Software License Audits: What They Are & How to Stay Audit-Ready (2026) – Shopify

Software licenses don’t drift out of compliance because teams are careless. They drift because environments change faster than contracts. For example, a developer on your team might test out a new virtual project that inadvertently triggers “per-core” licensing costs you haven’t paid for. 

Without a clear software license-management strategy, teams often don’t see risks until a vendor points them out. Flexera’s 2025 State of ITAM data shows only 43% of companies have complete visibility over their tech stack, while 45% of organizations report spending over $1 million on software audits in the past three years.

This guide explains what a software license audit is, what triggers audits, and what to expect during a vendor audit. You’ll also learn how to run a repeatable internal audit that produces defensible evidence so you can reduce unanticipated costs, limit disruption, and stay audit-ready year-round.

What is a software license audit?

A software license audit is a compliance check against contractual entitlements. Its purpose is to align real-world usage with what was purchased and what the agreement permits across every environment where the given software runs. It helps an organization confirm that what’s in use matches what was bought—and what the contract allows.

Who initiates a software license audit

Most audits begin in one of two ways. A vendor may trigger an audit under the terms of a contract. In those cases, the goal is to enforce contract terms. Publishers use audits to verify compliance and recover revenue tied to under-licensing or misuse.

Alternatively, an organization may initiate its own internal audit. Internal audits surface risk before a vendor does, give teams time to fix gaps, and improve leverage in renewal and negotiation cycles. Instead of reacting to a notice letter, teams can proactively find and fix issues before renewal or negotiation deadlines.

What compliance means in practice

Compliance is a three-way reconciliation exercise. It requires keeping three layers in sync across every place software runs:

• Software usage metrics: Show how many users, instances, cores, or seats are active across software as a service (SaaS), cloud, and on-premise environments.
• Entitlements: Define what the organization owns on paper, including licenses, subscriptions, and grants tied to specific products and metrics.
• Use rights: Govern how those licenses can be deployed, including where they can run, who can access them, and under what conditions.

Those layers rarely line up on their own, especially in hybrid environments. As stacks spread across SaaS, cloud, and on-premise, it gets harder to maintain a single, accurate view.

Flexera’s 2024 State of ITAM report showed how quickly visibility erodes at scale. Organizations reported an accurate view of on-premise software 67% of the time, cloud instances 64% of the time, and SaaS usage just 54% of the time. Confidence in bring your own license (BYOL) posture falls to 19%. Deloitte’s 2025 Global ITAM Survey adds that fewer than 40% of organizations have adapted IT asset management (ITAM) processes for hybrid environments, and 42% cite complex licensing terms as a top challenge.

The result is structural risk. Teams are expected to prove compliance across environments they only partially see, using contracts that grow more complex each year.

That’s how an organization can hold licenses and still carry exposure: Usage may exceed named limits, software may run in environments not covered by the contract, or cloud deployments may fall outside BYOL terms. Success depends on demonstrating that what’s running, what’s owned, and what’s permitted remain aligned in every system.

What a software license audit covers

This is where confusion creeps in. A software license audit often gets lumped together with other practices that serve very different purposes. Here’s a quick overview of common practices and what they mean:

In short, software asset management (SAM) and ITAM make audits possible, security audits protect systems, open-source audits govern how software can be shared, and a software license audit governs commercial risk. When teams mix these up, they miss identifying compliance risk until an audit forces the issue.

Why software license audits happen (and what’s at stake)

Software license audits happen because license models keep changing while software footprints keep expanding. Hybrid environments, SaaS sprawl, and cloud consumption make it harder to keep usage and use rights aligned. 

That complexity is expensive when it shows up in an audit: Flexera found that 45% of organizations spent over $1 million on software audits over the past three years, and 23% spent over $5 million. 

Costs stay high because audits are increasingly common—and because the data is hard to prove. Flexera’s data shows major publishers audit frequently, with about 50% of organizations reporting audits by Microsoft in both 2024 and 2025 reporting.

