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SMB Big Picture

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SMBs Being Unfairly Targeted for Violating Software Licensing Agreements?

Posted by Ann All on November 26, 2007 at 1:04 pm

Are small businesses unfairly targeted by the Business Software Alliance (BSA), the group responsible for enforcing copyrights on software produced by companies like Microsoft, Symantec and Adobe Systems?

According to an Associated Press story in the Seattle Post-Intelligencer, nearly 90 percent of the $13 million that BSA collected from North American companies in violation of software licensing agreements last year came from SMBs.

The BSA says it focuses on SMBs because that is where much of software license abuse occurs. But IT managers and tech consultants say that SMBs simply lack the technological, organizational and legal resources of their larger brethren, which tend to be better equipped to decipher and manage complex licensing agreements.

Interestingly, a study from research firm Vanson Bourne published this past summer found that 62 percent of IT decision makers didn’t know how many software licenses were in use at their companies — and the problem appeared to grow with the size of the business.

One CEO interviewed in the AP story, who paid $40,000 to settle claims against his 10-person architectural firm, attributes his problems to “a lack of knowledge and sloppy record-keeping on my part.”

“… Sometimes you grow so fast, you can’t keep control of everything,” says the president of another company, which paid the BSA $125,000 after 12 percent of its software — much of it unused — was deemed out of compliance with licensing agreements. The BSA found “some really obscure stuff,” he says.

BSA critics point out that trying to make examples of such SMBs does little good, since most SMB owners have no idea they are violating copyrights. “If they were going after actual pirates, that would be a different story, but they’re going after hardworking companies,” says Barbara Rembiesa, head of the International Association of Information Technology Asset Managers. The group was formed to help educate SMBs about managing their software licenses — something that Rembiesa says the industry has largely neglected to do.

Federation Against Software Theft, a British organization similar to the BSA, has a sister division that educates companies, for a fee, on how to stay compliant, notes the story. The BSA has some software-management tools and advice on the Web, and it recently partnered with the federal Small Business Administration to develop and publish educational materials about software compliance. But its critics contend these steps fall short of giving SMBs the help they need.

The U.S. software piracy rate has remained at 21 percent since 2004 — which BSA critics say indicates that new approaches to encourage compliance may be required.

One option for SMBs is open source software, says IT Business Edge blogger Lora Bentley. Though SMBs have sometimes found open source choices confusing, major distributors like Red Hat are launching educational initiatives that may help, Bentley notes. Indeed, a company cited in the AP story that paid $90,000 to settle the BSA’s claims against it ended up switching from Microsoft to open source software.

Of course, it’s important to remember that using open source software doesn’t mean that SMBs won’t have to worry about licensing issues at all.

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