Software licensure compliance has become a hot topic in the last couple years as manufacturers increase the frequency of surprise audits. Microsoft products in particular are ubiquitous in the workplace and most companies don’t take the time to review individual software licensing agreements prior to installation. The penalties suffered from a failed audit are not always immediately clear and can cost a business tens-of-thousands of dollars.
Any organization that has more software instances installed on their computer systems than their license agreement allows is considered to be in breach of the agreement. If this is discovered during a software audit, the organization must take part in the mandated “true-up” process. A “true-up” is the process by which an organization reconciles the amount of software instances in use with the number of software licenses they actually own. In cases where an organization has been found out of compliance, many software distributers will mandate the purchase of “full price” versions of the software; as opposed to the often deeply discounted versions typically sold to businesses. In addition to the upfront costs of new licenses, the distributer may also rule that the company needs to pay back expenses for the amount of the time the software has been in use. Many software distributers also provide cost-saving, “benefit of the doubt” allowances that can be revoked if an organization is found in violation of license agreements. This means that future business with the software provider may become more difficult or result in further unexpected expenses down the line.
Software audits are costly not only because of the upfront software costs, but also because they can disrupt other important purchases. Business executives and finance departments hate surprises and audits are the worst kind. If a software audit occurs, an organizations financial department may be forced to cut back on projects and other important hardware/software upgrades could be delayed or canceled altogether.
Business analysts predict that most organizations are on average 20 percent under-licensed. Given that business software can run anywhere between $200 and $6,000 per license, the cost of an audit adds up fast. However, these costs are only the start. If an organization demonstrates flagrant ignorance or deliberate avoidance of licensing rules, it could become the subject of a legal audit. Software manufacturers employ and authorize the Business Software Association (BSA) to pursue copyright infringement, conduct formal audits and file lawsuits on their behalf. Penalties assessed by the BSA can theoretically amount to as much as $1,000 per instance of copyright infringement–that is $1,000 for each unlicensed, installed piece of software.
Software licensure creates a complex problem for decision makers. Liability and cost is created for legal, IT, Finance and every department in the company. This legal and financial exposure is new and takes decision makers by surprise.
The challenge is twofold:
To legally and cost-effectively bring old software licensure into compliance.
To make crucial large dollar value decisions, on how to cut costs for licensure of new software from Microsoft, Adobe and others.
Legal settlements for small and medium businesses with Microsoft for past licensure compliance is a surprise expense that steals entire IT hardware budgets.
The cost of non-compliance impacts every user and every department in a company. Legal costs can exceed the cost of licensing itself; IT carries an additional burden, translating directly into higher expense and less profit. The executive time spent addressing these necessary procedures impacts current and future business.
Cost-effective licensing requires these complex decisions. The result of these decisions can dramatically increase the cost of software licensure 10 fold or reduce software licensure expense by up to 90%. Which would you prefer?
For further information on software audits or to request a complimentary in-house assessment, call 212-242-2949.
*FPS – ITCSNY Fixed Price Solution Product
– IT Computer Support of New York