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Software licensing: Staying on the right side of the law

Tips on what do look out for to make sure your software is legal

Alex Hilton, license compliance manager at Microsoft, explains how small businesses can stay on the right side of the law when installing software.

A potential area of weakness for many small companies is the correct licensing of software. Recent research from the Business Software Alliance shows that one in three UK bosses has no idea what software packages they use in the workplace.

This adds risk to your business which is otherwise simple to avoid. By ensuring you are using licensed software you help avoid damaging your data through virus attacks, reduce your training and support costs, bolster your reputation with your staff as an ethical employer and, of course, avoid breaking the law.

Naturally, no business wants to face civil action for damages, or personal criminal sanctions for company officers, including imprisonment or fines. It’s important that small businesses become familiar with the warning signs to help identify counterfeit or illegal software and ensure they receive the benefits from using genuine product.

Ten questions every boss should ask to ensure IT compliancy:

1. Where do we purchase our software from? If it’s from unknown or unidentified resellers advertising in the print media or over the Internet, it may be counterfeit product. Avoid sellers offering products in packaging inconsistent with offerings through legitimate trade and retail channels.

2. Is the price we pay for our software too good to be true? If it is, this can be an indicator of counterfeit or illegal merchandise that is often inferior in quality. Distributors that offer unusual inventory explanations such as special deals, liquidated inventories or acquisition through bankruptcy sales are often indicators of counterfeit or illegal products.

3. Do we have back-up disks or CD-ROMs with handwritten labels, or components that appear to be of inferior quality? Again these are signs of counterfeit or pirated goods.

4. Do we have genuine user manuals? If they appear to be photocopied or are of inferior quality, the associated software may well be illegal.

5. Does the software we purchase include all accompanying materials, including licence agreement, manuals, certificates of authenticity (COAs) and original CDs? It should.

6. If we purchase retail versions of Microsoft products (including Windows 2000, Windows Me, Windows XP, Office XP) do these have an edge-to-edge hologram? This should incorporate complex holographic images that are etched into the surface of the disc.

7. Do we have end-user license agreements? To be compliant, you need these.

8. If the software was already installed on our new computer system, did it come with backup disks? If not, this could be a sign that the software is illegal.

9. Do we have a framework in place to manage our company’s licensing? This represents good governance to protect your business. It should include a written policy for copying software and/or procuring software licences.

10. Do we operate a complete Software Asset Management programme? You should – it can help you save money, manage technological change and work more efficiently. Good software asset management will help you determine what software you need – and what you don’t.

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