Software copyright theft does not just relate to spotty youths
making illegal copies of Mutant Ninja Death Battle III in their
bedrooms. It also affects the IT manager.
According to Mike Newton, campaigns relations manager at the BSA
(Business Software Alliance) the issue of software licence
compliance is a sizeable one. He says that each year $12bn worth of
software used for business purposes worldwide is not licensed
properly, and that in the UK last year the amount of software
"ripped off" by UK firms totalled £450m. This equates to 26% of all
software used.
"We can't go on like this," says Newton: "Imagine if you told a
shopkeeper that a quarter of his stock was being shoplifted, he
would be alarmed."
Along with Fast (The Federation against Software Theft), the BSA is
the main organisation in the UK to represent the interests of the
commercial software suppliers such as Microsoft, Lotus, Adobe,
Apple, Macromedia and Novell. The BSA has the power of attorney to
enforce the terms and conditions of software licences and is
charged with stamping out abuse, piracy and fraud. It is often
regarded by companies as being the "software policeman", and of
late senior IT staff have voiced their worries that it is starting
to turn the screw.
"If, by 'turning the screw', you mean we have raised the profile of
this issue, then that is correct," continues Newton. "Last year, we
carried out our largest campaign yet with radio commercials and
banner ads. If you whisper it, people don't get the message."
Newton says those responsible for software licence abuse fall into
three categories. First, there are those who knowingly pirate
software. This, he admits, is a minor problem, for example a small
team of developers may download and copy a new toolkit to use among
themselves. Second, the BSA has identified a growing number of
software counterfeiters who counterfeit both the software and
licences and sell them anonymously via the Internet to unsuspecting
users. Third, there are the businesses that have lost control of
their software assets and, through mismanagement, have not kept
their licences up to date.
This third group is where, according to Newton, the bulk of the
problem lies. He says: "It is happening across the board with large
and small companies. Large companies that have grown quickly
through mergers and acquisition and have seen their IT department
decentralised are not keeping adequate tracks of their assets.
Smaller companies with a less structured IT function are also
failing to maintain their licences. " As part of the BSA's last
campaign it wrote to 300,000 SMEs.
Predictably, users and senior IT staff don't see things in such
black and white terms. Tim Gregory, chairman of The Infrastructure
Forum (TIF), a user interest group that represents the IT function
of 93 major organisations including BA, SmithKline Beecham and The
Royal Bank Of Scotland, agrees that the vast majority of
contraventions of software licence agreements are unintentional.
However, he feels that the complexity of software pricing and a
lack of understanding of the IT manager's lot by the suppliers
exacerbates the problem.
"On the whole, IT managers want to abide by the rules but the
software companies need to help them to deliver, " he says. "I
don't understand why there isn't something built into the software,
like a self certification module, that would alert users if they
were using the software out of licence.
"I'm sure that many software agreements are broken by accident
because the rules are too complex. For example, a real situation
I've come across is where a company had an agreement for a number
of concurrent licensed users. However, the application was deployed
across 60 sites, so how do you ensure there aren't too many people
using the application at the same time? We would like to see more
flexibility for negotiation between suppliers and customers.
"
Gregory also bulks at the suggestion by BSA's Mike Newton that
every major company should have a software asset manager. "This
would just be another cost to industry," he says.
At asset management software providers Tally Systems, director of
communications Randy Britton says that demand for their latest
product, TS Census, has been growing steadily. This he says is down
to sites preparing to migrate to Windows 2000, as well as companies
who are increasingly intent on bringing their software under
control. "The BSA is becoming more aggressive in its approach to
companies, " continues Newton. "If a company has carried out
adequate asset management, then at least it knows what situation it
is in, and is less likely to be at the mercy of the BSA."
Britton says that far from finding that they have been under-buying
software licences, some companies find the opposite is happening.
"We have come across companies who have no central control of their
IT, have over-compensated and have found they are paying for
licences they haven't used in years. In one instance unused
licences amounted to 10% of the entire software bill."
