Channel Partners

April 1, 2004

4 Min Read
An Up Side to Piracy Crackdown

Most managers of small and mid sized businesses know software piracy is illegal. But they likely do not understand how losing track of their software costs their businesses time and money every day. This creates an opportunity for channel partners to design and implement software asset management programs that add value for their clients’ businesses.

The software industry is cracking down on companies of all sizes. No longer will they tolerate the unauthorized copying, distributing or downloading of copyrighted software. Countless small and mid sized businesses violate copyright laws every day as they have installed software on more computers than they are licensed to support.

The problem is pervasive. The Business Software Alliance (BSA) reports the global piracy rate was 39 percent in 2002. In the United States, the rate was 23 percent.

Some users of illegally copied software see no harm in their actions, but the consequences are far-reaching. Software piracy contributes to the loss of sales, jobs, wages and tax revenue, the BSA says. In 2002, it cost the software industry $13 billion in lost revenue. In the United States, the industry lost nearly $2 billion in revenue in 2002, as well as approximately 105,000 jobs, $5.3 billion in wages and $1.4 billion in tax revenue, according to the BSA.

That’s why stiff penalties are in place for organizations where employees copy or download unauthorized software. These penalties include damages, fines and jail time. Civil damages can reach $150,000 for each program that is copied.


Even if it’s not true, most small business owners and managers seem to believe they will escape the legal entanglements of software copyright infringement. That’s why channel partners should emphasize the incredible benefits small and midsized businesses can derive from effective software asset management.

  • Businesses that carefully manage their software licenses avoid not only the liability associated with software piracy, but also the liability that can result from sexual harassment lawsuits sometimes filed if employees download pornography onto a corporate network. Corporate networks also can harbor peer-to-peer music swapping systems placed there by employees. These too cause legal liability issues and can be ferreted out by a good software asset management policy.

  • By eliminating unauthorized software applications from their networks, companies can decrease distractions in the workplace, which results in improved productivity.

  • Some applications downloaded by employees can eat up large amounts of bandwidth, hampering both Internet and internal network performance. By eliminating these programs, traffic can flow more smoothly.

  • Pirated software sometime opens holes in the network, which allows viruses to enter and wreak havoc. Erasing these programs will enhance security.

  • Software companies give discounts to customers who buy multiple copies of a software title. If a manager knows exactly how many licenses the company needs, he or she can negotiate lower rates and save money.

  • Good software asset management practices create a base of knowledge about the software used across the enterprise. With this information, IT managers can improve their internal support mechanisms. For example, a company might use multiple versions of the Microsoft operating system. If 80 percent of support calls are generated by only 20 percent of the firm’s machines - and these all have one version of the operating system - IT managers now know exactly which computers to upgrade.


Whether a channel partner is solution-oriented or more focused on long-term client relationships, the partner can create a successful strategy for delivering software asset management programs to customers.

  • If a one-time engagement is preferred, the channel partner can conduct an audit of the company’s software and correct any violations. The system would then be handed over to the client, which must police itself in the future.

  • If a long-term engagement is preferred, the channel partner can follow up an initial audit with quarterly or annual check-ups.

Each engagement must include three phases:

  • Collection. The titles of all software must be extracted from every PC in the enterprise.

  • Aggregation. The data must be compiled so it can be viewed at every level of the enterprise - globally, nationally, regionally and locally.

  • Reporting. This is where the rubber meets the road. A gap analysis will reveal what software exists in the enterprise versus what software has been purchased. If additional licenses must be purchased, this analysis can help managers negotiate preferred bulk pricing with software vendors. In some case, the cost of the analysis can be covered completely by software license discounts.

Once channel partners have this report in hand, they must act on the data. They can use the information to determine which systems are not properly patched and, by patching the systems, eliminate serious security risks. Plus, they can ferret out those tools on the network before they do damage.

Several software tools on the market can assist with both the auditing and reporting. A good place to start is with the BSA’s free software audit tools, available for download on its Web site ( While these tools are useful, they cannot act as substitutes for technically advanced channel partners who understand the complications of enterprise-wide software licensing and will hold the organization accountable with quarterly or annual follow-up audits.

Andrew Levi is chairman of the Information Technology Solution Providers Alliance (ITSPA) and founder and president of Aztec Systems, an IT services provider in Dallas.


Aztec Systems
Business Software Alliance

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