Software Audit and License Compliance

Is your company at risk?

Does your company take software compliance seriously? If not, your company could be at risk. Many small-and-medium-sized businesses simply don’t have the internal resources to manage software compliance, and yet it is extremely important for every company to develop a policy around software use.

Just how important is it?

 Well, let’s put it this way: In the case of software piracy, whether unintentional or malicious, what you don’t know CAN hurt you. It is both illegal and risky to be in violation of software licensing agreements. You can be subject to severe penalties as a company and/or an individual who either knowingly or unknowingly obtains, uses, or possesses software illegally. Civil copyright infringement carries fines up to $150,000 per title infringed, and criminal violation carries fines up to $250,000 per title infringed and up to 5 years imprisonment! Even if you don’t get caught, other risks associated with “pirated” software (like viruses) can wreak havoc on a workstation, server, or on your entire corporate network.

With the software industry losing billions of dollars each year, the BSA (Business Software Alliance) is cracking down on offenders. The BSA is a well-funded organization that will audit businesses suspected of mismanaging software licenses or engaging in outright piracy. And believe us: they don’t care whether you knowingly did something wrong or not. Crying ignorance of copyright laws and the content of your licensing agreements will fall on deaf ears at the BSA. That’s why it’s in your company’s best interests to keep compliant with your various software licensing agreements.

Here are some general guidelines to help maintain compliance with software licensing agreements:

Establish a policy for software acquisitions, registration and use.   Be sure to cover software loaded on servers as well as on individual PCs and laptops.


Read and understand your license agreements.  Many software manufacturers have distinct policies regarding software licensing.


Appoint a software manager.  There should be a clear assignment of responsibility for monitoring compliance of software licensing.


Perform periodic audits on all computers(especially on portable devices) to verify installed software.


Establish a software code of ethics.  Some companies have users of their computers sign a statement stating they have been informed of software laws and they have accepted responsibility for compliance. Many also include an Internet usage policy, which can cover downloading software on company equipment.


Maintain a library of software licenses.  Accurate records should be kept regarding all software purchased. Include documentation for proof of purchase in the form of dated purchase material, such as a purchase order or invoice, showing the number of copies of the software purchased.


Maintain a software log. Knowing what you have in terms of software is key to maintaining compliance with your software licenses. Keep a log of:

 Product and version


 Registration number

 Date and source of purchase

 Name of user and user location

 Hardware serial number (server, PC, laptop)


Incorporate a policy regarding use of personal software on corporate computers.  Personal software is still subject to the license agreement for that particular software. Often these agreements stipulate the application must first be erased from the user's home computer before it is loaded anywhere else. In other words, there is a difference between single-user and single-terminal software. If you allow your employees to load personal software onto your corporate computers, the supporting purchase documentation should be turned over to the company, or the owner should agree to be responsible for providing the documentation upon request.

When reviewing your licensing agreements, be sure you understand the terms.span style="mso-spacerun: yes"> Some software applications may require the purchase of additional licenses when you upgrade a server, purchase new desktops, or add additional users. Some agreements may expire, requiring you to purchase new licenses to continue using the software legally


To determine if your business is software compliant, you must figure out these three things:

  •  What is currently installed and in use?

  •  What is owned?

  •  Reconcile all applications with licenses owned.

If you have more installed copies of an application than you have owned licenses, then there is likely a violation of the terms of one or more licensing agreements. Remember, licenses are not necessarily the same as purchased software discs. Some software packages are purchased with multiple licenses, allowing you to legally install the same application on multiple computers. This is usually the case with server-based software, whereby the application is installed on a server, then made available to multiple users (clients).


An internal audit may prove that you own many more licenses than you have installed copies of software.  Clearly you’re in compliance, but your business may have spent too much money for licenses not needed.  Don’t be so terrified of compliance that you overspend.

o What’s a Small Business To Do?

These are tough issues for a growing business to manage. You aren’t certain of your future needs, so you either don’t purchase enough licenses and jeopardize compliance, or you purchase too many and waste precious capital.


There is an easier way.  You can outsource your IT to ITonCommand. You’ll no longer have to worry about having too few or too many licenses. ITonCommand is a per-user subscription-based service, so you pay only for the applications each user needs. We manage and maintain your Microsoft software licensing, so you never even have to think about it.


Now doesn’t that sound a lot easier than doing it yourself? Before you pay another dime for licenses you don’t need, before you spend another minute thinking about software compliance, piracy, and copyright infringement, and before you lose another minute of sleep worrying about what you don’t know, call ITonCommand. We’ll help you untangle the web of software licensing confusion and free you to focus on doing what is most important: Running Your Business, Not Your Network. 

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