Bugwatch: The perils of piracy

This week Mark Floisand, chairman of the Business Software Alliance, considers the effective management of software assets, and the real cost to business of software piracy and under-licensing.

The news that Kazaa, the peer-to-peer file-sharing program, is the most popular free software on the internet is further testament to the growth of online piracy.

One-quarter of all software in the UK is illegal in some way, a high level for a developed nation and member of the G8, although lower than similar rates in Europe.

And it is not just disreputable businesses that are infringing copyright law - so are a significant number of companies, ranging from small businesses to large corporates.

Although the situation is made worse by online piracy, the biggest problem for the software industry is still under-licensing.

It is easy for a growing business to lose track of the licences it is using, particularly in the current climate of consolidation.

Managers need to foster a culture of respect for intellectual property amongst employees, and the channel has a responsibility to provide support and guidance to customers.

In order to reduce the rate of piracy, organisations must establish a clear statement of policy on software usage and enforce it with the appropriate technology.

They must also perform regular audits of their software assets and will increasingly need a software asset management infrastructure to track what software is being used and to ensure there is no copyright infringement.

As well as protecting organisations, effective management of software assets will give organisations better control of software costs and identify where the return on investment is.

Furthermore, it will ensure that organisations receive the appropriate support services for all software in use.

Research recently conducted by IDC on behalf of the Business Software Alliance found that reducing the level of illegal software in the UK from 25 per cent to 15 per cent would create 40,000 jobs in the IT sector.

It is not just the vendors that benefit from software revenues. Of those 40,000 jobs, 20,000 would be in IT services and 7,000 in the channel.

Services and channel firms would see substantial benefits in the parts of their businesses related to servicing, distributing and installing software.

IDC says every £1 of software sales can generate up to £1 of services revenue and £1 to £2 of channel revenue.

It predicts that reducing the software piracy rate in the UK by 10 points would jump-start the IT sector as a whole and could increase it from a £40bn to a £57bn industry by 2006.

Furthermore, the greater the revenues the industry generates, the more it can invest in research and development to create solutions that drive efficiencies, increase productivity and give businesses competitive advantage.

The rate of piracy in some countries is so high that companies do not believe it is worth translating their software into the local language.

Reducing piracy rates would not only ensure that all nations have localised software, but would act as a catalyst for innovation and could ultimately provoke the delivery of yet more life-changing applications.

Software revenues play a major role in the general economy and reduced software piracy would have an impact across the nation.

That 10-point reduction in UK software piracy would generate £2.5bn for the government in tax revenues, a sum approximately equal to the revenue generated for public spending by the National Lottery.

So not only will eliminating piracy protect your organisation, it will help contribute to the IT sector and to the economy as a whole.