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This article written exclusively for AUDITNET by: PCProfile Rob Harmer Consulting Services Pty Ltd P.O. Box 196 Modbury North Sth Australia 5092 fax +61 8 8265 1961
email robharm@pcprofile.com web site http://www.pcprofile.com

How to overcome "management resistance" to;

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

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

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 licenses.
  • 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 organizations 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 organization?

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 organizations 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 organizations 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. 

Aug 2001

July 2001

June 2001

May 2001

April 2001

March 2001

January 2001

plus a similar list in 2000 and from 1999 "World's Largest Toybox" Pays $525,000 To The Business Software Alliance http://www.bsa.org/usa/press/newsreleases//1999-01-14.248.phtml

More news stories about many other settled claims and actions can be found at; http://www.bsa.org/usa/press/antipiracy.phtml

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 defense costs to defend any actions brought against the organizations/directors etc
  • Buying the correct right amount of software licenses 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 practices 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?

Consider this simple model for one recent anti-piracy action.

In Australia a very recent case has awarded costs of $AUD 210,000 that are predicted to rise well above $250,000 in terms of 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!

wpe1.jpg (74594 bytes)

wpe5.jpg (25483 bytes)

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 license compliance issues VERY seriously
  2. Allocate sufficient budget for the correct number of licenses 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 organizations 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 organization. 

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.

Send us a pre-formatted  e-mail to request our "Software Licence Cost Model" template
 
Article written exclusively for AUDITNET by: Rob Harmer Consulting Services Pty Ltd   P.O. Box 196 Modbury North Sth Australia 5092 fax +61 8 8265 1961 email robharm@pcprofile.com http://www.pcprofile.com

Web Page Contents and Software License Cost Model are Copyright © 2000-2001 Rob Harmer Consulting Services Pty Ltd
Last Updated August 2001

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Revised: January 31, 2010

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