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Australian Enterprises Becoming 'Accidental Software Pirates'?

By David Gutbezahl, TMCnet Contributing Writer

Is your enterprise a software pirate? Companies can find themselves paying thousands, even millions, if they aren't careful about staying up to date with their software license agreements. A recent survey of Australian enterprises, conducted by a partnership between Flexera Software and IDC (News - Alert), has revealed that a vast amount of Australian organizations have fallen out of compliance with software license agreements.

Falling out of compliance with software license agreements isn't just an issue of becoming an “accidental software pirate,” as it can lead to heavy true-up fees. A software provider has the ability to audit enterprises that fall out of compliance, forcing these organizations to pay up to millions. These audits are usually not taken into account when creating budgets, which means that CFOs can find themselves in very difficult situations when they are audited.

The Flexera/IDC survey, which examined IT executives at Australian companies making more than $100 million, revealed that 84 percent were audited within the last 18-24 months. Eighty-seven percent of the companies were handed true-up bills, with 65 percent having bills that added up to at least a million dollars.

Companies that use virtualization technologies, creating complex IT environments, are even more at threat. Ninety-five percent of the companies surveyed who use virtualization technologies reported receiving true-up fees that passed $5 million.

The costs are almost always heavy on companies. Among those who reported having audits, 97 percent reported being audited more than $100 thousand. A total of 29 percent reported true-ups over $5 million.

These audits aren't one time occurrences either. Among the companies that reported being audited within the last 18-24 months, 37 percent reported being audited three to four times throughout the time period. Australian companies seem to be getting hit the hardest according to Flexera. Compared to other companies, Australian companies are being audited 13 percent more frequently. The bigger the company, the more likely it will be audited. Forty-seven percent of companies that earn at least a billion dollars in revenue reported being audited several times.

The software company that was most aggressive in auditing customers was Microsoft, who audited 60 percent of those surveyed. Other companies known to audit customers include IBM, Oracle, SAP (News - Alert), Adobe and Symantec.

Most of these companies are being hit by audits for what could be considered an accident. By not having the right processes, and properly tracking their software usage they find themselves falling out of compliance. Proper care could help alleviate the problem. Of course, the larger the company, the more software it uses, and the more complex their technology is, the harder it gets to keep track of everything, and the easier it is to the company falling out of compliance. This likely explains why the companies that have the highest of earnings find themselves being audited more often.