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Unlicensed Software Counts for 10 Percent of Lost Revenue, Report Finds

October 24, 2013
By Michelle Amodio, Software Licensing Contributor

Tax, audit and advisory firm KPMG has released a report that says the use of unlicensed software accounts for at least 10 percent of lost revenue for software companies.

The report, “Is unlicensed software hurting your bottom line?” analyzed 31 software companies, which combined make up more than 50 percent of the software industry’s revenue, and the results were rather intriguing.

52 percent of executives surveyed say 10 percent or more of revenue lost is due unlicensed software.

"Unlicensed software continues to be a significant issue for software publishers, even with an increased focus on compliance," says Rob Pink, national service network leader, KPMG Contract Compliance Services in a statement.

More companies are, however, trying to assure compliance. Almost half of the respondents, more than in past surveys, say that the compliance program in their company produces 4 percent or more of their software revenue.

"To date, the vast majority of activity from compliance programs has been focused on North America and Western Europe. Despite the publicity regarding software piracy in the Far East, compliance programs in these regions still account for less than 10 percent of total compliance activity. We expect this to increase in the next few years," says Paul Baguley, principal, KPMG Contract Compliance Services.

Software licensing is a complicated issue. There are many challenges associated with this topic, and it is up to the IT professionals to address these challenges and be cognizant of their role in keeping businesses compliant.

One of the biggest challenges is not making compliance part of a regular routine in an asset management program. Part of this can include establishing a clear and concise software policy, which should help employees understand the value of software and learn the difference between legal and illegal use, as well as pledge their commitment to the proper use of software.

Prior to purchasing any tool, it is important to go through license agreements and meet all its criteria so as to avoid any kind of future infringements.

It is up to IT departments to demonstrate they have an understanding of licensing issues and bring to light any occurrence of noncompliance and challenges they find. IT professionals have a responsibility to make sure their businesses not only understand but comply with software licensing agreements.

Edited by Blaise McNamee

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