Microsoft audits a fact of life

Microsoft has denied speculation that it is taking a more aggressive stance auditing Kiwi businesses that it suspects of using more Microsoft software than they have licences for.

Legal counsel Waldo Kuipers declined to comment on rumours that one large listed company had agreed to pay Microsoft $900,000 following an audit a year ago.

Software licensing for businesses operates on a "trust model", he says. "Customers are contractually obliged to order according to what they use."

Microsoft does not have any technical means of knowing how many staff may be using a particular program. The company can however take note if firms appear to be under-reporting their use of Microsoft software, based on discussions with the customer and their size and growth.

The Kiwi arm of Microsoft has audited customers for at least the past seven years, he said.

"I wouldn't say there has been a particular increase in that activity.

"There are certainly more reviews in some years than in others, but that seems to be more a matter of chance rather than something driven by policy changes. Just like an electricity company checks the meter to see what's been used, it's a natural part of a commercial software licensing business."

There are not a large number of audits, he says. "I could count the number on one hand each year.

"I don't think we would start a process like that unless we had already been through a discussion and generally the reason it gets done is the customer also wants to be sure of what the exact position is."

Licensing agreements usually let suppliers remove customers' volume licensing discounts if they were found to be using more software than they were paying for, he says.

He would not say how much Microsoft New Zealand had collected in such "penalties" since it began ordering audits.

Mr Kuipers says there is no evidence the economic downturn has made New Zealand businesses less honest or slower to order extra licences that they require.

"I think it has been an issue in some countries where the financial downturn has hit harder, but I wouldn't say it has been an issue locally." Under-reporting could also simply be the result of poor record-keeping by the customer.

He does not believe hardware virtualisation and the greater variety of proprietary and free software means it is now harder for customers to fulfil their obligations.

"Manual record-keeping would require more effort than 10 years ago, but the software tools that customers have at their disposal now to centrally manage and automatically track software use on a corporate network have improved dramatically and make it easier than it has ever been."

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