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Software compliance: reducing the cost of ownership - fact or fiction?

Richard Willmott, General Manager, FAST Corporate Services, discusses the best strategy for companies to gain overall control over their IT infrastructure.

N-Power Yorkshire Ltd (previously Yorkshire Electricity Group) has managed to reduce its budget by 15 per cent year on year; Braintree Council has saved £1 million and Scottish Widows have saved half a million. How?

Through software compliance. Vast chunks of an IT budget can be saved during the course of a year by ensuring that software is accounted for and properly licensed. It is estimated that on average a company can save between 10 per cent and 30 per cent of its IT budget by introducing a compliance programme.

In many respects, contrary to popular belief, IT should not be viewed as a cost centre but as an integral part of business strategy. While continuing expenditure in IT is difficult during an economic slump, targeted investment can realise significant overall cost savings.

In terms of these figures, it is staggering to find that so many organisations have not yet undertaken a compliance project and do not recognise the potentially huge cost savings involved.

On the contrary, corporate piracy levels are currently running at 26 per cent in the UK. This figure is especially surprising when you consider that Microsoft licensing changes required all companies to be able to prove compliance by 31st July 2002.

Probably one of the biggest incentives for companies to become compliant is the consequences of being found to be involved in software piracy. Not only can this result in a hefty fine, but can also lead to a criminal record and a possible prison sentence for company directors, which does little for a business's reputation. For example, Hampshire police recently found itself in the situation where it was caught having purchased £5 million worth of counterfeit software for themselves and 20 other police forces. On discovery, the culprit guilty of supplying the software was fined and imprisoned for two years.

The essential component for any software compliance plan is the audit, which can lead to cost savings throughout the business, not just the IT department. First, substantial cost reductions are possible by checking if the company posseses too much software for its requirements. Unless you audit your software you won't know what software you have installed or where it is located. You probably have many versions of the same package or have several packages that do the same job in different parts of the company. You may not know until someone experiences a problem with it, which may require an upgrade, more training, or a time-consuming search for a solution.

The audit can identify your software for you and the reconciliation will highlight any software that needs to be upgraded, redeployed, shortfalls rectified or licence agreements renegotiated. Simply by standardising on a single version application, or on one type of e-mail client, you immediately cut the burden on your support service - and slash your training costs at the same time. You may also save money on hardware upgrades, by concentrating your hardware where it's needed and cutting down on panic purchasing. The process for becoming software compliant is quite simple and can be done in four easy steps:

  • Establish IT policies and procedures;
  • Conduct a software audit;
  • Perform a reconciliation to determine correct licences;
  • Ensure ongoing management.


  • While it is no secret that there has been a significant downturn in the economy, until now it has been little known that compliance can offer return on investment. Companies that previously would have laid-off thousands of employees as a knee-jerk reaction in the short term should now think twice. Particularly in view of the new legislation under the Whistle Blowers Act that enables employees to blow the whistle on its company's soft-ware infringements without the fear of legal proceedings or retribution. In fact, employees sacked for blowing the whistle can now claim an award of up to £50,000 from the Employment Tribunal, another cost that companies in today's climate can do without.

    This should make organisations that have become accustomed to thinking software compliance is a necessary evil, think differently. Organisations such as FAST are not just waiting in the wings to imprison the underlicensed, but exist to promote software environments that are not only legal but can engender significant monetary benefits when they are most needed.

    Ten top tips to buying software

    Below are 10 simple steps for ensuring you are buying legitimate software:

    1. Buy only from reputable dealers

    2. Get a written quote listing hardware/software specification and version

    3. Make sure you get an itemised invoice giving details of all hardware and software supplied

    4. Make sure you get software licences - these are important documents

    5. Once you have bought your hardware do not allow dealers to install software onto your computer without them providing licences, etc

    6. Remember even Shareware must be deleted or purchased after the initial evaluation period

    7. If possible buy from a dealer recommended by the publisher

    8. Make sure that you understand that bundled software may come pre-installed on your computer and you may not receive the media

    9. If in doubt ask for help

    10. Contact FAST

    Beware...

  • If there are no relevant software licence documents;
  • If the artwork on the media and packaging looks unprofessional;
  • If somebody else's details appear on the registration screens;
  • If the dealer is refusing to give you the product ID/serial number;
  • If the software is being sold for a much lower price than it should be.


  • First published December 2003





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