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Accidental piracy can land your business in hot water

For small and medium enterprises (SMEs) the world of risk management is changing rapidly with greater emphasis on governance and transparency and a seemingly relentless push towards tighter regulation. Many SMEs feel overwhelmed by a constant stream of messaging encouraging them to become better at managing risks. But what are the business benefits? Why should attention be paid to aspects of risk management such as Software Asset Management (SAM) and information security.

Changing attitudes towards software piracy

In 2009, the Business Software Alliance (BSA) investigated the attitudes of Australian businesses towards software and their awareness of the associated risks of using unlicensed software. The results revealed 93 percent of businesses claim they have systems in place to ensure software used by the business is licensed and legal. However, in-depth analysis by IDC shows that software piracy in Australia remains a problem; 25 percent of software used in Australia is unlicensed, and therefore is illegal.

This discrepancy between the perceived situation and the reality suggests a lack of awareness among business executives about software and its management. This is a dangerous situation. Software has become a valuable and critical business asset. If businesses are not investing in, and appropriately managing and protecting their software assets, they leave themselves open to numerous business risks with significant financial implications.

The legal risks of operating unlicensed software can be significant – damaged bills and damaged business reputations. Furthermore, using genuine, licensed software means access to technical support, enhanced protection against viruses and malware, and therefore fewer business interruptions and data risks.

Software Asset Management benefits

Well implemented software management is not just about avoiding risks to your business that unlicensed software use can cause. It can also deliver efficiency gains and significant cost savings; not only in terms of direct expenditure on software, but also in related process and infrastructure costs.

The benefits of effective software asset management are extensive: it can put you in a better position when negotiating with software providers and ensures you have the information you need to feel confident in your software purchasing arrangements. It enables more strategic planning and prevents under and over-licensing, while reducing the IT administrative and support burden and its associated costs.

Your IT department or support services are better able to control what software employees have access to, including their ability to introduce unauthorised software onto your network.

Unlicensed software: What are the risks?

Twelve percent of Australian businesses believe there is ‘no risk’ involved in using unlicensed software, according to a study commissioned by the BSA. However, there are many business risks inherent in this practice. Failure to understand the risks associated with unlicensed software can expose your business to numerous hazards:

  • Loss of and damage to data – studies by IDC have found that pirated software acquired via illegal downloads or counterfeit CDs, has a one in two chance of containing ‘additional code’, including trojans, viruses or spyware, that can crash IT systems or expose confidential data to intruders. In addition, malware and pirated software frequently co-exist on websites that offer access to pirated software and piracy-related tools. At least a quarter of such sites were found to be rife with trojans and other security threats that are imbedded into downloaded products or distributed through other means to infect visitors’ computers. Downtime and security breaches have an immediate and negative effect on your bottom line.
  • Loss of functionality – software downloaded from websites or P2P networks is often sub-standard, or it can incur loss of functionality and compatibility issues you would not encounter with legal, licensed versions. There is also a risk that data becomes corrupted or not saved correctly, leading to critical data loss.
  • Lack of technical support – business operations rely heavily on IT, hence it is critical that relevant support systems are in place, which is unavailable to users of unlicensed software.
  • Damage to reputation – although difficult to quantify, damage to the reputation of a business found operating with illegal software is a real risk – in particular where customers are not getting the level of service they expect.
  • Legal risk – the BSA takes legal action on behalf of its members against organisations using unlicensed software. Unlicensed deployment of software is an infringement of copyright. If you have unlicensed software installed on company PCs, your business will face paying substantial damages and legal costs.

To manage these risks, and to reap the benefits of active Software Asset Management in your business, start with the free Software Asset Management tools and resources available at the BSA website at www.bsa.org.

–      Clayton Noble is co-chair of Business Software Alliance (BSA) Australia.

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