By Michael Costa Software audits have long been considered a necessary “evil” for maintaining end-user compliance with licensed use rights. Audits are one of the primary mechanisms software vendors use to make sure that customers are not deliberately or unintentionally overusing licensed software. Some software market segments and vendors operating in those segments tend to audit customers more than others. Nonetheless, merely the threat of having to endure an audit prompts most end-user companies to develop and maintain reasonable software license compliance programs. The news stories that are frequently published about companies suffering the embarrassment and liability of inadequate compliance seem to be growing, but the published reports are just a small fraction of the adverse experiences that otherwise law-abiding end-user companies experience on a daily basis. And, unfortunately, the audit trend is growing dramatically with the growth of innovative software licensing models and efficient IT infrastructures. Computing and license models like unlimited, term, subscription, utility, peak/burst, pay-per-use, cloud computing, virtualization, X-as-a-Service and a variety of new ways to measure license use provides major benefits for vendors and end-users seeking to improve flexibility, access and efficiency, but they're also fueling a rapid increase in audit activity. And, it's likely to get worse as software vendors optimize revenue gains and end-user compliance programs become overloaded. The irony is that audits aren't really necessary for most software vendors or end-users. The reason they're unnecessary is because software can be made “compliance-aware”. Software can be designed to recognize when it is being used in non-compliant ways and act accordingly. That's right. Software can “self-audit”. That also goes for hardware that includes embedded software and/or is network-attached. In fact, CAD and other segments of the technical software and hardware markets have done this for 20+ years, virtually eliminating the need for audits. It's commonly called electronic license management, compliance management or electronic licensing. The basic functionality is the same: the software stores use rights, measures and tracks actual use, compares use rights vs. actual use and responds in whatever way the software vendor defines. The basic capability can be developed by software vendors or robust software license management systems can be purchased from commercial vendors and integrated. The big question is why most/all software vendors don't provide this basic capability and why end-users don't demand it much as they would any other basic software capability. Let's explore that a little. Some vendors, unfortunately, seem to actually like auditing their customers. Some vendors prompt customers to consider auditing one of their core competencies – and provide software licensing models that practically promote unintentional overuse. Most vendors, however, recognize auditing as the dysfunctional relationship killer that it is. Some in the latter group also perceive electronic license management as obstructing the customer experience and, even if they do have strong proof of customer overuse, rarely follow-through on an audit. Software vendors can implement electronic license management in any way they see fit – from providing information in a usage log file to disabling overuse. Other vendors provide robust IT asset management dashboards that truly differentiate their offerings. It's hard to understand why most software vendors don't make license compliance much easier. The vast majority of end-user companies want to be compliant and do everything they can to maintain compliance. One of the common problems is that end-user companies just can't keep up with the growing complexity introduced with license model and IT infrastructure innovation. Software and “intelligent hardware” can and must integrate and manage license use rights and help customers maintain compliance day-to-day. Software vendors need to improve this aspect of the customer experience and customers must make sure that this basic capability is included with every software product they buy. In my opinion, license compliance audits can and should be rendered virtually obsolete. What are your thoughts?