Getting a software license audit notice can be alarming, but it’s a common challenge for organizations of all sizes. Whether it’s from Oracle, Microsoft, IBM, or another vendor, how you respond matters. Before you take any action, it’s important to understand what a software audit involves—and what’s really at stake.
A software audit is a formal review conducted by a software vendor—or a third party acting on their behalf—to verify that your organization is using its software in accordance with the license agreement. The audit assesses whether your software usage matches the entitlements you’ve purchased, and it can result in significant financial penalties if non-compliance is found. Common vendors that initiate audits include Oracle, Microsoft, IBM, and VMware (now Broadcom).
You just received your audit notice and you’re feeling very overwhelmed. It’s easy to feel this way knowing the horror stories you’ve heard. The time, stress, complexity and let’s not forget the money, all make a software audit appear incredibly daunting. Learn the 5 crucial tips to help you get started with your audit.
Not always. These types of requests—sometimes referred to as soft audits, license reviews, or even sales teams asking probing questions—are often not backed by contractual audit rights. Vendors may ask for deployment data or entitlement records without formally invoking an audit clause. Before sharing anything, review your contract and consult with licensing or legal experts. Voluntary disclosure can trigger a formal audit, even if the original request seemed informal.
It’s important to understand that audits are legal matters and you do have rights, but so does the vendor. Discerning between vendor policy and your true contractual obligation is the best chance you have to developing a ironclad audit defense. And our partnership with Beeman & Muchmore garners you access to the best legal team in the business. Learn more about your rights during a software license audit.
This is a legitimate concern. And you don’t want to reveal more information than you have to because then you’re opening the door to more compliance issues than necessary. Navigating an audit requires a clear understanding of its scope and how to effectively limit it to ensure compliance while protecting your organization’s data and interests. Learn how to understand and manage the scope of your audit.
During a software license audit, you’re responsible for proving compliance—the burden of proof is on the licensee, not the vendor. You’ll need to provide complete and accurate records of both your license entitlements and your software deployments. This typically includes:
Master agreements and license contracts
Purchase orders and invoices
Support renewal documentation
License keys or certificates of authenticity
Deployment records from discovery tools
Virtualization and server configuration data
User access logs (for user-based licensing)
It’s critical to ensure this documentation aligns with your current use of the software. Incomplete or mismatched records can lead to costly assumptions in the audit findings.
The most aggressive software audit activity typically comes from major enterprise vendors—including Oracle, Microsoft, IBM, and VMware (now Broadcom). These companies routinely audit customers to enforce licensing terms, uncover non-compliance, and drive additional revenue. While other vendors like SAP, Adobe, and Autodesk may also conduct audits, Oracle and Microsoft are known for frequent and high-stakes audit engagements. If you use software from these vendors, it’s critical to understand your license entitlements and deployment footprint to avoid costly surprises.
A software audit can take anywhere from a few months to over a year, depending on the vendor, the size and complexity of your environment, and how contentious the process becomes. Most audits follow a similar structure: the vendor issues an audit notice, requests deployment and entitlement data, and uses that to build an Effective License Position (ELP). After reviewing the findings, you have an opportunity to respond, challenge inaccuracies, and negotiate a resolution. The more disputed the findings—or the less clear your records—the longer the process may take.
If you suspect you’re out of compliance, don’t rush to respond. Start by gathering your contracts, purchase records, and deployment data to understand your current position. While you can’t make changes to your environment after receiving an audit notice, you can push back against non-contractual claims, clarify your entitlements, and negotiate from a stronger position. A third-party review helps ensure your response is accurate—and defensible. Learn how to navigate any audit scenario with ease.
Yes—and in many cases, you should. Software audit findings are not final, and vendors often overstate compliance issues or rely on interpretations not supported by your contract. You have the right to review the audit data, challenge inaccuracies, and seek clarification on licensing terms. Many organizations successfully reduce audit penalties through negotiation—especially when they bring in licensing or legal experts who understand the vendor’s tactics. Don’t assume the initial findings are set in stone; you can—and often should—push back.
Companies often aim to avoid contentious audits to maintain amicable relationships and ensure smooth business operations. The misconception that involving a third party exacerbates the situation is unfounded, as third-party mediators can actually facilitate dialogue, clarify issues, and help reach agreements faster, thereby mending and even strengthening vendor-customer relationships. Read how third-party mediation can strengthen, not hinder, your vendor relationship.
In the decade that we’ve been helping clients with software licensing, we’ve yet to find a customer 100% in compliance. Let that sink in. Even a small compliance issue can have hefty penalties. Learn how LicenseFortress stands out from the competition and will help ensure your compliance ↗
Fast and efficient, we’ve got your back every step of the way—from planning and data collection through defense and resolution—until that audit close letter is in your hands. Our proven process begins with scoping and secure access setup, followed by entitlement validation, legal review, and technical analysis. Once we build your Effective License Position (ELP), we submit findings to the vendor and negotiate directly on your behalf. If claims arise, we address them head-on, support remediation, and guide you through final closure.
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