A proactive software audit is important in successful M&A
Software license inventory is often a low priority during M&A activity but it is actually critical for long term success. Learn how a proactive audit can help your customers avoid additional costs and reduce some of the stress and disruption that accompanies mergers, acquisitions and divestitures.
M&A activity is once again on the rise with 2015 predicated to be a bull year. While things have been a little slow since the frenzied levels before the financial crisis, this is set to change with some pundits predicting a record year. According to financial markets tracker Dealogic, the stage is set given the growth trend in 2014 where there was a 60% increase in transaction numbers and a 170% increase in deal value over 2013.
This is all very interesting but you’re in the business of selling software, so how does this impact you? As a trusted advisor helping your customer’s manager IT and/or software environments you should know that M&A activity is a major trigger for vendors to conduct a software audit. Coincidentally the frequency of vendors conducting audits is another trend that happens to be on the rise. According to IDC, software vendors increased audits 100% from 2013 to 2014.
M&A activity is once again reaching record levels, software vendors are conducting more licensing audits and M&A activity is a trigger for an audit?
During M&A activity CIO’s are faced with a significant increase in workload and responsibility. They need to think about unifying disparate systems, consolidating CRM systems and standardising platforms to name a few. An additional concern that often goes unnoticed is the increased likelihood that the M&A activity will trigger an audit.
When you think about the seismic organisational disruption an acquisition or divestiture creates it is easy to understand why this is such a big red flag to software vendors. The entire IT landscape can change, new users are on-boarded while others are cancelled or moved. In bigger acquisitions and merges, new territories may need to be absorbed with different legal jurisdictions. While some agreements contain clauses that deal with M&A activities and their implications, most are not very friendly or forgiving regarding compliance violations. And while enterprises devote significant resources to integrating people, processes and products during a merger, software licenses and compliance are often ignored or at the very least low on the priority list.
Software audits are a fact of life and are an integral part of M&A activity where you can add real value for your clients. And you don’t have to be an investment banker in the middle of the financial negotiations to do it!
Don’t get sidelined when your customers undergo M&A activity. Help them by initiating a proactive software audit
Be proactive and help your clients by starting with a user-initiated audit of their software environments and the associated licensing contracts to uncover all compliance risks and potential savings and efficiencies.