Audits tend to show up when something changes in the environment, the contract, or the buying motion. Here are some of the most common triggers for an audit:

• Rapid growth and headcount changes: New hires, new departments, and fast provisioning tend to outpace license updates, especially for named-user and seat-based models.
• Mergers and acquisitions (M&A) and environment changes: Consolidations introduce duplicate contracts, overlapping products, and “who owns what” confusion across entities and geographies.
• Virtualization and multi-cloud sprawl: Infrastructure becomes more fluid, which makes processor and core-based metrics harder to prove with clean evidence.
• SaaS decentralization: Department-level buying creates overlapping tools, unused seats, and inconsistent access controls that weaken audit defensibility. A Deloitte survey shows only 34% of companies manage SaaS licensing centrally through ITAM or procurement, with many operating in hybrid or decentralized models.
• Contract renewals and major migrations: Renewals raise the pressure on both sides. Software vendors want a clean baseline before pricing resets, and organizations want leverage before signing the next term.

These moments are when risk becomes visible—and when teams need a defensible position fast. When audits show up late—during renewals or big technology changes—they do more than create extra work. They slow teams down, delay launches, and force leaders to make rushed decisions at the worst possible time. 

That’s why many organizations focus on staying audit-ready year-round and choosing platforms that are easier to manage. When systems are simpler and faster to work with, teams spend less time reacting to audits and more time building and moving forward.

What software publishers are optimizing for

Audits protect revenue and reinforce contract terms. When usage does not align with entitlements or use rights, audits create a path to recover under-licensing costs and push customers back into the contracted commercial model. Audit programs also reduce exceptions over time by tightening how products are measured and how evidence is accepted.

What organizations risk

Audit exposure typically shows up as money, time, and operational disruption:

• True-ups (reconciliations that identify additional licensing fees owed) and unplanned spend: Shortfalls often turn into settlement payments, backdated fees, or accelerated purchases.
• Penalties and commercial pressure: Findings can tighten renewal negotiations and raise the cost of switching.
• Forced cleanups under deadline: Teams may have to reassign users, rebuild evidence, and validate environments while business systems stay live.
• Shelfware and wasted spend: Flexera reports persistent wasted IT spend in the 20% to 30% range, including self-estimates like 20% SaaS waste and 30% desktop software waste. 

Why audits keep happening in mature organizations

Mature programs still run into friction because licensing complexity keeps moving faster than internal systems and workflows. Deloitte’s survey identifies the root cause:

• 47% of businesses cite visibility into cloud-based assets and consumption as the top challenge.
• 46% cite lack of coordination across IT, cloud operations, AI leads, ITAM, and finance.
• 42% cite compliance with complex licensing terms as a top challenge. 

This is also where “use rights” becomes the 2025 to 2026 key shift. Cloud and hybrid licensing introduces conditions that change what “allowed” means depending on where software runs, how it is accessed, and which metrics apply in that environment. 

Types of software license audits and what to expect

Not all audits look the same, but they tend to follow a predictable pattern. The main differences are who initiates the audit and how much control the organization has over timing and scope. Here are the types of audits and what to expect:

Internal audit (self-assessment)

An internal audit is initiated by the organization. It uses the same mechanics as a vendor audit (e.g., inventory, entitlement review, metric mapping, and reconciliation), but runs on your timeline and under your rules.

Teams use internal audits to:

• Identify shortfalls before a vendor does
• Fix gaps through reharvesting, rightsizing, or configuration changes
• Enter renewals with a clean baseline and negotiating leverage
• Build an evidence pack that stands up under scrutiny

This is the foundation of being audit-ready: Instead of reacting to an external request, teams can validate compliance before renewals, migrations, or vendor notices force a rush.

Vendor-initiated audit (contract clause)

Most enterprise software agreements include audit rights. When a publisher initiates an audit, it does so under those contractual terms.

These audits are formal and time-bound. The vendor defines the initial scope, requests data, and performs its own analysis. The organization is expected to respond within defined windows and provide evidence in the formats requested.

This is where gaps become expensive: mismatches turn into true-ups, contract changes, or commercial pressure at renewal.

