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In February Baines & Ernst Financial Management, a debt management company, settled out of court with the Business Software Alliance (BSA) for the use of unlicensed Microsoft software, writes Ross Bentley.
BSA, a watchdog group representing the world's biggest software manufacturers, began proceedings against the company last autumn.
As part of the settlement, Baines & Ernst, a leading debt management company, is to pay the BSA a substantial, five-figure sum.
Charles Howson, chief executive at Baines & Ernst, says that the company lost track of its software licences because of the extraordinary growth it was experiencing. "We are the fastest growing company in the north west," says Howson. "Five years ago we had half a dozen employees, now we have 500. Obviously with this level of growth we were very busy and our primary concern was dealing with enquiries and customer service."
With demands on the business escalating, administration problems and software usage policies were overlooked.
"Our software problems came from having MS Office loaded on PCs used by our call centre staff - they didn't use the packages but we still had them and the licences became outdated unbeknown to us. We didn't have the right processes in place to track them," Howson says.
"Also some of our staff were downloading software off the Internet and passing discs around among colleagues. It was difficult for our managers to ensure that all the staff were playing by the rules."
Howson thinks that a former employee contacted the BSA to take advantage of the £10,000 reward offered to anyone alerting the organisation of software licence abuse."But we were slow in responding to the BSA's initial approach in early January 2001," says Howson. "I didn't come on board until March. By that time the BSA has issued court proceedings."
Eventually an out-of-court settlement was negotiated. The company also had to delete the software it was using and buy up-to-date copies at an additional cost of more than £35,000.
"If we had gone to the BSA earlier and held our hands up to about 30 pieces of unlicensed software perhaps we would have got away with paying the extra rather than the fine," says Howson.
"But we had over 100 unpaid licences. I can see why we were fined - I can see they have a job to do. You should expect to pay for a job or service you use. It's a supplier's market - if you want to use the software you have to pay the price. We rely heavily on IT. We have 50,000 clients, which means a huge amount of transactions."
Howson says he has now appointed several senior managers to ensure that the company does not fall short of the licensing rules again. One is an IT manager who has previous experience of the BSA and has gone through the process of gaining BSA accreditation in the past. "We are going to work towards that," he says.
"From now on we will ensure that all licences are administered properly and that all the systems are in place. It needs to be given as much importance as any part of the business."
But does he think that the company has suffered a blow to its reputation? "Not really," he says.
"Rather, the whole episode has taught us a lesson. We are a large, reputable company that just made a mistake. In some ways, you could say that the incident has strengthened the company's reputation in that we have shown we were prepared to do the right thing."