Member Article

Why software licensing should matter to SMEs

This year, we’ve already seen a number of high-profile cyber security breaches, including French broadcaster TVMonde5 and British Airways. Any data breach can cause catastrophic damage to a company’s reputation, as Home Depot in the US discovered after a cyber-attack in 2014 left 56 million payment cards at risk.

The cases listed above are all large enterprises with strong security measures in place. If vulnerabilities can be found in large companies, with sophisticated IT systems and large budgets, SMEs definitely need to pay attention and take cyber security more seriously.

A report by the Government’s Cyber Streetwise campaign found that a quarter of small businesses think that cyber security is too expensive to implement, with a further fifth not knowing where to start. And yet while data loss and system failure could be catastrophic for a small business, SMEs often don’t have back up servers and sophisticated IT security systems, let alone in-house support to deal with cybersecurity issues.

This means that proactively defending against cyber attacks is far more effective than having to pick up the pieces after an attack. One cost-effective way of doing this is to ensure that all your business software is legal and correctly licensed.

Software licensing may not be the first thing that comes to mind when you think of cyber security., However, a BSA report found a close link between unlicensed software and malware. Malware – short for malicious software – is software used by criminals to disrupt computers, gather information or gain access to private security systems. Furthermore, BSA’s annual Global Software Survey, which looks at the rate of unlicensed software around the world, found that one in every four computers in the UK has unlicensed software installed on it. While legal software alone won’t protect you from all cybersecurity risks, together with basic firewalls and anti-virus measures, it provides a critical first line of defence.

Cyber security risks aside, businesses can also face large fines for using software without the correct licences. While not all copyright infringement is deliberate, businesses can be duped in to buying illegitimate or incorrectly licensed software. Of course, as with anything purchased from an unofficial source, this software could contain malicious files which could harm your computer and potentially give hackers access to your systems.

In order to stay safe and compliant, SMEs should consider these simple steps to protect themselves:

Manage staff downloads: IDC research estimates that 20% of unlicensed software in enterprises globally is put there by employees. Even if an employee downloads illegal software on to their computer without their employer’s permission, the company is still responsible, as it owns the machine. For example, in a recent case in the UK, a freelancer who downloaded an unlicensed copy of Autodesk software cost the business they were working for £33,000 in damages and license fees. Managing who has administrator rights on your work laptops will prevent unauthorised installations.

Be wary when making changes: Going through a significant change, such as a merger or acquisition, can throw up a number of complications. This is an important juncture at which to carry out a comprehensive software audit. Fail to do so and you could suffer a similar experience to First Choice Facilities, a safety specialist company. It paid out almost £100,000 in damages and license fees after acquiring another company and allegedly inheriting a substantial amount of unlicensed software.

Take stock while growing: While growth is good, well over a third (39%) of businesses BSA surveyed in 2013 claim they often allocate additional PCs and software to employees before paying for additional licences. This means that companies are often unlicensed for a period of time. And yet you never know when you might be called upon to account for all your software. Don’t let software licensing drop to the end of the to-do list.

Keep on top of your license numbers: Occasionally, BSA or its members may require you to carry out a software audit. This will be much easier if you keep a record of how many software licenses you have and who is using them. A simple Software Asset Management (SAM) tool will help you keep track of how many licenses you have versus how many you need. Controlling your software assets and keeping your license catalogue up to date will help you to save money and stay compliant.

Keep it legal: While on the whole it is the business that is responsible for unlicensed software, business proprietors and directors can be personally liable if it is proven that they were deliberately avoiding paying for software for financial gain. When budgets are tough, it can be tempting to cut costs wherever possible. Some people may feel that downloading software without a licence is a victimless crime, however it is illegal and therefore comes with its consequences. In the worst case scenario, you (not the business) can be personally responsible for any damages. This, coupled with the cyber security risks, should be enough to put any business owner off illegally downloading software.

Software licensing often falls to the bottom of the priority list. However, if it isn’t managed properly, it can lead to serious security, reputational and financial consequences, affecting the whole business. By implementing the sound SAM practices outlined above, you can minimise such risks and avoid copyright infringements.

This was posted in Bdaily's Members' News section by Sarah Coombes .