Let’s face it: Software audits are not fun.
I should know – I lived through a very painful and protracted software audit at my current company, Russell Investments, an audit that lasted over eight months from start to end. While the software provider (who I will not name) was completely within their contractual rights, I learned a lot from the experience and would like to share that experience with you – so you can learn from what we did right, and what we did wrong. For the purposes of this blog and my presentation at SIG’s Fall Global Executive Summit, I will call this software provider “Skynet,” but rest assured the real name of the company is one you would easily recognize.
Software audits never happen at a convenient time. Our situation started in late November 2018, near the end of our fiscal year. Our various business groups were scrambling to get their purchase orders approved and issued by year end. Any remaining budget dollars were being used to get a head start on the next fiscal year.
Skynet sent a letter to our CFO saying that we had been “selected” to receive a software license review. The word “audit” was never used in the letter. Audits are highly profitable for software companies – companies can operate within their contractual rights, as audits have a high ROI. Why? Because most clients do not have a firm grasp on the number of software licenses purchased or deployed (either on-prem or in the cloud).
After receiving the letter, we tried the “go it alone” approach for about the first four months of the audit and had limited success in providing the right information to Skynet and its auditors. We took inventory of all our software licenses and looked for any “touch points” (i.e. person-to-person contact) between Russell and Skynet. We had success in galvanizing our team to work on the audit and had the full support of our executive management.
It became apparent, however, after four months that there was no end in sight, and that this audit could drag on for many more months. Skynet was not letting up and seemed as persistent as ever. We looked for a consulting firm to help us with the audit, someone who had experience with Skynet software, their auditors and their business practices. There are many great firms that can help with software audits, but we chose a provider that had the right value proposition and was the best fit for Russell. We considered using legal firms and auditing firms, but I’m glad we went with a provider with industry expertise.
Before hiring a provider, we had purposely “narrowed” the communication channels between Russell and Skynet, including having myself as the point of contact for sourcing/procurement and another manager as the point of contact for our IT department. After engaging the provider’s help, they quickly became our “ghost” negotiators (or more like “Guardian Angels”) whenever we had communications between Russell and Skynet.
The right provider should help you craft a communication strategy to keep a step or two ahead instead of a step or two behind. During this process, we learned not to assume Skynet or their auditors had all the facts or were always correct in their assumptions; with support from our provider, we were able to push back and challenge their assumptions.
We needed an ally – if Skynet can hire an auditor to help run their software audit, why couldn’t we have an ally on our side? I would encourage any buying organization to get help in these types of situations – especially when large dollar figures are involved. By choosing a provider with industry expertise, our payments were reduced by almost 90%, to something much more affordable. When factoring in the fees we paid for a provider to take on this process, the high ROI made it a “no brainer” on our part.
Brett will present alongside Jared Frehner, a Senior Manager with ClearEdge Partners’ Compliance Services Group, at the Fall Global Executive Summit to share the do’s and don’ts of choosing a firm to help you win your software audit on Wednesday, October 16 at 5:15 p.m.
Brett is a Director with Russell Investments’ Global Sourcing & Procurement organization and leader for the financial and outsourcing services spend category. He has more than 20 years of experience in industry, consulting and academia with a focus on procurement, strategic sourcing and global operations. Prior to Russell Investments, Brett held sourcing and procurement positions at leading Fortune 500 firms, including AT&T, Microsoft, Nike and Costco. Brett helps organizations improve source-to-pay processes, enhance complex supplier relationships and mature their organization’s service delivery model. Mr. Miller is a Certified Purchasing Manager (C.P.M.) and holds an MBA from The University of Washington and a BA from Oregon State University.