A recent study conducted by Unisphere Research, and sponsored by LicenseFortress, reveals that software audits are becoming increasingly frequent and financially burdensome. The 2025 Survey on Enterprise Software Licensing and Audit Trends sheds light on escalating costs, operational disruptions, and the growing complexity of compliance management.

The study offers a detailed examination of how these pressures are reshaping priorities across IT and executive leadership. Companies are allocating more resources than ever before to mitigate risks, manage audits, and avoid potentially catastrophic financial consequences.

In today’s digital-first world, the software your business relies on isn’t just a tool; it’s the backbone of your operations, often driving everything from sales and HR to finance. Consequently, the potential risk to business continuity and financial stability could be huge if a software supplier suddenly claims your business owes £millions in additional licensing fees, threatening to sue, or even cut off access to crucial software, unless you pay up.

How do you respond in the face of such threats? The stakes are high, with the potential for severe, even existential, consequences for your business.

This situation arises more often than you might think, and is increasing in frequency. The pressure applied is amplified as the supplier approaches peak trading periods and financial year-ends. For some suppliers, this process of targeting customers for additional licence fees has become a lucrative source of revenue. Understanding how to navigate these treacherous waters isn’t just beneficial – it’s essential for safeguarding your business’s future.

Based on reports (including by G2 and CompareSoft), around 85% of licence “audits” (usually conducted by a supplier, or a third-party auditor on their behalf, either remotely or on-site), result in claims that the customer is not fully compliant with its licence terms. Non-compliance is usually alleged to have occurred due to (a) over-usage by the customer’s own personnel (or those to whom the customer has given access to the software), or (b) third-party software being integrated in a way that it (and therefore everyone using that third-party software) is now “directly or indirectly” using or accessing the supplier’s software.

We often support businesses in dealing with claims by software suppliers that the business (its customer) owes £tens of millions in additional licence fees, often based on the business’s end-customers using third-party software which interacts with the supplier’s own software. This interaction might only allow end-customers very limited visibility of the supplier’s software – but this is nevertheless leveraged by the supplier to pursue the business for large £sums.

Clients facing such claims have a decision to make: pay up to avoid disruption to the business; or refuse to be pressured, and invest resources in challenging the supplier’s allegations. Where the business stands its ground and engages with technical, commercial and legal teams, it often proves a very effective approach to minimise, and sometimes even eliminate the need to pay, additional licence fees.

If you are a business that wants to pre-empt risks and seek to mitigate these to avoid uncertainty, then the following top tips will help:

Birmingham City Council has failed to enter the new financial year with auditable accounting software after a disastrous implementation of Oracle Fusion, which has seen its expected project costs mushroom from around £20 million ($26 million) to around £131 million ($163 million).

The council has now missed its second deadline to get the system fit for purpose in terms of its legal and statutory obligations, despite going live with the software two years ago. Independent auditors had warned the council about the risks of entering the 2024/2025 financial year — which began on 6 April – in this state.

In a council meeting yesterday, councillor Fred Grindrod, chair of the council’s audit committee, called for a public inquiry into the ERP implementation, as well as into the council’s failure to understand its equal pay obligations.

He said, “We need a clear investigation into what happened, what went wrong, and who is responsible. On Oracle: Why was it turned on when so many problems were known? Why did it take so long to admit there was a problem? Why are we still not safe and compliant? When did we really lose control of the finance ledger?”

The council leader has also spoken of the need for a public inquiry.

In September last year, the council — the largest local authority in Europe — declared itself in financial distress by publishing a legal Section 114 Notice, saying the £3.4 billion ($4.3 billion) revenue organization is unable to balance its books. It also said it faces a bill of up to £760 million ($954 million) to settle equal pay claims after pay discrimination probes found it was systematically paying female employees less than men in equivalent jobs. That figure has since been disputed.

In October, the council said it would miss a November deadline to be safe and compliant with its Oracle IT system, a deadline set by external auditors Grant Thornton.

In February 2024, the external auditors reported that the system was still not “safe and compliant” in terms of financial reporting and legal requirements.

At the time, Mark Stocks, Grant Thornton West Midlands public sector leader, told councillors that unless it could be demonstrated that manual workarounds for the Oracle system were safe and compliant for the (then) next financial year [2024/25] starting in April, the audit team would not be able to issue an unqualified audit for that year.

“Actually having a functioning finance system for 2024/2025, including budgets, is absolutely crucial,” he told councillors.

The council’s audit committee also produced a report yesterday claiming it had been kept in the dark about the problems with Oracle.

The report said that since May 2023, when the audit committee was first told about the seriousness of the problems with Oracle, it had consistently tried to seek reassurance about how the council was mitigating the problems arising from the failure.

“Members are of the opinion that they were not being given the full facts,” the report said.

This comprehensive approach underscores the importance of multi-faceted security strategies in modern IT asset management, ensuring not only compliance but also the resilience of an organization’s digital infrastructure.