Could software piracy by staff land you in hot water?

Information has been released by the Business Software Association of Australia (BSA) about software piracy settlements in Australia in 2014. The worst offenders noted were architects, while 75% of the businesses involved in settlements were based in Victoria.

The BSA is the local branch of the Washington DC-based BSA, which is a consortium of software vendors who set out to find and prosecute companies using unlicensed software. The score in Australia is not good and there are more cases coming to light as staff report their companies for breaches.

As a company director, you have an obligation to comply with software licensing regulations and to ensure the computers and devices used within your business by your employees, and in some cases your contractors, have licensed software installed.

While you have only a handful of staff it can seem trivial to keep track of software on a per person basis, often software is purchased with the device in an OEM arrangement (Original Equipment Manufacturer). This OEM software is pre-installed and often a fraction of the price of the full license cost. The downside of OEM licensing is that it can only be used on the device it was purchased with and dies with the death of the device. The other issue is in managing licensing as the business grows. License management is complex as it requires a good deal of understanding of the rules of the license purchased. These rules change as often as café menus in terms of inclusions and exclusions added flavours and permissions. Often an open license bought in a company pack can be used on the device at work and also a device at home but not always and so it is important to know which license has been purchased and then track where it is used.

Clearly, when a cost item is this complex, and as expensive as software is, it is important to have some strategies to manage it in your business. Here are some high level ideas to help you get licensing under control and keep it that way, so when the BSA call you do not need to panic.

1. Do an audit of licenses on hand – count the boxes, note licence serial numbers and entitlements
2. Start a library system that logs licences purchased and tracks where the software is installed
3. If you use expensive software on a project-by-project basis include installation at the start of project and removal at the end of the project in your work flow processes
4. Centralise your licence procurement in just one person or one department of the business so that duplication is avoided and tracking can be maintained
5. Select software procurement partners that can assist you across a range of products your business uses
6. Move to cloud or subscription licensing to smooth out costs and ensure software is kept up to date. This avoids falling behind or requiring disruptive major upgrade projects.
7. Set staff policies and train your staff on compliance requirements
8. Manage a balance between locked down corporate style operating environments and the ability for staff to install tools they need to remain productive.

Remember, your IT services company is not the software police. It may run a software audit and report the gap between software installed and software licensed to help you keep track, but it is up to you to manage your licensing and ensure you are meeting the requirements. Licensing for a company of more than a handful of staff rapidly becomes complex and expensive, simplifying your licensing may cost a little more but will reduce the cost of management and tracking significantly.

For your IT advisers, it is always a fine line between providing advice and guidance and being perceived as ruthlessly flogging more licensing, but a lot can be done through internal process and company culture to keep costs down. A simple awareness that software is not free and a clear statement that only licensed software is to be used within your business goes part of the way. Having processes around installing software on an as-needed basis and then removing it when it is no longer required on the device can help minimise duplication and cost. Also using open or volume licensing packs can make it easier to maintain a licensing library so you know how many instances you can have installed for each application.

Building a company software library where licenses are checked out and then checked back in can help too. As your company grows this gets more and more difficult to manage without structured systems and network enforced policies. What SME businesses want to avoid for as long as possible is the locked down environment where staff are unable to install software as this can stop the quick install of a new pallet or app that is required for a quick fix or a quick flourish on a job.

Avoiding buying licensing is a risk that no business director should be taking as the money saved creates the risk of serious fines or potential jail time. The concept of running a successful business, paying a truck load in taxes and wages and then going to jail for software licensing for a few lousy bucks just does not stack up. 

It only takes a call to the BSA from a disgruntled staff member and you will be defending your position even if you have it under control. Seek help from experts as they will save you more in licensing fees than they cost and be smart when it comes to software compliance.

David Markus is the founder of Combo – the IT services company that is known for solving business problems with IT. How can we help?