Third-party audit (vendor-appointed)

In some cases, the publisher appoints an external firm to conduct the audit. The mechanics stay the same, but the tone often shifts. Third-party auditors operate from a fixed playbook and tend to push for broad datasets and standardized outputs.

For the organization, this increases the importance of preparation. Evidence needs to be clean, assumptions documented, and scope tightly defined before any data leaves the business.

True-up

A true-up isn’t an audit, but it often follows one. It’s the commercial resolution that follows audit findings. If usage exceeds entitlements or violates use rights, the shortfall becomes payable.

That payment may take different forms, including:

• A one-time settlement
• Backdated fees
• An accelerated purchase at renewal
• A forced move into a higher-tier contract

True-ups are also not limited to money. They often redefine contracts and tighten terms.

The typical vendor audit lifecycle

Once an audit is triggered, it doesn’t unfold randomly. Whether it’s run by a publisher or a third party, most audits follow this same sequence:

1. Audit notice: A formal letter invokes audit rights under the contract and sets the clock in motion. The notice often specifies a response window, the products in question, and the audit period. From this point forward, everything becomes evidentiary.
2. Scope confirmation: Products, legal entities, environments, and time windows are negotiated and locked. This step determines how wide the net is cast. A narrow scope limits exposure. A vague or expansive scope invites it.
3. Data request: The vendor defines how usage must be measured and what evidence is acceptable. This can include scripts, discovery tools, exports from identity systems, cloud configuration data, and entitlement records.
4. Analysis: Usage data is reconciled against entitlements and use rights. Assumptions are applied about virtualization, clustering, failover, and cloud deployment models.
5. Findings: The vendor presents a position: where usage exceeds rights, where data is incomplete, and where assumptions fill gaps. Findings often include both quantified shortfalls and at-risk areas.
6. Dispute and negotiation: The organization challenges scope creep, discovery methods, and licensing interpretation. Evidence is refined, alternative calculations are proposed, and commercial framing begins.
7. Settlement or true-up: The audit resolves through payment, contract changes, accelerated purchases, or a combination of all three. The outcome resets the commercial baseline for future renewals.

Why scope control is everything

Scope determines cost. It defines how much of the organization becomes auditable, and therefore how much exposure is on the table. Without clear boundaries, an audit can quietly expand to include:

• Products that are no longer in use
• Regions never covered by the original agreement
• Acquired entities with separate contracts and histories
• Time periods that no longer reflect how the business operates

Effective scope control forces four questions to be answered before any data moves:

• Which products are in play?
• Which legal entities are included?
• Which environments count?
• What time window applies?

Each answer narrows the problem space. Each unanswered edge becomes an assumption, usually in the vendor’s favor.

Organizations that treat scope as a negotiation step keep audits bound to what the contract actually permits. That discipline protects focus and limits cost—long before reconciliation begins. It’s also why internal audits matter: they let teams define scope and evidence on their own timeline, before a vendor sets the terms.

How to conduct an internal software license audit 

An internal audit uses the same mechanics as a vendor audit, but you run it on your timeline and under your rules. The goal is to build a repeatable system that proves compliance before anyone asks and reduces renewal surprises.

Below is a practical, end-to-end procedure with clear owners and required evidence.

1. Define scope and success criteria

Owner: ITAM / Procurement (with Legal)

This step in the audit process determines how big the audit becomes and how expensive it can get. Before anyone pulls data, installs scripts, or exports reports, set the boundaries.

Start by answering these five questions in writing:

• Which products are in scope? List them by publisher and product family. Avoid “everything” as a default. If a contract does not include audit rights, it does not belong here.
• Which environments count? Be explicit about on-premise, cloud, and SaaS. For each product, note where it actually runs today.
• Which legal entities are included? Use the contract language. Do not assume “the whole company.” M&A is where audits quietly double in size.
• What time window applies? Most contracts specify a lookback period. Capture it. If the agreement says “current usage,” do not volunteer historical states.
• What does “compliant” mean for each product? Translate contract language into operational rules.

Together, these rules form your software license compliance model for each product. This becomes the success criteria for the audit: what the organization must be able to prove with data.

