Identify and minimise licence risks during a Microsoft audit

Why used software is an efficient alternative to new licences, and not just in the case of sub-licensing

Microsoft announces its software audits with a 30-day lead time. For some IT departments, this is the start of a stress test. This is because the risks of failing the audit are always present, especially with more complex company and IT structures. Smaller medium-sized companies in particular, with just a few hundred employees, often do not manage their software assets with professional management tools and therefore quickly lose track of their licence structure. Acquisitions, mergers, spin-offs or a change in the licence model, such as from pure on-premise operation to a hybrid cloud solution, increase the demands on licence management immensely. In such situations in particular, a spontaneous software audit can lead to serious problems, especially with widely used standard software such as Microsoft, which is in use at almost every workplace.

In this blog post, we explain how companies can counteract audit risks preventively and use the example of the Italian company ELTEK SPA to show how used software licences can be used to compensate for existing under-licensing in a legally compliant manner in the shortest possible time and benefit financially at the same time.

Microsoft Audit: How to minimise the risk of sublicensing

Even most medium-sized companies usually have to manage an almost unmanageable number of software providers and solutions, including the respective licence agreements. Without professional software asset management with the support of digital management systems, this is not possible in an efficient and compliant manner. This is the only way for IT managers or SA managers to maintain an overview and be warned in advance, for example, if there is a risk of under-licensing or overcapacity.

As a rule, event-driven or regular internal, so-called ‘friendly’ audits, in which the licence inventory is checked in detail and documented practically as a test run in order to uncover possible licensing gaps at an early stage, also prove to be preventively effective. In our experience, the following occasions are particularly suitable for an audit of the internal licence portfolio in order to prevent under-licensing of existing software assets:

1. Internal reorganisation measures, such as the merging of departments or entire divisions, as well as outsourcing projects.
   
   
2. Migration projects, such as switching to a new system provider or a structural changeover from pure on-premise solutions to a hybrid cloud structure.
   
   
3. Opening or closing company locations, whether through organic changes or the acquisition of companies or the sale of parts of companies or subsidiaries.
   
   
4. Regular inventory analyses and requirements reviews, for example for budget planning in the fourth quarter of a year.
   

Microsoft audit risk: lack of documentation of the rights chain

Gaps in the documentation of the rights chain are a common problem during a software audit. It often turns out to be difficult to obtain and submit the necessary evidence in good time within the 30-day preparation period set by the manufacturer before the start of the audit. The consequences range from expensive re-licensing, in many cases of the latest version, a possible associated switch from purchase to rental licences and potential fines for extended licence violations.

Microsoft in particular has ramped up the number of software audits it significantly reduced during the coronavirus pandemic, meaning that licence checks can be expected again at any time.

No problems with missing documents during Microsoft audits: With PREO, companies or public administrations play it safe. The rights chain is fully disclosed and all evidence is available online 24/7 for PREO customers. This means that there is no problem submitting the requested documents on time during audits. PREO has successfully transferred over three and a half million used software licences in an audit-proof manner, and every single one of them that has been the subject to an audit in the last ten years has passed without any problems. You can find more information about software audits and how they work here.

Minimising Microsoft audit risks - what applies to used licences?

Some IT managers and software asset managers are still uncertain about the legally compliant use of used software licences. This is all the more surprising as it has been possible to buy or sell used volume licences in full or in part in a legally compliant manner for over a decade. The following principles apply:

• The software was placed on the market in the territory of the EU or another contracting state of the European Economic Area (EEA) with the manufacturer's consent when it was first sold.
  
  
• The licence must be perpetual.
  
  
• If the purchaser of the used software downloads the program from the manufacturer's data offer after purchasing the used licences and the program already contains improvements and updates, this must be covered by a maintenance contract concluded between the copyright holder and the first purchaser. The new purchaser has the right to use the latest version available under the maintenance contract and to receive security patches and updates.
  
  
• All previous owners of the used software licences must have permanently deleted their respective copies on their computers or rendered them unusable.

Good to know: If you have become the legal owner of used software and can provide proof of purchase, you can also resell the licences if you no longer need them.

Do you have questions about the legal compliance  for used software licences and how companies can benefit from them in the long term? PREO's licence experts will be happy to advise you personally and, on request, prepare a non-binding offer based on your individual licence portfolio.

Enquire now free of charge

Example ELTEK SPA: successful Microsoft audit thanks to rapid re-licensing

The Italian company ELTEK SPA also learnt that a failed Microsoft audit can become a major problem. Following the renewal of its own data centre and the simultaneous change in licensing strategy by Microsoft, it turned out that some server licences, both for the data centre and for the standard licences, were missing. With the help of PREO's licensing experts, the requirements were analysed within just one week and the used licences, Windows Server Datacenter 2Core and Windows Server Standard 2Core, were purchased from PREO. The Microsoft audit was successfully passed, as all used licences met the auditors' strict compliance requirements. In this customer case, you can read how Paolo Valle, Internal Auditing & ICT Manager at ELTEK SPA, was convinced to use used Microsoft licences and how high the financial savings were compared to new goods.

With its Appliance, Mobility and Medical & Sensing business units, the ELTEK Group specialises in the research, design, development and production of mechatronic and medical components. The company employs around 1,700 people at its sites in Italy, Switzerland, Poland and China.

With PREO, you are relying on an experienced and reputable B2B provider

As one of the pioneers in the European trade in used software, PREO offers companies, organisations and public administrations the audit- and compliance-proof purchase or sale of used volume licences, primarily from Microsoft or Adobe. More than 1,000 PREO customers have already benefited from the numerous advantages of the used software market:

• High savings on ongoing licence costs of up to 70 percent compared to the respective new version.
     
  
• 100 per cent legally compliant and audit-proof licence acquisition with maximum transparency in all processing steps, including complete documentation in the PREO licence portal ‘Easy Compliance’.
  
  
• Personal advice on all questions relating to licence transactions or the integration of used software licences into traditional network structures or hybrid cloud models.
  
  
• Existing capacities for software licence management for large IT infrastructure projects with thousands of workstations and cross-border locations.
  
  
• Greater sustainability in the IT sector by promoting an active circular economy and reducing the company's carbon footprint. Speaking of sustainability: PREO is the only retailer of used software with a current scorecard listed by EcoVadis, the world's largest provider of sustainability ratings.
  
  
• The expertise from numerous reference projects that PREO has already successfully realised for well-known companies from various industries and sectors.

Enquire now free of charge