It might be fun to charter an accountant, and sail the wide account-sea, but if their software isn't compliant, big fines abound. Credit: The Crimson Permanent Assurance (Monty Python's Meaning of Life)

Enterprise software counts among an organisation's most important assets - it runs business operations and literally keeps the gears of business turning. Like any other strategic asset - if the business fails to effectively manage its software, there can be dire consequences financially and operationally.

In today's rapidly evolving IT landscape, enterprise software licensing has become so complex that even the most law abiding companies cannot possibly follow the rules - no matter how well intentioned. They've all become "accidental pirates" and software vendors are, legitimately, hauling in the bounty.

Evidence of software mismanagement in Australian enterprises can be found in recent research. Working with IDC, we ran a survey amongst senior IT executives in Australia employed in firms with $100m or more in annual turnover. The report reveals that 9 in 10 companies have been hit with remunerative penalties (what we call "true-ups") for not complying with their software licences in the past two years - and of those, 65 per cent were for a million dollars or more. These numbers, when compared to our global 2014 Software Pricing and Licensing Survey, reveal that Australian enterprises are facing significantly higher true-ups than their global counterparts and are being audited 13 per cent more frequently.

The survey also revealed that startlingly, 98 per cent of Australian organisations are out of compliance with their software license agreements and those adopting virtualisation strategies are even more vulnerable to this. In fact, of the 95 per cent of organisations surveyed who deployed virtualisation technologies, all received true-up penalties in the high-end range of $5 million or more.

However, most of these businesses haven't been intentionally breaching the terms of their licences. They are merely "accidental pirates," who are unwillingly letting their compliance slip through the cracks. For most organisations, falling out of compliance can be as simple as someone procuring a tool on the wrong licence, someone else sharing an app to a few too many staff members, or a company using an application in a virtualised or cloud environment - not realising the licensing implications of using the software in that way. Before you know it, you've got a million-dollar penalty on your hands.

Whilst software license audits are a legitimate way for vendors to ensure they're getting paid for their software that's actually being used, CFOs are often unaware of software contract provisions permitting these audits, and similarly, employees are rarely educated around compliant use of licenses. Here we're seeing a consistent and harmful disconnect between IT, HR and Finance departments who simply aren't communicating on the subject of software licensing.

A comparison of global and local survey results revealed that in Australia, companies are lagging behind in automating the software license management process, with only 25 per cent using automated commercial software to manage their software estate (11 per cent below enterprises globally). The majority of respondents are using a patchwork of methods, or are doing nothing at all.

Given the growing complexity of managing software licences, particularly in environments like BYOD, automated commercial solutions such as Software Licence Optimisation tools have emerged to ensure continual compliance and licence optimisation.

With all signs pointing to the fact that software vendor audits will continue to be a long-term and frequent trend (84 per cent of respondents report having been audited in the last 18-24 months, with 37 per cent of respondents audited three or more times during this same period), prudent organisations are implementing best practice processes and technology to help ensure continual software license compliance. With these reasonable measures now so readily available, IT managers should no longer have to present their CFOs with six-, seven- or eight-figure true-up bills.

The results of this survey should serve as a wake-up call to IT management. Whilst the software audit process is unavoidable, true-up penalties certainly are.

Tom Canning is Vice President (Asia-Pacific) for Flexera Software which is a software auditing company.