Users have identified four key ways that software suppliers unfairly exploit software licences to extract money from corporate IT in the practice known as stiffing, or software licence abuse.
Speaking at last week’s joint meeting of the Eurim parliamentary lobbying group and the Computer Weekly 500 Club, the European IT director of a major UK-based multinational outlined four areas where all users are vulnerable to their software suppliers.
The first area is known as 'Version Release Stiff'. This, said the speaker, is where there is a lack of clarity and definition about what constitutes a release and what is a version.
Whereas a version is clearly a new piece of software and should be paid for, a release is merely a maintenance update and should not be priced as a new purchase, but instead paid for out of maintenance charges.
“It’s like a car,” said the IT director. “When you buy a car it’s a version, so if you want a new car you should pay for one.”
Conversely, if you simply send a car to a garage to maintain it, that is the equivalent of a software release and you should not have to pay for an entire car all over again.
All too often, said the speaker, “suppliers make the continued function of the software you’ve bought subject to the purchase of a new version”.
The second example is known as the 'Upgrade Stiff'. This form of licence abuse revolves around usage, and is limited only by the creativity of the sales staff, the meeting was told.
“You end up paying for usage you’re not using,” said the speaker. This stiff works by charging Rolls-Royce prices to all licensed users, irrespective of the usage each gets out of the software. There is no differential pricing and occasional users end up paying just as much as heavy-duty users.
“Every single person has to pay for a Rolls-Royce - and there are no bicycles available,” warned the speaker.
Then there is the 'Change of Platform Stiff'. This is the familiar story of being charged by the software supplier simply for changing the platform the software is running on, whether it is hardware or operating environment.
You pay dearly for the privilege, even if the software you have licensed still does exactly the same as it did on the previous platform.
And finally the speaker warned of the 'Change of Anything Else Stiff'. Here the supplier decides you have done something that is not specifically allowed for in the contract, such as outsourcing your IT operations, merging with another company, de-merging, changing your company name or moving premises. If you change it, you pay for it, is the principle the abusing supplier goes by.
Suppliers at the meeting claimed that they too were stiffed by users in a variety of ways including users who: run unlicensed software; sell the software on to third parties; hand over the software to outsourcers who use it for other, unlicensed clients.
“If this were any other industry, stiffing would be seen as misselling, sharp practice and theft,” said the speaker.
“It would be on the front page of the newspapers,” he added.
Quantifying the extent of software licence abuse
Computer Weekly has come across several cases of six- and even seven-figure software licence abuse in its long-standing campaign. Parliamentary/industry lobby group Eurim has now taken up the issue with an influential fact-finding Fair Dealing working party. In order to best use its clout with government ministers, the Office of Fair Trading, Eurim urgently needs to scope the size and seriousness of the problem and is seeking hard evidence of the range, nature and scale of the problems and the cost, including any knock-on costs.
Evidence may be given (in confidence if necessary) to the chairman of the Eurim Fair Dealing Group, Geoff Petherick (chief executive officer of UKCMG) on 01494-674605 or e-mailed to the group rapporteur [email protected].
Alternatively, please do not hesitate to discuss the way forward in confidence with Dr John Riley, managing editor, Computer Weekly, on tel: 0208-652 3099.