Unlicensed Software: Is It Worth the Costly Consequences?

Software piracy, even if it's done unknowingly, carries big consequences

Approximately one in five software programs used today is unlicensed, according to the Business Software Alliance, (BSA). Whether a firm is using professionally pirated copies or simply copies an off-the-shelf package to multiple computers, the civil penalties could reach $150,000. Criminal prosecution of larger-scale infringements could lead to fines of up to $250,000 and jail time for those responsible. And companies can be held responsible whether owners and managers knew about the infringement or not.

Phillip Rathle, senior director of product management for Embarcadero Technologies, a San Francisco, California-based software developer, says he sees more companies becoming aware of their software licensing status, but also adds that monitoring compliance can be difficult. Companies can more easily ensure they are in compliance with software licensing rights by opting for software purchases with maintenance agreements, which include support and upgrades, or by choosing subscription-based software as a service (SaaS) licensing models, such as market leader Salesforce.com. Either of these offerings may include training and home use rights, while giving you access to any upgrades that are released during the term of your agreement.

The tipping point for a software-licensing decision is typically at about five licenses, says Nicole Jesse, a software sales licensing manager with CDW. At that point, she says, businesses should probably choose a volume licensing agreement that includes upgrades and software maintenance, so you can adjust the licensing agreement, upgrades, training, and other aspects as your business needs change. Such agreements also make it easier to track the software being used in your company and make inadvertent piracy less of risk. 'When you're purchasing retail software, you own what's in the box. But as the business grows, it's generally a good idea to choose something that can scale with you,' she adds.

Rathle is also seeing more companies offer flexible licensing models that don't specify an end-user. So, for example, the licensed copy may be accessed and used through the company server by anyone at the company instead of being 'assigned' to a specific individual, which is useful for employees who work from various locations and gives the company the option of purchasing fewer licenses. He also suggests that firms ensure that data extraction from the software will be an easy process.

Companies should also have an exit strategy for their software packages, especially for subscription-based models, Rathle adds. He says one of the big questions for those who are considering perpetual models versus subscription-based models is: 'If this agreement were to end in six months or at the end of term, what is your plan for moving your data?' This may include customer data, which is crucial to their business. 'Don't just take the salesperson's word for it. Have the vendor show you how, if the agreement were to terminate today, you could get at this data and how the data can move to another vendor,' he says.

TECHNOLOGY ENABLER: Make Your Software Assets Transparent CDW Software Asset Management helps simplify the process of software management, while saving you time and money. The solution lets you conduct a comprehensive audit to capture a complete inventory of every software application running on every hardware device on your network. Click here to learn more