But saving money may not be the only good thing to come out of
taking control of your software licensing situation. Interim IT
director Colin Beveridge has worked with many blue chip companies
including Shell, BP, and ICI. In that time he has had regular
involvement with both the BSA and Fast. He says: "When the company
is up to scratch, organisations like Fast will accredit the
company, and I honestly think that endorsement is of value. It is
something that I can point to as another proof that we are doing
our job properly and taking our responsibilities seriously. "
Beveridge also feels that a decentralised IT department is the main
cause of licence compliance failure. "Licence-tracking problems are
most likely to arise where the deployment regime is not under
strict control of the IT function. I have seen many instances where
user departments buy their own software, and either implement it
themselves, or get their suppliers to do it for them."
But although the BSA cites examples where non-compliant companies
have been fined or forced into settling outside court, the
likelihood of being caught remains slim, and here may rest the
reason why IT managers have been slow in bringing their software
licences up to speed. After all, no IT manager got promoted by
telling the board they must pay an extra £100,000 in software
costs. Software compliance is not sexy, it is not a money- spinner
- it is low priority and for many remains a distant threat.
"Software compliance is like IT security, in that the real pain
comes when you get caught, " adds Norbert Kriebel, analyst at
research firm Gigaweb. "Prior to this it can seem like an
unnecessary outlay, albeit a legal requirement.
"For many companies, the expedient to become compliant rests on the
equation of whether the cost of compliance is equal to the
probability of ever being reported, and thereafter having to pay a
fine. With probabilities being low, many are thinking, 'Why do I
want to go through the pain of asset management?'"
But with software suppliers intent on clawing back unpaid monies
that amount to over a quarter of their revenues - it seems that the
chase will only get more fervent and the pressure on IT managers to
take ownership of their software more intense.
DB2 pricing
Thomas Gregers Honore, IBM manager for data
management, EMEA comments: "IBM is committed to making software
licensing as simple as possible, " says Thomas Honore, IBM's
European manager for data management. "We have tried, where
possible, to tie licences to servers rather than to the
desktop."
Honore says this has been the philosophy across most platforms from
Unix and NT to Linux, while the mainframe stands alone. "It's
always been in a world of its own," he says.
According to Honore there are several reasons for this change in
approach to licensing models. He says: "For an IT manager it is
much easier to keep track of the amount of processors he has
working in each server, than to keep tabs on the amount of end
devices he has running a specific application, especially with the
proliferation of laptops and handheld devices.
"Also, it was recognition of the way computing was heading; away
from the client-server model towards networked and internet
computing. If you price your software per user, things start to get
complicated if an application is Web based. For an application used
in-house, the IT manager will have a good idea of how many users he
will have, but when it is extended out to the Web, there is no way
he can accurately gauge the number of users.
"Depending on how popular a website is, the number of users can
increase by half a million in one day. How do you marry a user
based licensing model with this situation? How can an IT manager
budget and plan ahead with this potential amount of
fluctuation?"
And surprisingly, Honore is candid about the exact prices charged
per processor. "The standard price per processor, per year on an NT
machine is $17,600, although there is a work group edition for
newcomers to the market, which starts around $1,000 for 4
processors."
But how did IBM come up with such a figure? Honore says there are
several variables to take into consideration when formulating a
pricing structure. "We have to consider the research and
development costs. For example, IBM took out 900 patents for
database technology last year, and add to this the costs of sales
and marketing and distribution.
"We also look at the competition, and take into consideration
feedback from our customers, who have been trialling beta versions
of the software. From all these inputs we can get somewhere close
to coming up with a fair price."
Price to pay for illegal software
During November 2000
Macdonald Lindsay Pindar, a trading division of Pindar plc - a
leading European print and electronic media company - settled with
the Business Software Alliance (BSA) after it was found using
illegal software on its company network.
Macdonald Lindsay Pindar, which is based in Midlothian, agreed to
pay a total of £18,000 for using unlicensed Adobe, Corel,
Macromedia, Microsoft and Symantec software. BSA learned of the
software malpractice through a report to BSA's website (
www.bsa.org/uk ). BSA
now offers a reward of up to £10,000 via it's hotline and web site
to any person providing information on a company using illegal
software, in recognition of it's support to fight against software
theft.
Summary
Software suppliers say they are losing over a quarter of their
revenues through unpaid software licences, and are demanding that
the situation be rectified. They accuse IT managers of not being in
control of their function, and that most unpaid licences are down
to mismanagement. Is this systematic of the state of most IT
departments today, or do IT teams see strict licence compliance as
a low priority, and can only commit resources to the next job in
hand?
Ross Bentley