELP that said that they owed ten million dollars when they felt that they only owed two and a half million. What ends up happening is as they're taking out the seven and a half million dollars of accurate things in the final phase. The vendor actually sees that as a negotiation, even though they're actually doing things that are programmatically allowed. So you want that ELP to be as low as possible before you head into the final stage. From here on out, things are truly going to be a full on negotiation. To see how you can come out on top of the negotiation, watch the next video in which Jay and I talk about negotiating the final settlement of your software audit. Thanks for watching and always question those auditors findings. This is actually where the science, all the stuff that we've talked about up until this point has pretty much been science turns into the art of the negotiation.
