More NewsAdviser: Pay the penalty for unlicensed software

Adviser: Pay the penalty for unlicensed software

When it comes to software, businesses need to ensure licenses are up-to-date to avoid potential liabilities in the future

Over the years there have been a number of attempts to deal with the issue of
unlicensed software within businesses, mostly driven by the software houses
themselves.

But while software licensing is viewed by some as a matter of concern, is it
rarely high on their agenda. For others, copying software has been considered
‘fair game’ – after all, Microsoft isn’t short of a few quid. But at the end of
the day, software is covered by copyright law, which has recently been
tightened.

So where do you turn if you want to prove your company or practice is fully
licensed, and how can you decide if your business or organisation is fully
compliant?

The starting point is the copies of installed software and the licenses
purchased. But here’s the first problem: software is invariably moved between
different systems and the licences are so complex that some suggest not even the
vendors understand the rules.

Now there is evidence that the IT industry is starting to look at matters
from the users’ perspective. A not-for-profit-body called Investors in Software
(www.investorsinsoftware.com)
has been set up by businesses within the IT sector.

In the words of one of its members, the body’s objective is ‘to support and
advance professionalism in software asset and related IT asset management’. Over
the past six months, a working party has drafted a new International Standards
Organisation clarification for software asset management.

This may sound like asking turkeys to vote for Christmas, but there is some
hope of benefits for users. While IIS is independent of software manufacturers,
some 15 vendors have given their support for the process, and some have even
discussed a discount for those that comply with it when it is released.

But is this enough to answer the question of why an organisation or business
should take action? This could be where the profession has a part to play.
Promoting high standards of professionalism and integrity are fundamental to our
value to the business community. The management of the assets of any company is
the duty of all directors or senior managers. Can a business be selective about
complying with best practice?

Badly managed software assets can lead to potential liabilities that may come
to light during the audit process, while unexpected liabilities can result in
disputes during or after a merger or acquisition. That’s not to mention the
adverse publicity that would ensue from any action being brought by a software
vendor.

Then there’s the financial cost of non-compliance. To date, most claims have
been settled out of court for substantial amounts. Conversely what manager would
pay more for the use of an asset than is necessary or fail to take advantage of
discounts?

Failing to have a clear record of all available and licensed software in use
is like driving towards a speed camera without knowing the limit. Ignorance is
not an excuse.

Mark Holland is a partner on the Information Technology Advisory group of
Baker Tilly

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