Software providers such as Microsoft and Oracle are aggressively targeting public sector customers with licence "audit reviews" in a bid to plug falling subscription revenue, according to research.
Over one-third of the 436 councils surveyed across the UK have been subject to at least one software licence review in the last 20 months, according to a report from software licensing costs advice company Cerno.
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Of those, 60 per cent were found to be "under-licensed" and hit with a penalty of up to £50,000.
Out of 132 universities, one quarter have been subject to at least one software licence audit in the last 20 months, it said.
"This survey confirms considerable activity in licence reviews by the major software vendors - principally Oracle and Microsoft - and, critically, the high incidence of penalty demands following the review," said Robin Fry, co-founder of Cerno.
"Public sector organisations must expect such reviews and prepare for them," he said.
As hardware products and support remain static, there is a high reliance on generating additional revenue by way of software licence updates and support fees rather than the finding of new business, said the report.
It cited figures from Oracle indicating its total revenue from new licence sales had fallen from 28 per cent to 21 per cent between 2010 and 2015.
However, Microsoft and Oracle conducted the majority of audits, with Microsoft alone accounting for 44 per cent of the audits carried out in the study, its authors said.
The survey found that if councils and universities have not had a recent request for an audit, they should expect one within two years. Furthermore, the probability is that it will result in an unbudgeted-for payment.
"The statistics however, only tell part of the story. In our experience, the surprise to the customer is that the software vendor is not their trusted friend: indeed that the licence review has been initiated with the predominant aim of revenue optimisation, regardless of any damage to the relationship," said Fry. ®