Just how are the statistics for losses to software piracy
calculated?
My interest in statistics has never been high even before
accounting irregularities. Some numbers, however, I find
fascinating. Take those published on the Business Software Alliance
Web site.
According to a survey the software industry is losing $11bn (£7bn)
year in revenue globally owing to illegal copying or use of
unlicensed software. The UK is one of the more compliant countries
with a piracy rate of only 25% in 2001.
While these mind-blowing statistics equate to the turnover of a
chunky corporation, several thoughts spring to mind. How are these
figures calculated with such precision? Do company representatives
really say, "Yes, we only pay for three-quarters of the software we
use"?
From experience, most large organisations generally pay more than
they need for their software and maintenance. Even the Federation
Against Software Theft supports this view, it claims a reduction in
total cost of ownership by standard inventory management
techniques.
If the statistics are accurate, then where is the army of enforcers
parading strings of successful settlements as a warning to
wrong-doers? Surely if this is genuine missing revenue, it is worth
some high-profile chasing? We see occasional publicity about a
council or a medium-sized organisation, but as often as not the
cause is ignorance of the law or their contractual obligations.
It is a fact that some software suppliers use outsourcing deal
publicity to predict revenue generated through breach of contract
settlements. Could it be that if these predictions fall short of
reality, the difference is put down to unlicensed use?
Where else could all this cash shortage be found? It could be a
miscalculation relying on the fact that many organisations have PC
software installed that is not used - including, "It was there when
I got the PC, what is it again?" It comes as a surprise when for
example, one company which undertook an asset audit, found 60% of
its installed software was not required.
This came as a shock and especially as it was legally obliged to
have licences whether it was using the software or not. Perhaps
this situation is anticipated and is factored into the equation.
If that is not the answer and the 25% (or more) deficiency is not
due to corporate mismanagement, then it must be down to the small-
and medium-sized enterprises and the domestic market. This is
possible, but it is even less likely that anyone would fill in a
survey and admit to it.
The numbers may be based on experience and judgement and a random
sample. This is not as far fetched as it sounds. There are industry
models that predict the amount of revenue a given organisation or
market should generate and if it does not then you have your income
gap. Needless to say I have little faith in figures generated this
way.
It is worth considering a couple of facts which contribute to the
grand number generator:
- Most large organisations are over-licensed. There may be
deficiencies for one supplier and excesses for another, but overall
the result is generally in the supplier's favour. It is accepted
that managing the desktop - and often the midrange - domains is a
nightmare and few, if any, organisations get it anywhere near
right. Hence they cover the problem by over buying.
- In many organisations of all sizes, the employees and
management's knowledge about software licensing, the implications
and the legal requirements is often appallingly scant. This is a
major contributor to over-installation and usage abuse.
- A further breakdown of the statistics would help. How much of
the deficit, if any, is attributable to the domestic market and how
much is in the business and public sectors? Also it would help if
we knew how much the deficit was for each platform. We assume that
the deficit is down to the PC community, but is it
really?
The answers are in there somewhere but then I always
was an optimist.