CIOs involved in merger-and-acquisition initiatives or divestitures have enough to worry about as it is. They must factor in blending disparate systems, consolidating databases and standardizing platforms. An additional concern that often fails to get their attention, however, is the increased likelihood that an M&A will trigger a software audit.

The reason: An M&A or divestiture involves organizational disruption that dramatically changes the landscape of an enterprise’s use of hardware and software. Geographies and legal jurisdictions are redrawn, new users are absorbed or released, and new software agreements and licenses are added or shed. While some contracts contain specific language with regard to M&A activities and their repercussions, most are not very friendly or forgiving to compliance violations. And while enterprises devote significant resources to integrating people, processes and products during a merger, software licenses and compliance are often ignored.

The havoc and confusion that accompany an M&A make an enterprise vulnerable to violating the compliance terms of their software agreements. This vulnerability, in turn, is a bright red flag for software vendors that are increasingly vigilant about identifying and pursuing organizations that run afoul of their contractual terms. Indeed, for vendors facing declining sales of new products, audits of enterprise clients are becoming a major revenue stream, sometimes generating millions in fines. A 2013 survey by Express Metrics found that 53 percent of enterprises had been audited in the previous two years, and Alsbridge, a consulting and advisory firm, has seen increased instances in audits since then.

SOURCE: cioinsight.com