Once you’ve come up with answers, document them in the first two artifacts:

Artifact #1: Scope definition document

This is the boundary contract for the audit. It states, in plain terms, what is being examined and what is not. It answers:

• Which products are in scope: List every application, edition, and module being examined.
• Which environments apply: Specify where each product is allowed to run: on-premise, cloud, SaaS, DR, test, and failover.
• Which legal entities are included: Name the business units covered.
• What time window applies: Define the start and end date for usage and entitlement evidence.
• What is excluded: Document products or environments that are intentionally out of scope.

Artifact #2: Contract metric summary by product

In this artifact, define what “compliant” means for each product by translating contract language into operational rules. For example,

• License model: Named user, device, core, processor, subscription, or consumption
• Counting rules: How users, instances, or cores are measured
• Environment rules: Production vs. non-production, DR, failover
• Cloud and BYOL conditions: Where licenses may run and under what terms
• Any concessions or amendments: Side letters, renewal exceptions, legacy terms

2. Build a trustworthy software inventory

Owner: ITAM / IT Operations / Security

Once scope and success criteria are set, the next job is to establish a single source of truth for what is actually running and who is using it. This is where audits most often break down. 

If the inventory is incomplete or inconsistent, every downstream calculation becomes debatable. A software license audit tool can help standardize discovery and reporting, but outputs still need normalization rules that match contract metrics.

That inventory must be able to answer two questions with evidence:

• What is installed or running?
• Who is using it?

To do that, most organizations need to pull from multiple systems, including:

• On-premise discovery tools: Endpoint agents, server scans, and virtualization platforms that show installed software and running instances
• Cloud configuration and usage data: Native cloud provider reports for VMs, cores, clusters, and regions
• SaaS admin exports: User lists, seat assignments, activity logs, and license states from each application’s admin console
• Identity systems: Directory services and SSO platforms that map accounts to real people, roles, and departments

These sources rarely agree out of the box. That is why this step also requires explicit normalization rules.

So decide, in writing:

• What counts as “active”: Last login in 30 days? 60? 90?
• How duplicates are handled: One user across three systems equals one person or three seats?
• How service accounts are classified: Human, non-human, or excluded?
• How environments are labeled: E.g., production, test, DR, sandbox
• How cloud resources are grouped: By region, cluster, subscription, or business unit?

These rules must align with the contract metrics defined in Step 1. If a product is licensed by a named user, your inventory must reliably answer “Who is a user?” If it is licensed by core, your inventory must show how cores are counted in each environment.

This second step produces two artifacts. They define what “done” looks like for your inventory and give the rest of the audit something stable to work from:

Artifact #3: Inventory export by product and environment

This is your single source of truth for what is actually being used. It is a consolidated dataset that combines what’s running for every in-scope product. This file is the raw material for reconciliation and includes:

• Where the software runs
• How many users, instances, or resources exist
• Which environment each record belongs to

Artifact #4: Normalization rules document

This document explains why the numbers look the way they do and ensures that future runs produce the same result. It is the logic layer that makes the inventory defensible, capturing the decisions that turn messy system outputs into consistent audit data. It defines:

• What “active” means
• How duplicates are resolved
• How service accounts are treated
• How environments and cloud resources are classified

3. Compile entitlements

Owner: Procurement / Finance

This step documents what the organization owns on paper. The goal is to create a complete, defensible record of all rights the company has to use software across contracts, purchases, renewals, and side agreements.

Most organizations do not have this in one place. Entitlements live in PDFs, inboxes, order systems, vendor portals, and legacy spreadsheets. This step consolidates that sprawl into one audit-ready view.

Start by gathering:

• Master agreements and amendments
• Purchase orders and invoices
• Renewal quotes and order forms
• Vendor SKU catalogs and metric definitions
• License grants, concessions, and side letters

This stage produces two artifacts:

Artifact #5: Entitlement register

This is an audit-ready record of what the organization owns, by product and metric. For every in-scope product, it captures:

• Product and edition
• License model and metric
• Quantity purchased
• Start and end dates
• Associated legal entity
• Source document

Artifact #6: Contract source map

This artifact points from each entitlement line back to the exact source document. It records:

• Contract or order form name
• Document location
• Effective date
• Amendment or supersession history
• Any special terms or exceptions

4. Map license metrics and use rights

Owner: ITAM (with Legal)

This step turns legal language into something operators can actually measure. Contracts describe rights in prose; audits run on rules. The job is to translate each entitlement into a testable model.

