Rid Your Business of Software Piracy: 7 Tips

Pirates still roam freely in the ocean of software out there, but if your business is among the pirates, it could end up costing you literally and figuratively.

You may very well be a smart, community-minded business owner. But if your company is using pirated software — and you condone it, you aren’t aware of it or you don’t really give a rip — you’re not a responsible business owner. And you are taking unnecessary risks.

No, you’re not alone. In the United States, about one-fourth of the software programs used today by businesses are illegal copies, according to the statistics from the Business Software Alliance (BSA), an active industry group. For U.S. small businesses, those with 100 or fewer employees, the piracy rate is even higher: about 40%. While those numbers are bad enough, the piracy problem worldwide is worse — although software piracy worldwide has decreased since 1994, some $13.08 billion was still lost in 2002 due to pirated software.

Indeed, software piracy continues to generate negative publicity, especially for those busted for it. But that isn’t stopping a lot of good people from doing it (or supporting what has become an underground industry, run similar to drug trafficking).

Obviously, there’s a moral argument for avoiding casual copying and taking the time to get your software licenses into compliance. Here it is: You are ripping off an industry that feels the same way you would if your products were illegally copied and then sold or distributed in the marketplace, robbing you of revenues and profits.

But there are business arguments for it, too, even if pirating software — or supporting the black market by buying counterfeit software at
dirt-cheap prices — is helping your business make it through tough times. Here are the dangers of using pirated or counterfeit software:

You aren’t going to get the product support you need when a problem occurs.

You aren’t going to get upgrade information or special (legal) deals that might come in handy.

Without genuine software, you can’t be sure what you get won’t be infected with viruses or tainted by broken or incomplete code.

You likely aren’t managing your software inventory very efficiently, especially if you mix legal with pirated software and can’t account for which is which, or whether employees have only the software they need or use.

You’ll have to do some creative accounting for tax purposes if, say, you bought 10 new PCs in the past year and only one set of software applications.

Last but not least, you are breaking the law. You could conceivably get caught if a disgruntled employee reports you to the BSA, which has a vigorous piracy watchdog program. Getting caught could mean fines of $150,000 or more, plus a hit to your “community-minded” image.

If you want to make this the year you bring your company’s software inventory into compliance, here are seven tips:

1. Recognize you have a problem that may take some time and resources to resolve. That’s a key first step. But several tools are available online to possibly make it an easier task that you think.

2. Assign someone in your company to be in charge of this effort. It could be your information technology manager or specialist, if you have one. It also could be the person who oversees your accounting or purchasing transactions. The key is to bestow responsibility on a company employee to get the job done.

3. Check out the online management tools at your disposal. Microsoft (which is my employer) and the Business Software Alliance both have software management guides that can help you organize and maintain your software inventory. You will get a better handle on what you need to purchase and what you need to eliminate to become compliant. These resources will help you determine if you have purchased genuine or counterfeit software. Yes, counterfeiters have gotten that good, though the industry is finding ways to fight back (such as the edge-to-edge holograms for Office XP, Windows 2000 and Windows XP CD-ROMs).

4. Consider hiring a reseller or IT specialist you can trust. A knowledgeable and trusted software reseller could handle software purchasing for you, and many also now will help you clean up and manage your inventory. “There are advantages to having a relationship with a reseller, so it might be worth your while to develop one,” says Kneko Burney, chief market strategist for business infrastructure and services at In-Stat/MDR.Why do I say hire a reseller “you can trust”? Because many resellers themselves buy counterfeit software at online auction sites and elsewhere, then turn around and sell it to their clients. If you got an unbelievably low price for a quantity of software, you should ask a reseller if it is genuine, says Anne Kelley, a Microsoft senior attorney specializing in anti-piracy efforts. “If a reseller is providing you with counterfeit software, you will see it in his eyes,” she says.

5. Be wary of any software sold through online auction sites. Again, that’s where much of the counterfeit product on the market today is sold. “Based on our own research and evidence, more than 90% of the software distributed over the Internet [through auction sites] is counterfeit,” Kelley says. The BSA offers “Ten Tips for Safe Software Shopping,” which you can find in the Global Resources section of the BSA Web site? home page (www.bsa.org).

6. Take time to get a basic understanding of software licensing agreements. In many small and midsized businesses, brand-new PCs go to the highest execs, and the others are handed down through the pecking order. Software licenses often follow the PCs, and they shouldn’t, notes Mike Lauricella, an analyst with the Yankee Group. But too many businesspeople associate a license with the machine, rather than the user. As a result, he says, many businesses have users with more software licenses than they need or could ever use — a wasteful situation, often coupled with illegally copied software going to those who really need the licenses. Carefully managing your software inventory and understanding how licenses work can help you avoid such inefficiency.

7. Clean up your software inventory at least once a year. Whether you outsource the job to a reseller or IT specialist, or do it in-house, make reviewing your inventory an annual event. Purchase the software and sign up for the licenses you really need, and comply with the terms. Get rid of the rest. Eliminate piracy from your business plan.