The figures don't compute

Just how are the statistics for losses to software piracy calculated?

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.

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