Software companies lose billions due to illegal software

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Ahmedabad, Dec 22: Illegal and unlicensed software installations continue to be a significant problem and source of revenue loss for software companies worldwide, according to a recent survey of software company executives conducted by KPMG LLP, the US audit, tax and advisory firm.

In fact 55 percent of the executives estimated their firm's revenue loss at greater than 10 per cent of total revenue. Overall 87 percent of the executives claimed revenue loss due to unlicensed users. Seventy seven per cent of those surveyed agreed with International Data Corporation estimates that 35 percent of software installed is unlicensed, leading to an estimated US 34 billion dollars loss to the industry.

The KPMG study found that 64 per cent of software publishing executives indicated that their companies have a program designed to ensure customer compliance with software license agreements while 36 percent do not have compliance programmes.

Executives of software companies are struggling to find answers to combat unlicensed software use. Some firms are either not executing their compliance programmes or need them analyzed or overhauled.

In fact, 20 per cent of the KPMG survey takers say that their compliance programs deliver over five per cent of their ongoing software revenue streams, and 30 per cent say they derive between five and 10 per cent of annual revenue. Seven percent of respondents indicate that these programmes actually contribute 10 per cent or more to the top line.

In India also, the picture is quite grim as almost 50 per cent software is pirated. One of the major problems in India is the weak law enforcement and awareness. Though a number of companies have started software compliance programme but we still need to go a long way.

According to KPMG's survey, software companies could be doing a better job of helping their customers understand what they have purchased, and what types of usage their license agreements allow.

Only 36 per cent make such information easily accessible by their customers, while 43 per cent say that they share such information on a case-by-case basis.

In addition, the information that is made available may not be as comprehensive as necessary. While 45 per cent say their entitlement information is comprehensive, 55 per cent say the data may provide only an average or limited level of understanding.

The survey was conducted in co-operation with the International Business Software Manager's Association (IBSMA), a trade group that represents enterprise-level software customers.

UNI

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