A licence to bill?

Pro

1 April 2005

Software licensing can be a contentious issue for Irish businesses. Much of the software on the market today requires licences to be considered legal. Inadvertently breaking a license agreement can leave businesses open to expensive penalties.

However, one of the main arguments against software licensing is that it poses quite a high cost to businesses, and it also ties them into a contract with one particular company for a certain amount of time. Because of this, some companies may ‘reward’ clients for taking out licences that span a large amount of time, in the form of reduced fees.

It hardly needs to be said that Microsoft dominates desktops around the country. As one of the largest software companies in the world, it is undoubtedly against those who want to avoid properly licensed Microsoft software.

Paul Mason, SMB group manager for Microsoft Ireland, believes that making a commitment to a single company is a benefit rather than a disadvantage. Microsoft claims to offer better pricing for customers, believing that the company should reflect customer loyalty in the pricing.

The company offers a range of licensing options suitable for SMEs. The Open licence is a one-time transaction; the same companies could also opt for the Multi Year Open licence, which is a three-year licensing term, with the option to renew this for a year to three years. Also on offer is the Open Subscription licence, which allows the companies to lease the licences rather than buy them. It has the same three-year and renewal options as the Multi Year Open licence.

Microsoft has also implemented the software assurance scheme, which means that customers won’t be left with obsolete software in a year or two. Companies that invest in the scheme have what is similar to a maintenance contract. During the period of that contract (typically three years), the customer is entitled to any updates Microsoft brings out for software. This can be installed whenever you like — as long as the update is within the contract’s period, you are entitled to receive it.

Paul Mason echoes the importance of the software industry in Ireland, and so licensing and piracy is an important issue for the country. ‘Like every other software company, we’re trying to protect intellectual property and trying to create jobs,’ says Mason.

However, he insists that the company is not out to get all those who have unlicensed software. Recognising that some customers can be victims of unscrupulous resellers, the company doesn’t assume that all those who have pirate software have committed the offence. A Website, How to Tell.com (www.howtotell.com), helps users find out if their software is legal and gives helpful numbers for those who suspect that they might have illegal copies of Microsoft products.

Microsoft takes the attitude that customers want to comply with licences, but that some find Microsoft’s licensing policies ‘a bit confusing’. To combat this, Mason says, the company recently ran a series of software asset management seminars with Deloitte and Touche. The events were run throughout Ireland, and the company has distributed a software asset management guide to customers. Partners have been trained to offer help and guidance to those who want to understand the licensing process.

However, at the other end of the scale are those customers who are pirating the software intentionally. These customers may find themselves on the wrong end of a legal action by Microsoft. ‘We will prosecute, both at end user level and in our partner community,’ he says.

If you have licensed software, keeping track of it all can be a bit tricky — especially when the licences are restricted to a certain period of time. ManageSoft, from ProStrategy, monitors and controls a company’s software, including licences. Compliance tracking is automated and the management program also performs software licence audits. All the information you need about the licences for your company is at your fingertips when you need it.

While oversight may be claimed in some instances of companies failing to renew licences, the reality is that this is not always the case. Software piracy may be on the decline in Ireland — a few years ago, it stood at about 70 per cent — but it is still at an unacceptably high 42 per cent. And it’s not just home users who are pirating software. Large companies are also getting caught with unlicensed software on their machines. And the cost of the licences would more than likely outweigh the costs of legal action if your company is found to be inadequately covered.

Julian McMenamin, spokesperson for the Business Software Alliance (BSA), believes that the high piracy rate in this country is due to a general attitude in Ireland. ‘People don’t seem to have respect for intellectual property,’ he says, pointing out that many don’t realise the value that intellectual property offers the economy.

With Ireland being one of the largest exporters of software in the world, the high rate of piracy is not only embarrassing for the country; it can also damage the economy. Jobs, wages, tax income… all can be put at risk from illegal software. And while many users who pirate software may assume that the software companies won’t miss a little money, there are the smaller software companies to consider.

