Case Study: Audit
[We're going to try something new today. If you've done a case study before, you'll recognize the format... if not, it's not rocket science. The following is a story about a completely fabricated (but possible) situation. There is no end. It's up to you to evaluate and make suggestions. In other words, what would you do based only on the information in the story?]
Acme Corporation received the audit letter in July. The notice informed them that their vendor, WidgetWorks, was invoking the audit provisions of their agreement and that they would be contacted in a few days by an outside auditing firm to schedule the audit. The recipient at Acme sent the notice to their contracting group, who reviewed the notice and waited for the auditing firm’s call.
During the review of the notice, Acme assembled all of its documentation regarding the WidgetWorks products installed at Acme. They pulled records from contracting, purchasing, IT and accounts payable. In essence, they performed their own mini-audit in preparation for what WidgetWorks might discover.
Meanwhile, Acme’s contracting team unsuccessfully attempted to find copies of any agreements with WidgetWorks. Curious, the contracting team worked with IT to investigate the possibility of a click-through agreement during the WidgetWorks installation process. Sure enough, one existed, but it didn’t contain any “audit rights” language. After several internal discussions, it was decided that without contractual language allowing an audit, Acme would not comply with the request.
As might be expected, WidgetWorks wasn’t thrilled to hear that Acme didn’t want to allow the audit. Through a phone call between WidgetWorks and Acme it came to light that Acme actually licensed multiple versions of the WidgetWorks product. The older versions (which Acme was using) did not, in fact, have the audit language. However, the newer versions (which Acme had purchased but was not using), did contain audit language.
Acme suggested to WidgetWorks that if they would like to limit the scope of their audit to auditing usage of the newer versions, Acme would be willing to comply. WidgetWorks kindly refused.
OK… what should Acme and/or WidgetWorks do?
The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering a licensing topic every week, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent - namely, reading a contract from start to finish.
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