Software Strategies for Small Businesses

Understanding the value of your software assets, proper software management and the risks associated with the use of unlicensed software.

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For nearly 20 years, the Business Software Alliance (BSA) has been working to help small busi-nesses understand the value of their software assets. BSA believes that all businesses want to run efficiently, competitively and legally, which is why they have helped businesses better under-stand the risks associated with software piracy by providing free tools and educational materials on how to begin implementing software management practices as well as an overall software asset management (SAM) program within their organization.

Even though BSA has made significant strides by providing free educational resources, guidance and software asset management strategies to businesses worldwide (see Free Help for Staying Legal sidebar), software piracy continues to be a growing problem throughout the world. Unfortunately, education alone does not always ensure priority for this important business process and many small businesses end up paying stiff financial penalties if caught using illegal software, as well as facing unnecessary security risks and safety threats from software that is often fraught with viruses and malicious code. Not to mention, these businesses are simply breaking the law.

Last year alone, the United States’ IT industry lost $7.3 billion as a result of software piracy. Furthermore, an independent study shows that 21 percent of software in the United States is unlicensed.

Small businesses often face the greatest risk for software piracy because of their lack of established software asset management practices in contrast to the often dynamic nature of their business operations. This can be a costly oversight.

Small businesses paid over $11.4 million in fines to settle software piracy claims in 2006 alone, a considerably higher business expense than investing in legitimate, licensed software. The use of improperly licensed or pirated software is against the law and can result in fines of up to $150,000 for each software title copied.

Organizations that are using unlicensed or illegal software are more vulnerable to viruses and ineligible to receive technical support or software upgrades. Unlicensed software can sometimes produce inconsistent, inaccurate or even potentially unsafe results that can delay projects, and at worst, create faulty products.

While guidance and education can go a long way, time has shown that if we want to stop software piracy, then we need to enforce copyrights. No business or industry should have to sustain such substantial losses, which impact their ability to invest in research and development and expand their businesses (see CAD/CAM Suppliers Aid in Software Asset Management sidebar). As a result, BSA’s enforcement program was launched in 1993 and has investigated software piracy in thousands of businesses worldwide resulting in millions of dollars in damages, settlements and, in some cases, criminal prosecution (see Reporting Piracy Rewards sidebar).

 

Tips for Software Asset Management

Sound software asset management makes good business sense, but many businesses see software as an expense rather than an asset that must be valued and which can greatly contribute to their bottom line.

That perception needs to change. All businesses should know that software asset management programs are not only simple to implement, but they can also save businesses money, enabling them to better plan for software purchases and potentially negotiate lower prices with vendors.

By implementing simple processes and controls, a business can not only ensure its employees have the right tools to perform their job effectively and securely but also identify ways to optimize software expenditures (see Maximize Software Assets and Streamline IT Resources sidebar). In addition, businesses that have proper licenses for its software are eligible for tax benefits associated with software depreciation.

Benefits of implementing a software asset management program include:

  • Cost savings, not only in direct expenditure on software, but also in related process and infrastructure costs.
  • A potentially stronger negotiating position with software manufacturers and improved software purchasing arrangements.
  • More strategic infrastructure planning.
  • Prevention against over-licensing and identifies over-deployment of hardware while reducing the IT administrative and support burden with its associated costs.
  • Increased control for the IT department regarding what software an employee has access to, significantly reducing the opportunity for users to introduce unlicensed software to the network.

 

Summary

In the fast-paced, highly-competitive environment of small businesses, every decision counts. Concerns about improperly licensed or outdated software generally are not a priority until there is already a problem. The clean-up to rectify the various issues is then time-consuming and ultimately more expensive than if a business had become compliant in the first place. Unfortunately, not all businesses understand that good corporate governance extends to their IT network and means a good system of checks to ensure ethical and legal operations. Through continued educational outreach, small businesses will be encouraged to consider the benefits of implementing a software asset management program as a priority rather than an afterthought.