For each in-scope product, answer one question: How is this license agreement counted in the real world? That means defining:

• Named user vs. device: Who or what counts as a unit of usage
• Core vs. processor: How infrastructure is measured in virtualized and physical environments
• Subscription vs. consumption: Whether usage is fixed or variable over time
• Cloud and BYOL rules: Where licenses are allowed to run and under what conditions
• Environment constraints: Production, non-production, DR, failover, and test rights

This is where “use rights” become measurable. Cloud and hybrid models often change what is allowed depending on where software runs, how it is accessed, and which metrics apply in that environment. If these rules aren’t explicit, every downstream calculation becomes debatable.

Artifact #7: Metric and use-rights mapping sheet

This sheet defines how to measure usage for each product. It defines, for each product:

• License model and metric
• What constitutes a countable unit
• How usage should be measured in each environment
• Any cloud, virtualization, or BYOL conditions
• Exceptions, legacy terms, or special rights

This keeps measurement consistent and ties reconciliation back to what the contract actually allows.

5. Reconcile and build the effective license position (ELP)

Owner: ITAM

This is where the audit becomes real. Up to this point, the work has been preparatory: defining scope, building inventory, compiling entitlements, and translating contracts into rules. Reconciliation is where those streams finally meet.

For each in-scope product, line up three inputs:

• Inventory: What is actually running
• Entitlements: What the organization owns
• Use rights: What the contract allows

Apply the metric and use-rights rules to the inventory and compare the result to entitlements. The output is the effective license position: a product-by-product view of where the organization stands.

This step surfaces:

• Overages where usage exceeds rights
• Duplicates created by overlapping tools or identity drift
• Orphaned users with access but no owner
• Inactive seats that still count against limits
• Unprovable usage where data is missing or ambiguous

This is where “We thought we were fine” turns into numbers you can defend.

Artifact #8: ELP summary by product

The ELP summary is the audit’s core output and captures the outcome of reconciliation. For each product, it shows:

• Measured usage under contract rules: The count produced after applying license metrics and use rights to raw inventory data
• Entitled quantity: The number of licenses or units the organization owns on paper
• Variance (over or under): The gap between measured usage and entitlement, expressed as surplus or shortfall
• Source systems used: The tools and data feeds that produced the usage numbers
• Assumptions applied: Any interpretive decisions made where data or contract language was ambiguous
• Confidence level in the result: An assessment of how complete and defensible the calculation is

6. Decide and remediate

Owner: ITAM + Procurement + Finance

Reconciliation tells you where risk exists. This next step determines what to do about it. Every gap requires a decision. This is where an internal audit stops being an analysis exercise and becomes an operational one.

Each shortfall follows the same logic:

If a shortfall exists:

• Can it be fixed operationally?
• Yes → Reassign users, uninstall software, rightsize seats, adjust configurations.
• No → Escalate for commercial action.
• Negotiate
• Accept a true-up

This decision tree keeps teams from defaulting to “buy more” when the issue is operational. Many gaps close without additional spending if the organization is able to complete this process thoroughly.

In practice, remediation work includes:

• Reharvesting licenses from inactive or duplicate users
• Removing unused software from endpoints or servers
• Adjusting configurations to match contract terms
• Documenting exceptions that cannot be resolved
• Preparing negotiation positions for gaps that remain

The goal is to shrink exposure before any external conversation begins. This step produces two artifacts:

Artifact #9: Remediation log

This is a record of actions taken to reduce risk. It shows actions taken on what it finds. For each item, it records:

• Product and issue
• Action taken
• Owner
• Date resolved
• Resulting impact on usage

Artifact #10: Exception register

Some gaps cannot be fixed operationally. This register captures them in a controlled way. It documents:

• Product and condition
• Why it can’t be remediated
• Business owner
• Risk level
• Planned resolution path

Together, these artifacts separate known, managed risk from unknown exposure. They make remaining risk visible and owned.

