Challenging Vendor Audit Costs

Our organisation has recently gone through a lot of change – we have been bought out by a much larger organisation and are now a division that is being incorporated into a large, enterprise organisation. Whilst this is an exciting time for us, it has also been extremely challenging.

The parent company are going through and have recently settled a number of audits with the usual suspects. No surprise there then – it would appear auditors don’t care about your size or industry, they will audit you. In a way I’m glad that they have had a tough time, as it means that my campaign to implement Software Asset Management on a global scale will have more meat on the bones.

They don’t have any form of SAM or license management in place, but since their experiences with audits they are actively looking for a dedicated resource and technology to manage all entities and the global estate.

There is one thing that has been concerning me, and that is the ‘financial demands’ initially made by the software vendor at the end of an audit.

Case #1 – Microsoft

Microsoft has literately just completed an audit of the parent organisation. Initially, they sent a bill of around £3.5million to true-up and address shortfalls. The size of the business now is estimated at about 17,000, but when Microsoft audited them it was about 11,000 seats. £3.5 million for a true-up seems like an awful lot of money.

They eventually settled at £1.1million after they called in their Microsoft supplier who has a number of Microsoft experts. They quickly found a number of errors in the report and a number of miss-calculations. As they didn’t have the internal expertise or resource, they were extremely close to signing a deal for £3.5 million.

Case #2 – IBM

Almost a textbook copy of the Microsoft case, IBM contacted the parent company demanding £170,000 for another shortfall. Unfortunately, the company paid before my team could see what they were requesting payment for.

It turned out that a few probing questions would have resulted in almost null payment as a lot of what IBM were claiming money for had already been paid for or was clearly communicated with IBM that the software was on longer in use!

Case #3 – Oracle

This case was actually us before we were acquired. We have a very small Oracle estate, but what we do have we really value – it is a key database solution within our organisation that we quite frankly cannot see replacing anytime soon.

However, Oracle released an updated version of one of their flagship products which also included a few new features. Our DB teams downloaded the updates and started using the new features. They also received an email – which on the look of it should of been forwarded to us – that they subsequently deleted as it appeared to be spam. This email contained information that advised the user that the use of feature A, B and C actually required a new license type as our existing licenses may not cover it.

Of course, we didn’t find out about this until Oracle contacted us and broke the wonderful news to us. Whilst I totally understand that they did communicate the change with us, it wasn’t in a clear or effective manner from a licensing point of view.

Lessons Learnt

To me the different scenarios bought out a lot of frustration for me, which is why I felt compelled to write a blog again. The software licensing world just seems to want to complicate itself even more, or trip you up at every corner. Just when you think you’re managing a certain vendor reasonably effectively and that it is under control, they change the pricing, bring out a new license metric or send you a large bill that makes very little sense.

Your Account Manager then seems confused as to why there is little or no relationship with them, and why we get angry when they call us asking to ‘improve the relationship so we can be more strategic and forward thinking’. Sure, we can talk, but I can’t shake the feeling you have a hidden agenda…

I went off on a tangent a little bit there, but the lessons learnt from these cases is that you should always challenge the software vendor, even if they seem 100% set and confident in the shortfall or bill figures they are sending over to you.

Even if you think they are right, challenge them. You may knock off a few pounds from the original bill. Also, it is important to remember that the compliance figures that they generate have some form of human input, and humans make mistakes!

 

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One Comment

  1. Adam Glen says:

    I am not sure that £3.5 million is that out of the ballpark for 11,000 seats. MS Office alone would be about £3.9 million for that many. Mind you I am sure that a company of that size was not running 11,000 seats of office unlicensed, but combine with SQL or Dynamics, that doesn’t seem too far fetched.

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