Software Licensing - Procurement
of Software Assets

Purchasing software products and companies with pirated software products is a dangerous practice. When buying a business, ensure that the assets - and all the assets - are legitimate.

With the transition of the UK to a service economy, software assets are essential to managing and creating the documents and meeting business needs in the marketplace. Consequently, software takes on a proportionately higher book value in business.

Pirated software products play a supporting role to music piracy in the media. Pirated copies of software are readily available online on P2P services and on street corners. According to recent estimates, the Business Software Alliance state that 25% of the software used in the United Kingdom is pirated.

Management of Software Licences

Managing software assets relies on a number of measures. Firstly, a system to record the personal computers and the software that is installed on them is required. Secondly, it is important to implement restrictions on users' ability to install software (one method is to implement group policies on a network).

Procurement & Supply Chain Measures

Software procurement policies and supply chain management accompanied by responsibility for due diligence during the procurement process is critical to ensure that its software is genuine and properly licensed.

Purchasing Practices

Where the company is an end user, does the supplier have accreditation or proof of the right to license from the software vendor? On what terms are they required to resupply the software? Does software delivery require them to supply the vendor's licensing certificates and user manuals? Do the resellers simply install the software for a network and leave a master copy rather than a package for each machine? Is the software packaged in a way markedly different from that marketed by the software vendor.

Most resellers of software are able to receive accreditation as authorised dealers in various flavours of software, be it anti-virus, word processing or project management software.

What You Should Do

As part of the due diligence process, ensure that the supply chain processes are rigorous enough to withstand pirated copies of software to filter into the organisation. Ensuring your software suppliers are authorised dealers will go a long way to preventing infiltration into the business, compromising the integrity of the business. When purchasing a business it is crucial to incorporate warranties into the contract of sale to ensure that the business purchased has good title to the software. Software licensing stands apart from the usual state of practice and are set up deliberately to ensure that the intellectual property rights are retained by the software house. Licenses are not always readily transferable and are always subject to restrictions and qualifying criterion.

The Business Software Alliance has the power to enter premises to ensure that software is properly licensed. At the end of the day, it is common sense to make sure that software is legal & licensed as with any other asset in use by the business.