7. Document the audit pack

Owner: ITAM

This step gathers proof with documentation. The audit pack is the body of evidence that shows how conclusions were reached and why they are defensible. It allows anyone (e.g., legal, finance, procurement, or an external auditor) to trace results back to source systems and contract terms without recreating the work.

Package inputs, assumptions, and outputs so the audit can stand on its own. This step produces the following artifacts:

Artifact #11: Inventory sources

This file documents where usage came from and how it was collected—so numbers can be traced back to the source. It answers questions like:

• Which discovery tools, cloud consoles, and SaaS admins were used
• When the data was pulled
• What systems were excluded and why
• How raw outputs were transformed into audit data

Artifact #12: Entitlement proof

This is the contractual proof establishing what the organization legally owns. 

It contains:

• Master agreements and amendments: The contracts that define audit rights, license models, use rights, and enforcement. They set the legal boundaries for everything that follows.
• Order forms and renewals: Product-level commitments that specify quantities, editions, and metrics, turning a framework agreement into real entitlements.
• License grants and concessions: Side letters, legacy rights, migration credits, or special terms that override “standard” rules.
• Supporting purchase records: Invoices and procurement exports that prove what was bought, when, and by whom.

Artifact #13: Metric assumptions

This artifact bridges the gap between legal language and operational data. It shows how contract terms were translated into measurable rules (“what the contract says” to “how usage is counted”).

It documents:

• How each license metric is interpreted: Named user, device, core, processor, subscription, or consumption and what that means in practice
• How users, cores, or instances are counted: The systems used, the fields relied on, and the rules applied to arrive at a number
• How environments are treated: Differences between production, non-production, DR, test, and failover, and how each is counted
• How cloud and BYOL conditions are applied: Where licenses are allowed to run, which platforms qualify, and what changes when software moves to the cloud

Artifact #14: ELP outputs

The ELP is what executives, procurement, and legal teams act on. It translates technical sprawl into commercial risk and gives the organization a clear, defensible position before any external conversation begins.

It shows, by product:

• Measured usage under contract rules: The counted users, cores, instances, or subscriptions after applying metric and normalization logic
• Entitled quantities: What the organization owns on paper, taken directly from contracts, orders, and grants
• Variance (over or under): The gap between usage and entitlement, shown clearly and consistently
• Data sources used: The systems that produced the numbers, such as discovery tools, SaaS exports, cloud APIs, and identity platforms
• Assumptions applied: Any modeling choices, exclusions, or interpretations that affect the result
• Confidence level: How reliable the position is, based on data quality and visibility

Artifact #15: Remediation actions

This artifact is a record of actions taken in response to findings.

It records:

• Licenses reharvested: Users, devices, or instances reclaimed and returned to the available pool
• Software removed: Applications uninstalled from endpoints, servers, or cloud environments
• Configurations adjusted: Changes made to bring environments back into contract terms (for example, reducing cores, correcting editions, or reclassifying environments)
• Exceptions documented: Gaps that could not be fixed operationally, with rationale and owner
• Dates, owners, and outcomes: Who took action, when it happened, and what changed as a result

Artifact #16: Executive summary

The executive summary is what aligns ITAM, procurement, finance, and leadership around a shared conclusion. It turns audit work into business context and makes risk visible at the level where it can actually be acted on.

It explains:

• What changed since the last audit: Progress made, exposure reduced, and systems brought back into alignment
• What exposure remains: Products or areas where gaps still exist
• What risks exist: Financial, operational, and commercial implications of those gaps
• What decisions are pending: Items that require executive direction, budget approval, or negotiation strategy

8. Operationalize the cadence

Owner: ITAM + Procurement

An internal audit only creates leverage if it stays current. The goal of this step is to turn the strategy you’ve built into a repeatable operating rhythm so audit readiness becomes part of normal business.

