Remote Software License Compliance Audits – Strategies to Maintain Momentum in a Post-COVID World

The Golden Era of Business Travel

Until recently, it was an unquestioned reality that many vendors performed the vast majority of Software Audits onsite and in-person. The typical audit engagement followed a somewhat standardized approach: qualification, notification, an onsite visit, report, and finally, a settlement.

Our peers from the Big-4 firms had specialized software compliance teams located in central hubs and were sending their experts to perform work where required and solicited help from local offices on a need-by basis.

This well-established routine worked well in pre-COVID times when flying the auditors across the globe on overcrowded planes and exposed to hundreds of people was nothing more but “business as usual.” But then came COVID-19, and nothing will ever be the same.

In hindsight, we might look at it as serendipity that Connor introduced the concept of remote software audits a few years ago, and had the chance to build scalable processes to support this practice. Today, we operate a dual-approach to compliance audits with great success. While it sounds trivial, executing remote software audits requires several critical elements, which I will highlight below.

Quick Adaptation

We saw a far more dramatic and faster pace of change recently than many thought possible just a few months ago. The virtualization of work, from the home office setup to video conferencing with teams and clients – this is the norm now. And while many of us look forward to a business trip after weeks of lockdown, it is questionable whether we will (ever) get back to pre-2020 days in terms of travel. We realize that exposing our teams and business partners to such risks is not good business.

And employees will expect to travel less, to avoid crowded spaces, and to increase their security. During times of uncertainty, Maslow’s Hierarchy of Needs provides a good guideline of the priorities we will look at – personal safety and health. Companies that adapt quickly and create such beneficial environments for their employees and their customers will have a clear advantage.

Flexible structures and the ability to act as one global firm are critical elements to ensure successful execution of remote audits, while at the same time guaranteeing an efficient program. The adage “think globally, act locally” is king.

Transforming the Audit Process from Onsite to Remote

Turning a process around takes time, though. As we all know, changing established routines and operating procedures is not easy. And the underlying nature and expected outcome of an audit will not transform, either. Software compliance audits will remain critical for any company protecting their IP while recovering unpaid license and maintenance fees, fostering payment discipline, fighting piracy – these, and many more, arguments remain valid. The need to review installations, deployments, underlying data will remain integral parts of any compliance audit engagement.

The current transformation impacts how vendors and auditors need to adapt to executing more audits remotely while ensuring accuracy, completeness, and a healthy return on the program.

A remote inspection is not going to replace all onsite visits. There will be instances where a team of auditors will need to go onsite to inspect the licensee’s business operations. Therefore, I am not advocating a “rip-and-replace” model. Instead, a fundamental shift from onsite to remote audits to allow for greater flexibility, shorter cycles, increased security for your team and licensees, while continuing to drive high ROI from your compliance efforts.

We introduced the concept of remote audits three years ago and conducted hundreds of engagements successfully across the globe. Based on our experience, performing remote reviews is as successful as going onsite. There are some critical observations for you to consider:

  • Enterprise (20%) and Transactional (80%) customers might require different approaches. While your typical audit program focused on Enterprise only, you can extend your compliance efforts across your entire customer base
  • From a business perspective, remote audits offer an attractive ROI for vendors, if done correctly, recoveries of underpaid license and maintenance fees should remain relatively consistent, while costs such as out of pocket expenses and travel time would be eliminated. Transactional customer segment, for example, we have observed the ROI to be, on average, 12X, before factoring the impact of automation.
  • Automation is critical to reducing time-consuming and expensive human data manipulation tasks. Over the past three years, we have developed several tools that use machine learning and advanced analytics to cut down data tasks by as much as 95%. You can apply automation to almost any environment, any business, and any data source, which will drive efficiencies and cut down costs.
  • Consider the global nature and regional differences of your licensees. What we have found hugely successful is to have local, highly-trained auditors in all major geographies and jurisdictions that can talk with your licensees in their language, understand the domestic specifications and nuances, and adapt quickly to changing circumstances.
  • Having local teams with a localized approach makes perfect business sense. This flexibility allows you to maximize the impact of each audit, thus reducing friction in the process.
  • Remote engagements can still fully support the license advisory services many programs are looking to offer their customers. This will, however, require agility, creativity, and investment in technology by your service providers.

Remote compliance audits will be the golden standard in the years to come. They offer security for your employees, customers, and business partners. They are efficient and highly profitable. Combined with automation, they offer a better way to address compliance across your entire licensee segment. Onsite audits will continue to take place and are the right engagement method in many cases, so switching to a hybrid model and reinventing your compliance approach today will pay big dividends for you immediately. Vendors and big third-party firms will look to pivot to this new model in the months and quarters to come. With several years of experience under the belt of executing remote audits, we are in a fortunate position to help our clients today drive the same results as they typically get from traditional onsite inspections.