SCHAUMBURG, IL--(Marketwire - Dec 6, 2012) - Software license compliance audits are an established industry practice by which vendors are allowed to investigate customers' actual software usage, and seek additional compensation in the form of a "true-up" penalty if use exceeds licensing terms. According to Flexera Software's 2012 Software Pricing and Licensing Survey, prepared jointly with IDC, software vendors are continuing to exercise their rights to audit their customers and true-up.
Part of the problem can be traced to challenges companies face tracking and managing software license use, and reconciling that use to ensure compliance with licensing terms. According to the survey, one third of enterprises surveyed said they are either dissatisfied or very dissatisfied with their current method for managing software licenses and usage.
And the reason for that dissatisfaction is clear -- 38% of enterprises indicated that 11% or more of their application spend is associated with applications that are overused, and therefore out of compliance, up from 26% one year ago. Moreover, the survey shows that vendors are exercising their rights to recapture some of that revenue leakage due to noncompliance via software audits and true-ups. 64% of enterprises reported that they have been audited over the last 18-24 months. And large enterprises -- defined in the report as those with greater than $1B in revenue -- were significantly more likely to be audited three times or more in the last 18-24 months. Moreover, 24% of enterprises said their total true-up paid over the past year was $1 million or more.
Finally, the survey revealed that the major software vendors -- those that typically account for a significant portion of most organizations' enterprise application spend -- are also the most aggressive auditors. Enterprises reported that over the last year, they've been audited most frequently by Microsoft, Oracle, IBM, SAP and Adobe.
"Software usage that exceeds the negotiated license terms can represent significant lost revenue for software vendors," said Amy Konary, research vice president - software licensing and provisioning at IDC. "There are many factors that make license compliance difficult, including license and IT environment complexity, lack of automation, and decentralized IT. IDC expects that vendors will continue to enforce their license agreements with audits, and advises enterprises to pro-actively track and manage usage of their software license assets."
"Never has the need for Software License Optimization been more pronounced," said Randy Littleson, Senior Vice President of Marketing at Flexera Software. "Organizations face tremendous challenges tracking and managing software licenses and reconciling that use against their software license agreements. If existing license management strategies aren't significantly reducing or eliminating painful software true up penalties -- optimizing the software license estate often eliminates or significantly reduces that risk exposure."
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About the 2012 Key Trends in Software Pricing and Licensing Survey
Since 2004, Flexera Software has produced the Key Trends in Software Pricing and Licensing Survey in conjunction with several industry partners such as the Software and Information Industry Association (SIIA), the Centralized Electronic Licensing User Group (CELUG), and Electronic Design and Automation (EDAC). Since 2009 Flexera Software has joined forces with IDC for the survey. Amy Konary, research vice president - software licensing and provisioning at IDC, prepared the analysis and presented these findings at Flexera Software's SoftSummit Regional Briefings. Executives and managers at 334 software vendors, intelligent device manufacturers, and enterprises participated in the survey.
About Flexera Software
Flexera Software is the leading provider of strategic solutions for Application Usage Management; solutions delivering continuous compliance, optimized usage and maximized value to application producers and their customers. Flexera Software is trusted by more than 80,000 customers that depend on our comprehensive solutions -- from installation and licensing, entitlement and compliance management to application readiness and software license optimization -- to strategically manage application usage and achieve breakthrough results realized only through the systems-level approach we provide. For more information, please go to: www.flexerasoftware.com.
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