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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[Warning: Those who know me know that I’m somewhat prone to hyperbole; this post is no exception.]

I woke up this morning feeling something like Bill Murray in “Groundhog Day.” On NPR: yet more bad economic news from the Bureau of Labor and Statistics. Despite forecasts predicting a December turnaround in the employment market, the economy actually shed another 85,000 jobs. Seriously? Again?

You may recall in the economic downturn of 2001, George Bush famously pleaded for consumers to “go shopping” as a patriotic duty that would help lift the nation out of recession. Well, if, like me, you’re not inclined to go spend your recently decimated nest egg, given the tepid “jobless recovery” that seems to be underway.  But maybe you’re more inclined to spend a little of your company’s money as a patriotic act of economic stimulus known as “software license management.”

Still with me?  If so, hear me out:

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Happy New Year!

If you’re anything like me, the first weeks of January usually involve a Herculean effort to work off the extra pounds you packed on as a result of all the holiday excess.  But this task is dwarfed in comparison to the effort your company may face as a result of the past decade’s technology excesses:  blind overpurchasing of applications, lax software usage policies, unfettered adoption of new enterprise and consumer technologies, and a pervasive “Wild West” attitude toward responsible licensing practices.  All these have led to a glut of shelfware, institutionalized overspending, and unprecedented software piracy risk among many organizations–leaving IT departments with a colossal mess to clean up.

Related to all this, I thought I’d post a timely and well-written article about the ever-evolving pitfalls related to software licensing, written by Dan Tynan of InfoWorld. The column is a good primer on software license management, especially for those looking to get a handle on their license position. (Our own Kris Barker was tapped by Dan to lend his expertise about driving down application and support costs by metering software usage, along with navigating the licensing landmines associated with virtualized systems and software.)

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I just stumbled upon a rather frightful Business Software Alliance (BSA) report revealing the relationship between software piracy and internet security. The report concludes that the higher a country’s piracy rate, the higher their malware infection rates. (Read the entire report here.)

 The BSA offers two primary reasons for this phenomenon:

•  Individuals running software that was illegally obtained often don’t have access to critical vendor-issued security patches that prevent malware from infiltrating their PCs. (I’d also guess that in geographic regions with high piracy rates, consumers are generally less likely to spend money on tools (or professionals) designed to protect and/or repair their PCs should an infection occur.)
• Often times, sites distributing pirated software and/or piracy tools actually embed malware into their downloaded products or employ other means to make visitors’ computers vulnerable to infection.

While the BSA focuses its efforts on trying to cut off the distribution of pirated software at the source (through the legal process, as well as through a practice called “takedowns”), this approach is—in my estimation—equivalent to chasing apparitions; as known channels are shut down, new channels simply open up. Rather, the BSA needs to find a way to educate consumers, primarily in developing countries where incomes are low and piracy is high, about the ways in which indirect costs of using pirated software often exceed the savings. While the BSA dedicates considerable resources to education, it appears to me that the bulk of their efforts target businesses, where piracy tends to be more the result of careless licensing practices than internet piracy—and the security issues are therefore much less of a concern.

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