2006 BREAKING NEWS This news needs to be fed through the C level exec IS community pretty quickly. The threat levels they face with what could end up being an intrusive issue that causes C-level IS personnel significant grief, outside their control but it can be managed if they pay attention to some detail. Read the fine print in the article at http://www.bsa.org/usa/press/newsreleases/San-Fran-settlement-Jan-2006.cfm where 2 San Francisco firms very recently paid up $US 150K in fines as settlement costs. In the Jan 2006 news release above the BSA announces a reward scheme of up to $US 50,000 for reporting instances of software piracy that lead to successful prosecution (conditions apply of course). As C level exec you need to be fully aware of the risks and threats this poses for your organization and yourselves - the impact can be very significant! The BSA members are not prepared to let piracy continue and the size of the reward offered at $US50K is the biggest we are aware of in over 16 years that PCProfile has been providing advice to the auditor community on the issues faced. If you know of sites where pirated software exist then you can report them using this link http://reporting.bsa.org/usa

How to overcome "management resistance" to;

"There is NO MONEY or BUDGET for Software Audit Tools"

Register with PCProfile now to receive your FREE copy of the License Cost model via e-mail. 

Offer only available to registered end-user organizations and not resellers/vendors.

You know you need to audit your computers to make sure that you have the right number of software licences.

The steps you have probably taken are;

• Surf the net and find a wide range of software audit tools available.
• Download them, try them out and make a short list of candidate solutions
• Establish, by seeking quotations or pricing information the cost of acquiring these licences.
• Make an allowance for annual support and maintenance fees and
• Factor in the cost of administration in-house.

Then, you make your submission to management and if you are like many of the organisations in operation today the reply is one of the following -

• "WE HAVE NO BUDGET FOR SOFTWARE AUDIT".
• "WE HAVE NO BUDGET FOR SOFTWARE AUDIT - TRY AGAIN NEXT YEAR".
• "TOO EXPENSIVE"
• "DO IT IN-HOUSE"
• "NOT INTERESTED"
• "NOT HIGH ON OUR AGENDA AT PRESENT"
• OTHER PRIORITY TASKS ARE MORE DESERVING"  and so on.

You've now HIT A BRICK WALL!

What do you need to do, to convince management that lack of a software budget is not a valid issue, is not wise and presents untold risk against the organisation?

Read on, for what may seem to some, to be "career limiting" recommendations.

As an auditor, computer manager, accountant, or director the following information is MUST READ & CONSIDER CAREFULLY MATERIAL that you need to be aware of, to cover your professional standing and integrity!

FIRSTLY, look at the track record of the following recent activities over the last 7 months in USA.

The following are some examples of organisations that have had to settle claims with the Business Software Alliance (BSA) in USA relating to unlicensed copies of software programs installed on their computers.  These cases directly illustrate the High Cost of Using Unlicensed Software BUT the values shown relate to the PENALTY settlement amounts paid to the BSA for the illegal use of the software which covered a range of vendors such as; .Adobe, Autodesk, Microsoft and Symantec. In addition to settlement of claims amounts, they all agreed to;

• delete any unlicensed copies if any, 
• purchase replacement software if needed 
• and strengthen their software management practices. 

In most instances these organisations when approached by the BSA had voluntarily conducted a self-audit in response to BSA’s request (sometimes this comes form a tip-off from a staff member or an ex staff member or disgruntled employee). The results of the "voluntary audits" in some of the cases listed below confirmed they had more copies of software than they had licenses to support. 

Stories about settled claims and actions can be found at the links below and these articulate in many cases the 5 and 6 figure sums that many have forked out, that in our view were COMPLETELY UNNECESSARY payments, that could have been avoided! 

NOW CONSIDER THIS "BIT OF KEY DETAIL" THAT MANY IGNORE!

The "settlement amounts" above DO NOT take into account the cost of;

• Disruption to business
• Legal Fees and prosecution costs of the anti-piracy police
• Legal Fees and defence costs to defend any actions brought against the organisations/directors etc
• Buying the correct right amount of software licences legally required (that should have been done in the first place!)
• Deleting illegal copies of software (and making sure that any generated files are retained!)
• Retrenchment costs of staff who may have been guilty of the acts performed
• Loss of public face and publicity detrimental to the marketplace
• Buying audit software and asset management tools
• Setting in procedures and practises for ongoing management
• Setting up asset registers and asset tracking
• Resumption of activities after all the above disruption and so on!

What $ values would you ascribe to the above ADDITIONAL COSTS?

Lets look at a simple model for one scenario.

In Australia a court case awarded costs of $AUD 210,000 that we predict rose to well above $210,000 in terms of "initial cost". Here is a summary of potential costs that could be incurred that has been derived from a  "Software Licence Cost Model" developed by PCProfile. Our estimate is that it is likely to be in excess of $AUD 600,000 by the time all costs are taken into account!

From the above model and pie-charts it should be very easy for you to CONVINCE management that it is imperative that they;

1. Take software licence compliance issues VERY seriously
2. Allocate sufficient budget for the correct number of licences required AT ALL times
3. Allocate sufficient budget for software audit tools
4. Allocate sufficient budget for staffing 
5. Allocate sufficient budget for policy making & training 
6. Allocate sufficient budget for policing as an in-house task
7. Conduct software compliance audits regularly
8. Ensure staff sign agreements that if they are caught loading software illegally then costs of recovery will be made against them and disciplinary action eg; dismissal may be taken

A few final words.

Some auditors and managers have already asked us "who" might be the candidates for dismissal?  One may well be the auditor for "failing in his professional duty to advise" (sounds harsh doesn't it, but it has happened before), and the other might be the staff member responsible for under licensing/installation of illegal copies of software !

Directors of companies and organisations can also be held liable so the "buck stops at the top of the tree". Many directors are surprised they can be caught up in anti-piracy legal actions!

If you are unable from this article to convince management that a software budget MUST contain provision for software audit tools, software asset management, software compliance and policing on an in-house basis using this model, then send us an e-mail and we will send you an Excel template where you can calculate the impact within your own organisation. 

The model that we have developed will add weight to your case with some "live numbers" that are more specific to your own business case justification.

Register with PCProfile now to receive your FREE copy of the License Cost model via e-mail. 

Offer only available to registered end-user organizations and not resellers/vendors.

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