Credit crunch drives software audits

More frequent software audits and new licence conditions likely as software houses seek to shore up revenues against the economic downturn.

Computer users face more software audits, increased support costs and new licence conditions as software houses seek to shore up their revenues in the face of flat sales.

The Federation Against Software Theft (Fast), an anti-piracy group made up of organisations that use software, reported audits among members were up 20% in a year. Microsoft led, with 18% of members reporting a compliance-related visit from the Redmond firm, but PDF-maker Adobe and security firm Symantec had also begun to audit customers, it said. In all, 34% of members said they had undergone a software audit.

Vuk Trifkovic, an analyst with Datamonitor, said global software sales had levelled off in the first half of 2008, but had declined in financial services markets, which faced "some difficulties".

"I cannot say for sure that software firms are using compliance audits to boost revenue, but it would be a common sense reaction," he said.

Mike Lawrence, managing director of BentPenny, a software reseller, said the inspections were "revenue-grabbing". In 40 years he said he had come across very few incidents of deliberate copying to avoid payment. "Most big companies can be about 10% over-licensed, just to avoid this," he said.

Figures from Fast showed that 41% of members audited were over-licensed. Spokesman Phil Heap said this meant companies could save money by becoming compliant and managing their software assets stringently.

He said, "Reduced sales are definitely a driver for software publishers to increase their enforcement activities. We are also seeing software publishers engaging directly with organisations through other types of initiatives such as software asset management programs, encouraging companies to produce an effective licence position (ELP) and true-up on the required licences. Some are even offering incentives such as exemption from enforced audits if they join the voluntary initiatives."

Richard Steel, president of local governement IT association Socitim, said he was unaware of a higher rate of audits among his members. A more pressing problem was helping the government's Office of General Commerce (OGC) to renegotiate its Microsoft licence. The OCG has called for comment with a view to implement the new deal in April 2009.

Steel said Socitim was hoping to move away from rigid boundaries between distinct services such as police, schools and fire and rescue. "We would like to see a situation where the licence goes with you on your device," he said.

Carl Maugham, operations director of Erudine, which builds software development tools, said, "There has been significant loss of appetite for new projects among large users." The slowing economy, especially in the financial sector, meant projects were being postponed by 12-18 months, he said.

Software companies faced lower revenues because of virtualised systems, he said. They were using audits to make sure they got what was due, rewriting their licences to preserve revenues, and seeking other sources such as support and tools, he said.

The Business Software Alliance, an industry body that fights copyright infringements, said piracy cost the global industry £24bn in 2007. Britain was relatively good, with only 24% of PCs found with unlicensed software. But piracy still cost UK software houses £900,000.

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