This means moving from “project mode” to “process mode.” Here’s what to do:

• Monthly or quarterly inventory refresh: Re-run discovery on on-premise, cloud, and SaaS environments on a fixed cadence. The goal is to spot change early instead of discovering it during a renewal or audit notice.
• Entitlement updates at purchase: Every new order, renewal, or amendment updates the entitlement register immediately.
• Reconciliation before renewals: Every renewal cycle begins with an ELP. No product gets renewed without a current view of usage, rights, and exposure.
• SaaS reviews tied to identity changes: Joiners, movers, and leavers drive SaaS waste. Tie SaaS reviews to identity events so seats are reclaimed as people change roles or leave.

This step produces two artifacts:

Artifact #17: Audit calendar

The calendar defines when each control runs. It turns “We should check this” into a scheduled obligation.

It specifies:

• Inventory cadence: When to run on-premise, cloud, and SaaS discovery
• Reconciliation windows: When ELPs are built for in-scope products
• Renewal checkpoints: Which products require an ELP before renewal
• Review owners: Who runs each step and who signs off

Artifact #18: Renewal workflow integration

This workflow embeds audit discipline into buying behavior. It ensures that no contract moves forward without a current compliance view.

It defines:

• Trigger points: What events trigger an audit check (renewal, expansion, migration)
• Required inputs: Inventory snapshot, entitlements, and ELP
• Approval gates: Who must review exposure before signing
• Escalation paths: What happens when risk is discovered late

This shift—from reactive cleanup to continuous readiness—is also what makes larger platform changes feasible. Organizations that operate in audit-ready mode can evaluate migrations and replatforming from a position of control. Instead of audits dictating timelines and budgets, teams can align compliance, modernization, and growth initiatives—shortening time to value and reducing disruption.

Software license audit checklist 

Use the following checklist to pressure-test your readiness, keep audits within boundaries, and avoid the mistakes that make them expensive. It’s designed to be run as-is, whether you’re preparing for an internal review or responding to a vendor notice.

Before starting

• ☐ Scope is defined in writing (products, entities, environments, time window)
• ☐ Contract metrics are translated into operational rules
• ☐ Inventory sources are identified (on-premise, cloud, SaaS, identity)
• ☐ Entitlements are compiled and current
• ☐ Normalization rules exist and are agreed upon
• ☐ Owners are assigned (ITAM, Procurement, Finance, Legal, Security)

Stop sign:

• Do not pull data before scope is locked. Early exports can become evidence.

During reconciliation

• ☐ Inventory reflects only in-scope products
• ☐ Usage is measured using contract rules, not tool defaults
• ☐ SaaS users are tied to identity systems
• ☐ Orphaned and duplicate records are flagged
• ☐ Assumptions are documented
• ☐ An ELP exists for each product

Stop sign:

• Do not just “eyeball” compliance. Ensure numbers trace back to a source and a rule.

Before sharing anything externally

• ☐ Scope matches the contract
• ☐ Raw data is reviewed and normalized
• ☐ Assumptions are written
• ☐ Evidence aligns with use rights
• ☐ Legal has reviewed what will be sent
• ☐ Internal ELP matches external position

Stop sign:

• Do not send raw exports to a vendor. Ever.
• Do not answer questions outside the defined scope.

Pre-negotiation

• ☐ All operational fixes are complete
• ☐ Remaining gaps are quantified
• ☐ Financial impact is modeled
• ☐ Procurement owns the narrative
• ☐ Legal confirms interpretation positions
• ☐ Walk-away points are defined

Stop sign:

• Do not negotiate from estimates.
• Do not accept the vendor’s math as a starting point.

Post-audit hardening

• ☐ Inventory cadence is scheduled
• ☐ Entitlement updates are automated
• ☐ Renewal workflows require an ELP
• ☐ SaaS reviews are tied to identity changes
• ☐ Exceptions are tracked
• ☐ Audit pack is archived and reusable

Stop sign:

• Do not treat the audit as “done.”
• If readiness is not operationalized, the next audit will cost more.

This article originally appeared on Shopify and is available here for further discovery.