Mixed enthusiasm for cost avoidance

Avoiding the need to spend money in the future isn’t always something to write home about. This software licence audit illustrates how we saved £250,000 in future expenditure, but resulted in an overall lack of enthusiasm.  

  • A software package costs £200 per licence. An audit shows that there are 2000 installations—a total cost of £400,000 in software licences
  • An audit of purchasing records show the purchase of only 500 licences
  • The business has already spent £100,000 on licences and to be fully compliant an additional £300,000 of expenditure is required
  • An audit of software usage shows that only 750 need to use this software package
  • After removing software no longer needed, the business needs an additional 250 licences – reducing the additional licence cost from £300,000 to £50,000
  • Removal of 1250 software installations has reduced future expenditure by £250,000

As auditors, we can be enthusiastic about:

  • Saving the company £250,000
  • Reducing the commercial risks associated with unlicensed software

However, other’s enthusiasm wanes because:

  • An immediate expense of £50,000 is required
  • The £250,000 was never actually spent so is not returning into a budget
  • Nobody knew about the £250,000 risk exposure so easily forgotten
  • No further action is required on the £250,000 saving, whereas the £50,000 expenditure will no doubt require approval and be visible at c-suite and director level
  • When considering the cost benefits associated with the audit, the identified need to spend £50,000 is something memorable, not the £250,000 saving