‘Contrary to popular belief, it’s not just the Microsofts and Symantecs of the world,’ says McMenamin. ‘There are quite a few smaller software companies in Ireland and users pirating their software could seriously affect these firms.’

The BSA isn’t there just to police companies that may find that their licences have lapsed — they can also offer advice to companies who want to comply with proper software licensing. In fact, if a company is discovered to be using illegal software, they will receive a letter from the BSA advising them to comply with the necessary licensing schemes before more serious action is taken. Only after that will the BSA take further action and raid the premises — as some companies have found out to their cost.

Other options

But there are other alternatives to restrictive licensing procedures. Some businesses are ditching Microsoft’s Office and choosing to go with Sun’s StarOffice suite instead. Sun’s suite is trying to challenge Microsoft’s position in the desktop productivity software market; it costs less and its licensing, although present, is less stringent than that of Microsoft products. The suite includes word processing, presentation, spreadsheet and database functions.

The company has a user-based pricing model — so users can install it on their desktop machine at home, and in work — and its upgrade policies are flexible. File compatibility doesn’t appear to be an issue — StarOffice 6.0 runs on Windows, Linux and Solaris machines, and files can be shared with Microsoft Office users. This seems to be a good option for companies who would rather not submit themselves to what some consider restrictive and expensive licensing procedures.

Yet another option for businesses is Open Source applications, which are becoming more prominent. The open source movement may not be considered much of a threat to larger companies like Microsoft at the moment, but it is gaining a foothold in Europe. A recent study on the use of open and free source applications, the FLOSS report, showed that use of free and open source software currently stands at 43.7 per cent in Germany and 31.5 per cent in the UK. This covers database applications, Website creation, and server operating systems.

However, if users want an open source office productivity suite, OpenOffice.org is a good choice. It is compatible with Microsoft Office files and includes word processing, database, graphics, spreadsheet and multimedia presentation applications.

Ciaran McCabe, of Open App, explains that installing OpenOffice.org is similar to installing a regular productivity suite. It can be downloaded as an application, which runs on Windows, Macintosh and Linux platforms. The difference with open source applications is that you can get access to the source code, allowing enhancements to be made to suit your business — users are only bound by the licence under which the software itself is published. The enhancements can be performed by a support organisation such as Open App, providing another key benefit for SMEs who use such applications.

According to McCabe, OpenOffice represents a credible alternative to software manufacturers who are pushing to tie companies into licensing agreements. ‘Using OpenOffice, you can shop around for your support organisation,’ says McCabe, ‘rather than being tied to the software manufacturer that produced it’.

Waterford Technologies

Waterford Technologies, based as the name suggests in Waterford, produces e-mail management software. Its primary product is MailMeter, software that manages mail usage for companies, producing reports to show the heaviest users.

Brendan Nolan, managing director of the company, explains that the company has recently developed its own licensing system for its products. Previously, Waterford Technologies was using a third-party licensing system, for which Brendan says they paid a ‘minimal’ amount. ‘The first version of the product licensing component was third party, but it was very rigid,’ says Brendan.

The decision to develop a new licensing system was influenced by the company’s desire for greater flexibility; it wanted to be able to customise important features such as the period of the licence and number of users.

Technicians in-house developed the new system over about a month. To use the software, the user must connect to the company’s Website at: www.waterfordtechnologies.com.

At present, pirated versions of Waterford Technologies’ products is not a major concern; the licensing component will not allow the software to work unless the Website has authenticated it.

What is Open Source?

The general understanding of open source programs is that they are available to the general public for use, free of charge. The program can also be modified from its original form.

According to opensource.org (www.opensource.org), ‘open source’ does not only mean access to the source code. It also allows free redistribution, and modifications and derived works; the licence must not discriminate against any person or group, or against use of the program in a specific field. The licence must not be product-specific, i.e. dependent on being part of a software distribution, nor can it restrict other software. Finally, the licence must be ‘technology-neutral’.

Contacts: