Procurement · 18 April 2017

Unlicensed software continues to cost small business owners

Unlicensed software
Aside from legal costs, unlicensed software could also put IT systems at risks from harmful malware

Copyright infringement from using unlicensed software cost small UK business owners over £900,000 in 2016, according to new research.

Figures from the Business Software Alliance (BSA), a lobby group representing the interests of the software industry, revealed that legislation and damages costs for small firms rose from £770,192 in 2015 to £914,587 in 2016.

The continued use of unlicensed software among small business owners goes against the national rate in Britain, which has dropped two per cent to 22 per cent since 2014.

Business owners in the sales and distribution industries were found to be the worst offenders in the past three years, with engineering, manufacturing and architecture firms closely following.

As part of a wider campaign to raise awareness of the risks of counterfeit IT products, BSA emphasised the link between unlicensed software and malware, with owners putting their own IT operations at risk.

Commenting on the figures, Sarah Coombes, managing director for BSA Europe and Middle East, said the growing costs of unlicensed software to small business owners was “concerning”.

“Despite the rate of unlicensed software in the UK dropping, it’s clear some businesses are continuing to ignore copyright law, leading to greater settlements and legalisation costs,” she added.

Coombes pointed out that the real cost of unlicensed software exceeded the stated figure, with legal fees and indirect expenses such as business disruption adding to the bill.

“We encourage all businesses to ensure they have stringent software asset management (SAM) practices in place. Implementing even baseline SAM tools and processes, such as regular inventories and having a software use policy for employees, can have a huge benefit,” Coombes advised.

“Knowing what software you’re using and what you’re licensed to use could even lead to cost savings, by helping to identify over-licensed software. Anyone aware of a business using unlicensed software can send an anonymous report to BSA, or go on the record for a potential reward.”

Further BSA research highlighted the likelihood that owners of smaller firms would be reported by their own staff for illegal or unethical IT practices. Almost four in ten small business employees admitted they would report their boss for using counterfeit or unlicensed software.

With BSA confirming the financial incentives on offer, the number of whistle-blowers reporting guilty business owners increased from 290 in 2015 to 335 in 2016.

Looking to bolster your firm’s IT security? Find out which passwords are the most easy to guess

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.