Under the name of “Revenue Protection”, most software publishers have been checking on their customers to ensure that they have not used more software than paid for, a practice known as Software Licence Compliance (SLC) audits.
Traditionally, SLC audits are mainly concerns of the FTSE 500 who spend tens of millions in computer software every year. Over the years of paying out unexpected licence audit fines, most large organisations have reacted with heavy investments in internal governance programmes around software assets, making the FTSE 500 less of a lucrative market for compliance revenue generation.
As a result, we have observed a significantly increased level of software licence auditing activities in the mid-market and SME sectors over the past 18 months.
How does it work?
When a software supplier of yours suspects that you owe them money, it will enact the audit clause embedded in most Software Licence Agreements today and send in the licence inspectors. Sometimes third-party inspectors are involved, they can be the FAST (Federation Against Software Theft), the BSA (Business Software Alliance) and in the most serious situations, the PIPCU (Police Intellectual Property Crime Unit).
The inspectors will assess your licence usage, reconcile this to the quantity of licence entitlements you have bought to see if you are out of compliance.
The top publishers measured by the estimated number of audits carried out per year are: Microsoft, Adobe, Autodesk, Oracle, SAP, McAfee, Attachmate, VMWare and Symantec.
What happens if you are found using more?
Any unlicensed usage of software (“under licensing”) will result in financial penalties. This could include:
- Buying the licences you owe at full list price without discount
- Cost of back-dated support & maintenance payments
- Cost of audit (these can often be at 6 figures)
- Legal fee (if the matter is escalated to court)
According to a survey conducted by Express Metrix, a software detection tool maker, over half of the 10,000 participants were invoiced for non-compliance, and 18% paid out £150,000 or more.
The penalties can also go beyond financial. According to the revised Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002, if the degree of unlicensed software usage is severe, the company directors could be prosecuted for software piracy and IP theft, facing up to 10 years of prison time and unlimited fines.
What you can do now
If you are not sure on your software licence compliance status, you are probably out of compliance already. It is essential that the matter is addressed before you are hit by a vendor audit.
We have over 20 years of experience addressing licensing issues, and provide a wide range of Software Asset Management (SAM) services to help clients minimise compliance risk and make tangible savings from better use of acquired software.
To help you get started, we are offering free SAM Risk and Opportunity Assessment Workshops to all existing HW Fisher clients. To find out more about the free SAM workshop or our complete portfolio of Software Asset Management services please get in touch with us using the contact form.