One In Three SMEs Knowingly Break The Law With Unlicensed Software

Nearly a third of companies are not licensing software in an attempt to cut costs, according to a new survey. Small firms could run the risk of hefty fines for using unlicensed software warned the Business Software Alliance (BSA).

The organisation said growing businesses are especially likely to own fewer licences for software than they need. It also warned that firms going through mergers are especially liable to break copyright laws.

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The survey found that nearly a third (30 percent) of UK small businesses admitted to installing software onto more PCs than their agreement allows or using the wrong kind of licence for their organisation.

Cost cutting is a major incentive for infringing copyright law. Another 30 percent of businesses would buy the wrong kind of licence to save money. According to the BSA, this is a “false economy as unlicensed software use often leads to enforcement action”.

The research suggested that growing businesses are particularly likely to have too few licences for their software.  Well over a third (39 percent) of businesses surveyed often allocate additional PCs and software to employees before paying for additional licences.

Businesses going through a merger and acquisition are also susceptible to falling foul of copyright law.  The sturdy found that 86 percent of organisations surveyed (with 25-250 employees) have either seen the same or more mergers and acquisition (M&A) activity in the past five years.

For nearly half of the SMEs (49 percent) that have merged with another firm, a software audit was not carried out on the acquired organisation. While 37 percent of respondents admitted to either inheriting, or possibly inheriting, unlicensed software as a result of failing to follow due diligence during an acquisition.

These admissions flagged up concern among the businesses surveyed: 78 percent now believe that businesses need to be more educated on the risks of becoming under-licensed following M&A activity.

Michala Wardell, UK committee chair at BSA, said: “It’s shocking that almost a third of small businesses are infringing the Copyright Act when it comes to managing their software. And simply bewildering that many of these businesses don’t change their software management practices until they face a legal challenge. Given the costs involved, you’d think the job of sorting out software licences would be a priority from the word ‘go’.”

The research was conducted by Vanson Bourne, surveying 250 small businesses with between 25 and 250 employees in the UK in December, 2012.