Mike Austin breaks down what makes software vendors audit your company: economic pressure, spending changes, mergers, and complex licensing deals. He recommends proactive talks with your vendor account team and negotiating audit clauses before they come knocking.
Chapters
Let's talk about a selection process. Right. So what happens that, you know, people say all the time, what is it that triggers an audit? Right. One thing that's happening right now, regardless of who you are, is just the fact that with the economy and the downturn, with the pandemic, the software vendors are not meeting their numbers and they're just going to frequently, they're just increasing the frequency of who, of the audit. So right now I would call that an external factor, that they're not making their numbers and they're just auditing more people in order to grab revenue. Right. But you know, outside of a pandemic, these six things are the things that typically would potentially kick you into a selection process or put you on a radar. Right. So there's a change in spend. You know, you're spending less than used to. You got a complex structure, and they start questioning whether you have a handle on how you're actually, actually licensing things. You do frequent M and A. M and A. Usually, you know, if you do an acquisition, you know, it's probably pretty much guaranteed that sometime within the first year, you're gonna have two or three different vendors knocking on your door. If you've got a highly customized and complex licensing agreement, that's a trigger, you know, obviously a decrement decrease in spend that's not aligned to a reflection of the growth of the organization. And then I call IQ gathered by various team members. A lot of times these software vendors are in talking to a bunch of people and they may hear things that are contradictory to the way things are licensing. Not always. Right. I one time had a team member sit in on a meeting where they said they were basically going to have an extra 10,000 PCs on the network. So they said they had this number. And that person went back to the account team and said, oh, look, we found this out. And they said, well, you have these many PCs and you know, you're way under license with us. And it really just ended up being that they were in the middle of a massive refresh. But, you know, it took them six months to convince the vendor of that and things like that. So, you know, if you can, if you, if you want to try and avoid these things is what you want to be doing is making sure that you're communicating with your vendor, what's going on. So if you're going to decrease your spend, make sure they understand why you're decreasing your spend. They might not like it, they may try and fight against it, but as long as you're doing, you know, within the rules itself that, you know, they'll understand. So what I say is try and communicate any of these sorts of things with your account team as frequently as possible. And then, you know, also there's some things you can do. Maybe try and negotiate some audit clauses in, maybe do self assessments versus audits first, and then, you know, making sure that you understand the big risk factors and that you have a handle on those.
