Conducting a Software License Audit: Internal Process Guide

Why Conduct Internal License Audits

An internal software license audit is a proactive review of all software installed across your organisation against the licences you have purchased. The goal: identify and resolve compliance gaps before a vendor audit notice arrives. For Indian SMEs, internal audits are particularly important because software vendors are increasingly aggressive in auditing Indian companies, and the true-up costs (buying licences you should have had) can run into lakhs of rupees.

Step 1: Inventory All Software

Use an automated inventory tool to scan all company devices (laptops, desktops, servers) and produce a list of every software application installed, including version, publisher, and installation date. If you do not have an automated tool, use a combination of: operating system inventory features (Windows Installed Applications list, macOS System Information), MDM/UEM platform reports (if you use one), and manual checks for critical servers and specialty workstations.

Step 2: Compare Against License Register

For each software title found in the inventory, check your licence register: how many licences were purchased, what type (perpetual, subscription, concurrent, named user), what is the licence key or subscription ID, and who/what is each licence assigned to? Flag any title where installations exceed licence count, any title where licences exist but no installations are found (wasted spend — reassign or cancel), and any title where installations exist but no licence is found (compliance gap — buy licences or remove software).

Step 3: Investigate and Resolve Gaps

For each compliance gap, determine: is the software actually being used (if not, uninstall), can unused licences be reassigned from another area (if you have 100 licences but only 80 users, assign the extra 20 to cover the gap), can the software be replaced with a free or cheaper alternative (open-source alternatives to many paid tools exist), and if none of the above, budget for the licence purchase.

Step 4: Document and Report

Generate an internal audit report: software titles audited, total installed count vs total licenced count, compliance rate by title, gaps identified and actions taken, remaining gaps with resolution timeline, and cost impact (licences that need to be purchased, licences that can be cancelled). Present this report to management annually — it is your evidence of due diligence if a vendor audit ever arrives.