When the global economy first sank into recession, dozens of reports were published in which technology analysts speculated that software vendors would rely more heavily on software audits—and the resulting financial settlements—to compensate for lower revenues.  In tandem with this, organizations targeted by vendor audits were expected to have a higher rate of non-compliance because software asset management initiatives would be back-burnered—along with the true-ups that frequently come as a result—until budgets were once again secure.

So did these predictions bear themselves out?  From a philosophical standpoint, one could just as easily argue that software companies have a lot more to lose during uncertain economic times by terrorizing their customers.  But the answer would appear to be “yes,” at least in the United Kingdom, where a fair amount of research has been conducted on the topic. (I have yet to come across any specific research suggesting a US or overall global increase in vendor audits.)

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An article featured in a South Africa technology portal popped up in one of my feeds today, and I couldn’t help but take the bait. The column, entitled “Open Source Against Piracy,” contends that open source software developers should consider becoming members of the BSA.  As I best understand it, the reasons given are twofold:  

1. The BSA perpetuates a belief that anyone who copies or gives away software is a pirate; open source developers, as BSA members, could persuade the organization to change its definition of piracy and ensure the terms of FOSS agreements are being upheld.
2. Users pirate software not because they are “criminals” but because the software they wish to use is cost-prohibitive; if producers of open source software can convince the BSA to be more aggressive in their pursuit of software pirates, illegal users will flock to free open source alternatives.

Frankly, I find these arguments rather curious and a bit thin on logic.  First, the goal of persuading the BSA to conduct audits and enforce open source license agreements would be nothing short of futile, given the relative permissiveness of open source EULAs, the characteristic lack of paper trail, the absence of financial motivation, and the difficulty determining where, when, and by whom violations have occurred. How would the BSA even begin compiling its list of targets?  It’s not that the BSA doesn’t understand the fundamental difference between commercial and open source EULAs, as the author claims—it’s simply that the entity isn’t set up or, perhaps more importantly, intended to enforce the latter. 

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Here’s an interesting article about the relationship between CIOs and CFOs, written by Scott Rosenberg of Miro Consulting.  In the column, Rosenberg asserts that CIOs and CFOs frequently don’t see eye-to-eye not because of competing agendas, but because budget is typically prioritized and allocated based on the profitability of any given division. Ironically, therefore, CIOs often find themselves with inadequate budget to effectively accomplish the initiatives intended to support those very groups.

What does this have to do with software license management?  Well, one issue that compounds the problem is that all too often, organizations are vastly over-licensed on software. However, CFOs, who are preoccupied with opportunities to reduce unnecessary spending, don’t have the expertise or tools to identify such problem areas.  If CIOs can bring this problem to light, they can strengthen their partnership through a shared agenda and free up precious funds by renegotiating license agreements that more closely reflect actual software usage.   

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Ouch!  A New York-based brokerage company, Euro Brokers, is being sued by IBM for an undisclosed amount for allegedly downloading unlicensed software valued at more than $1.7 million.  According to an InformationWeek article, Euro Brokers was once a legitimate IBM customer, having purchased licenses for Informix database software. But a software audit performed by KPMG revealed that over the course of several years the company had installed additional copies that it hadn’t paid for. 

Here’s the chronology of events as described by IBM in the lawsuit: (more…)

If you Google the term “software vendor audit,” you’ll find no shortage of information on the topic, particularly related to how to avoid and/or survive them. Frankly, though I try to stay on top of all the current research and frequently talk to customers who provide good anecdotal insight, I’ve seen very little recent material that sheds any new light on the matter.  But I confess I was taken aback by some of the information revealed in Forrester’s software licensing report, released January 4^th. 

First, Forrester reports a year-over-year increase in software audit activity during 2009.  This comes as no surprise; as software sales slumped during the economic downturn, vendors sought new ways to bolster their revenue streams; one way of doing so is to more aggressively audit their customers and force them to correct their license deficits.

What did surprise me, however, were some of the anecdotes Forrester cited in which vendors required customers to pony up, apparently in a single-minded attempt to extract extra revenue. According to Forrester, “In addition to spotting genuine under-licensing, many vendors’ audit teams seemed to want to meet their revenue targets by exploiting technicalities and loopholes.”

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