New research points towards increased software audits

The Business Software Alliance (BSA) released on June 24th, 2014  the results of its annual Global Software Survey (read the BSA’s press release here).  In the report, it estimates that US $62.7 billion worth of commercial software was used illegally around the world in 2013.

If you compare this against Gartner’s estimate that the total spend on enterprise software (the closest comparable figure we can find) is estimated to be around US $320 billion in 2014, that would seem to suggest that the BSA believes that software publishers are missing out on a massive 19.5% of their potential revenues.

No company in its right mind, when faced with the news that it could increase revenues by nearly 20%, is going to sit down and just accept that figure. 

The BSA survey results have to be a strong signal that more investment will be put into software audit and compliance campaigns. Looking at the BSA figures more closely, they cite the Asia Pacific region as one of the major areas for the use of unlicensed software, with 61% of software in use not accurately licensed. 

We should expect to see a strong increase in audit activities in this region over the next 12 months. In comparison, ‘piracy’ rates of 19% and 29% in North America and Europe respectively seem relatively low.  That is until you realize that these two regions between them account for (the BSA estimates) US $23.7 billion – nearly 40% of the total shortfall in software revenues.

If you were a software publisher, what would you do? 

Go chasing down lost revenue in countries like China and India, where there is limited awareness of – and government support for – Software Asset Management?Or would you instead focus your efforts on regions like North America and Europe, where not only is your target audience typically more educated in the ways of compliance, but you also have an established legal basis under which to execute your right to audit?

We think the answer is obvious and that the BSA figures should sound as a very clear alarm call to businesses and public sector organizations in North America and Western Europe that we should expect to see an increase in both the volume and frequency of software publisher audits in the coming 12 months. 

Gartner currently says organizations have about a 65% chance of being audited by at least one software vendor each year.  We think next year that figure will not only break through 70% but the chance of being audited by more than one vendor will increase by an even higher factor.

And that’s not to say organizations outside of North America and Western Europe can relax. Far from it.  To date, many software publishers have not yet launched full audit programs in Asia Pacific, Eastern Europe or Latin America.  But believe us, they are coming (we know, we’re working with several software publishers on just these projects!). Gartner has been very clear in the past. If you want to minimize both the cost and disruption caused by inevitable audits, you have to act first.

Don’t wait for the knock on door, take charge of your organization’s software licensing.  It’s true you might uncover a few ugly truths (which are better dealt with outside of the scrutiny of a software vendor anyway!), but our experience shows that organizations will always also uncover opportunities to drive down software costs. After all, that’s what both Snow and Software Asset Management are about – creating a fair, transparent and cost-effective way to manage software licenses that creates a level playing field for both the software consumer and the software provider.