Hot Spots

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Although asset management is not a new activity, two aspects of it still should be closely monitored: (1) keeping track of licenses in order to stay legally compliant and (2) accurately recording the hardware/software inventory for each machine. Without a means of automation, the load on system administrators is often so great that these actions are either omitted or not carried out thoroughly, and that presents a problem. Neglected asset management can really come back to bite you. Trade groups such as the Software and Information Industry Association (SIIA) and the Business Software Alliance (BSA) have become quite militant in enforcing software licensing. They have staged surprise audits and have levied hefty fines for unlicensed software use regardless if the cause is a simple recordkeeping error or unreported user installations anywhere on the site. They even have whistle-blowing hotlines for disgruntled and former employees to report violations.

According to the BSA, the value of pirated software comes to $3 billion annually in North America. Via surveys conducted each year, the BSA grades states on license compliance. The ten states that experienced the largest percentage point reduction in piracy from 2000 to 2001 were California, Colorado, Illinois, Maryland, Missouri, Nebraska, Nevada, New Hampshire, New York, and Utah. Such studies also serve to forward the BSA's message regarding the negative impact of software piracy on the nation's software industry and economy, including lost jobs, wages, and tax revenues. The BSA also emphasizes how piracy brings about a depletion of available funding for research and development.

According to one study, the U.S. software piracy rate was 25 percent in 2001, up one percentage point from 2000, and piracy was costing the nation $1.8 billion in retail sales of business software applications and more than 111,000 jobs. The BSA Web site advises businesses and consumers to take the following steps to adopt a corporate policy on compliance with copyright laws: audit company computers, document software purchases and understand licensing agreements, beware of prices that are too good to be true, and educate management and employees on their obligations under copyright laws.

The BSA takes a hard line on licensing violations, sweeping around the country, city by city and state by state. In the vanguard are often press releases announcing an amnesty for license violators; if users get their license payments in order before a specific date, they will not be held liable for any violations. After that date, however, enforcement actions come in to play. When a tip comes in, the BSA can take one of two paths to enforce compliance: (1) request a self-audit of the organization concerned or (2) stage an unannounced raid. Fines regularly exceed $100,000, and lawsuits are frequent. Also, the firms still have to pay out funds for the unlicensed software. Over the past decade, the BSA has collected about $80 million in penalties.

Unfortunately, too many organizations assume that if they get caught with unlicensed software on their computers, they will face the equivalent of a traffic ticket. In reality, federal copyright laws allow for up to $150,000 in damages for each work infringed. A visit to the BSA's Web site (www.bsa.org) and their press release section reveals document after document regarding the various companies that have settled with the BSA to avoid heavy penalties, and every one of them also paid in full for software licensing (Exhibit 1).

Exhibit 1: Unlicensed Software

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