The software licensing conundrum
I found this article in Reseller News (New Zealand) very interesting. And while I agreed with many of the writer’s points, I thought the article would have benefitted from an exploration into the different types of ‘piracy’ that exist. Although I’m sure between us all we could come up with many more examples, three top-level ‘categories’ immediately spring to mind:
1. the individual user at home downloading through P2P (often rip-offs of legitimate software)
2. the organization buying applications at ‘too good to be true’ prices (often counterfeit)
3. the organization installing more copies of software than they have legally purchased
Personally, I don’t see how the BSA / Microsoft claims of US$55 million in lost revenues (in New Zealand alone - the global claim is closer to US$48 billion) are going to be recouped by addressing point 1 (and maybe even point 2) above – the fact is that the vast majority of home users, student and general skinflints can probably ‘live without’ the latest versions of Office etc. But I do believe that many organizations continue to use more software than they are legally entitled to – not because they are flagrantly disregarding licensing laws, but because they simply don’t have a handle on their software use. In many (probably most - it depends on who’s figures you trust) cases, organizations lack the necessary policies and technologies to ensure that all applications deployed on the network are accurately licensed.
In my view, this is where the vendors are truly losing money.
The interesting thing with software licensing, however, is that there are two sides to the coin (as it were). Our own research found that most organizations actually pay more than they need to for software – typically over-spending by as much as 20 percent per year because they do things like:
1. buy applications they don’t need (there might already be redundant copies on the network, for example)
2. buy applications through more expensive channels (buying off the shelf, instead of through volume licensing, perhaps)
3. fail to cancel or renegotiate maintenance and support contracts based on current application usage (we’ve seen examples of companies still paying maintenance on applications that were retired from use three years ago - evidence that IT and Finance often don’t talk to each other)
As such, software management is interesting mix of ‘swings and roundabouts’. On the one hand, vendors are undeniably losing revenues they are rightly owed – but on the other the end user organizations are already paying over the odds! The key, in my view, is to proactively establish what the organization needs in the first place and then manage it carefully to ensure that a) it’s delivering real value to the business and b) that the organization is paying a fair price for what it is actually using. The onus isn’t on the vendors alone, end user organizations need to take control of their own destiny. It’s what we like to call Software Asset Management (SAM).
