Not to be stiffed at: combatting unfair software licensing

IT managers, are supposed to be more business savvy these days. Julia Vowler gives them a few pointers on how they can combat...

IT managers, are supposed to be more business savvy these days. Julia Vowler gives them a few pointers on how they can combat unfair software licensing

Software licence abuse, known as stiffing, is a burden on too many corporate IT departments. But what can be done by responsible-minded IT directors to extricate themselves and their departments from this problem?

Speakers from major UK companies at last month's Computer Weekly 500 Club meeting, in association with IT parliamentary lobby organisation Eurim, helped clarify both the problem and ways of tackling it.

Software stiffing is, says Eurim, the exchange of money when neither benefit accrues to the purchaser or cost to the supplier. It occurs when users of software make changes to the way software is used, like the platform it runs on or the location it runs at, which is of no additional value to the user or cost to the supplier. But the supplier charges a fee. He is entitled to do so if the contract with the user does not include each change of usage. Licences only allow software to be used in precisely the way stipulated in the contract.

This puts users in a very vulnerable position which some suppliers exploit.

The burden that stiffing imposes on corporate IT is not just in cash terms. It can be more subtle and dangerous in the long term.

One speaker identified a two-fold knock-on effect from stiffing.

The first is in time and effort spent identifying and tackling it. Because of the prevalence of stiffing, IT departments have to allocate resources to scrutinise all software licensing agreements. The presumption is that signing a software licence is dangerous, and therefore time and effort has to be spent going through the terms and conditions as opportunities for stiffing is a cost born by the user.

Secondly, the prevalence of stiffing may force companies to operate sub-optimally. A company may be prevented from buying the best software because the licence is too stiffable and the supplier will not unstiff it. Therefore, the user may have to avoid the risk of being stiffed by purchasing less suitable software. Stiffing can restrict the software selection process.

But how can IT directors get to grips with stiffing? The evening's speakers pooled their advice.

  • Make checking of all licences, current and upcoming, for abusing clauses a routine and rigorous occurrence. Never sign the standard contract unless you have checked it gives no leeway for stiffing

  • Educate user, procurement and legal departments about stiffing. It may not be obvious to non-IT professionals just how limiting a contract can be, and how vulnerable signing it may make the company

  • Educate user and personnel departments of the software licensing cost implications of hiring staff. It may prove costly to add a new member of staff to the licence, even if they only access the software occasionally

  • Be brave and warn the board of licensing cost implications of software selection. Stiffing may mean the company cannot get the best software. You also need to raise awareness at board level. It is a burden across the entire economy via increased costs to corporate IT. Chief executives need to understand that so they can lobby against it

  • Beware the enemy within. Your technical staff may care more about getting the best technology, irrespective of cost. Therefore, they may conspire with the supplier's sales people on how getting their favourite software past IT management. Ban the technical trial of all software until contract terms and conditions have been checked.

  • Refuse to sign any contract or open any shrink-wrapped software which states it is licensed under the terms and conditions of Ucita, the draconian US law now working through state legislatures giving suppliers punitive powers, like turning off software in the event of a dispute, without legal redress. Ucita raises grave issues of extraterratoriality which need government resolution.

  • Support Eurim's campaign to seek legal protection from stiffing by supplying Eurim, in confidence, with documented evidence it needs to convince the Government that stiffing is a major, pandemic problem, and a substantial burden on the economy.

    True tales of stiffing

    Subsidiary spends without thinking

    One IT manager at a UK head office was asked to check a supplier's standard contract by one of the company's international subsidiaries. After combing through the contract and highlighting areas of concern, he received an e-mail saying the subsidiary had already signed the standard contract with the supplier's terms and conditions unaltered. The contract hadn't even been checked by a company lawyer.

    Y2K conversion bears heavy cost

    Another major UK company was told six months before December 1999, it would have to pay £1m to receive a Y2K-compliant version of critical credit-card transaction software. The IT director involved preferred the upheaval of replacing software with a system from a rival. He saved no money, but at least the stiffing company did not benefit financially.

    Contract keeps on running

    One company discovered some suppliers routinely extended the length of the contract at every renewal, from three to five years, to guarantee longer revenue.

    Make an example of a supplier

    A UK company which outsourced its IT and needed to reassign more than 150 software contracts, reduced the sum demanded by suppliers for reassignment. The outsourcer was not going to use the software for any other client, and the software would be running on the user's machines and in its datacentre for the first 18 months of the outsourcing contract. "They asked for £3.8m (in total) and we paid out £1,300," recalls the IT director. His technique was to pick the supplier whose software he could most easily do without, and refuse to pay. He deinstalled its software, word got out, and the other suppliers backed off.

    Users aren't always saints

    One small software house sold its products to a large company which promptly deployed it at five sites and sold it on to 60 customers of its own, not paying the software house a penny. When it canvassed customers over Y2Kcompliance, 40% of its replies were from unlicensed users.

    Helping Eurim

    To give evidence, in confidence if necessary, phone the chairman of the Eurim Fair Dealing Group, Geoff Petherick on 01494-674605, e-mail the group rapporteur [email protected], or speak in confidence to CW500 Club organiser, Dr John Riley, managing editor of Computer Weekly.

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