Publisher Audit: Candidate Selection Strategy

Before any software license audit is initiated, Publisher needs to identify the candidate organizations for the audit. One view that people have is that the Publishers randomly approach an organization for the audit and wherever they get a skeptical response, they proceed to the next stage of audit. While this looks to be a good approach but would likely involve efforts with lesser return besides creating a negative image about the Publisher in the minds customers.

Some of the factors that drive the candidate selection strategy for software license audit are:

• Probability of recovering the penalty or license fee in case the candidate company is a defaulter: This factor will have a positive influence on the strategy if there is a high probability of recovery while a negative influence if the probability is low. E.g. a company approaching bankruptcy will not be a candidate from whom the Publisher will be able to recover anything. Thus, such organizations will not potentially qualify as a convincing candidate for the audit. In this case the strategy is being negatively influenced.
• Geographical location of the candidate company: Geographical location of an organization determines the degree of control that a Publisher has in the location to get their legal rights executed. E.g. If the candidate organization is at a location where the Publisher can easily execute their legal rights will have a positive influence while the location where execution of legal rights is challenging or extremely time consuming will have a negative influence on the candidate selection strategy.
• Prevailing customer relationship: If the customer relationship is very strong or the customer is a significant customer then it becomes difficult for the Publisher to proceed with auditing such a customer. There might be instances where despite knowing that there is some degree of non-compliance a Publisher might overlook the same in the interest of larger business interest. Thus, a strong customer relationship has a negative influence on the candidate selection strategy.
• Inconsistency in purchasing patterns: Inconsistent purchasing pattern for an organization is something that is treated suspiciously. Higher is the degree of inconsistency, greater is the influence of this factor on the candidate selection strategy. In other words an organization with a highly inconsistent purchasing pattern becomes a strong candidate for audit.
• History of poor license compliance: Poor license compliance history makes an organization more susceptible to a license audit. Thus, an organization having a history of non-compliance will have a positive impact on candidate selection strategy.
• Size of customer: Size of the organization translated into number of potential users of the license. Thus, large size will positively impact the candidate selection strategy while the small size will have a negative impact.
• Mergers and acquisitions: Mergers & Acquisitions leads to scenarios where the potential users of licenses increase besides increasing the risk of potential non-compliance due to the non-compliance by the organization being acquired. Second factor is something which the acquiring company has to be extremely careful about. Thus, more is the number of mergers & acquisitions or larger is the company being acquired/ merged, greater will be the risk. This would also mean that candidate selection strategy will be positively influenced.
• Geographical spread: Geographical spread of the organization means the numbers of countries the organization is operating in. More is the geographical spread, greater is the challenge in managing the licenses and more susceptible the organization would be to non-compliance. Thus, high degree of geographic spread would positively impact the candidate selection strategy of the publisher.

Following table shows impact of the factors on candidate selection strategy.

Also, factors in red are the ones which can single handedly contribute to an organization not being a candidate for audit. Combination of the impact of all these factors eventually helps the Publisher in deciding the candidate for an audit. Based on the maturity additional factors may be used by the publisher.

Based on criticality of the factors, these factors can be assigned a weight. An expected value can be provided to each parameter. Accordingly a combined score can be obtained. Organizations having a score more than a pre-determined threshold will qualify as a candidate for audit. Thus, an automated tool can be used to determine the potential candidate.

Objective of Publisher Audits

My earlier blogs shed light on Software License Management and Software License Forensics. Let us try to understand the objective of the publisher during such audit in the order of priority

• Revenue Generation: Unaccounted licenses (when more than the license procured is being used or pirated software is being used) or non-compliance to license terms mean lost revenue for the Publisher. They would want to recover such lost revenue.

• Protection of IP: At times non-compliance also leads to violation of IP of the Publisher. It is of utmost interest for the publisher to protect its IP.

• Prohibiting piracy: Unaccounted licenses (when software with a crack serial code is being used) also mean piracy. Piracy leads to lost revenue for the Publisher as well. But in this objective the primary goal is to prohibit and advocate against piracy.

• Creating and agreeing a license consumption baseline for a customer: This is more of a mutual exercise where customer even is not sure about what they are consuming. The primary objective in this case is to arrive at a baseline based on which all future license consumption can be based upon.

• Encouraging and enabling customers deploy Software Asset Management (SAM): Having an effective SAM deployed is not only beneficial for the publisher but also for the customer and enables ease of calculating license utilization. It creates a win-win situation for both publisher as well as the customer.

• Helping customer improve their SAM: We have seen that organization growth and restructuring besides mergers and acquisitions put forth a major challenge for SAM. Thus, SAM has to improve and evolve. Publishers enable their customer by helping them improve their SAM. Again, this is a win-win situation for both of them

• Educating customers on license usage, terms of usage and SAM: Here the basic purpose is to educate the customer regarding SAM, the license types and their terms of usage besides the usage of license itself.

• Internal process adherence and governance: Publishers have their internal process controls and governance. They need to comply with it. At times this triggers the audit.

• Customer satisfaction (through overall contribution towards their SAM and compliance initiatives)