Software Licences – Are You Compliant?

Unlicensed software has been a blight that has plagued software houses since the very first operating system was released at the dawn of computing.

Whether it is an individual home user ripping his neighbours copy of MS Office, organised crime, such as was seen in the Balkans in the mid 90s selling counterfeit CDs, or whether it is huge corporations operating vast amounts of unlicensed software throughout their IT systems.

Microsoft v The NHS

In June 2014, Microsoft wrote to the National Health Service following its 2010 decision to scrap the NHS’s “Enterprise Agreement” (an agreement where an organisation pays a lump sum for free use of Microsoft’s software). Similarly, the Ministry of Defence recently cancelled its own Enterprise Agreement, which has necessitated vast audits of operating systems and application usage, such as MS Visio, MS Project, etc, plus the immense effort to remove these applications from numerous IT systems across its entire estate.

Following a huge organisational change last year across the NHS, which saw many Primary Care Trusts and Strategic Health Authorities abolished with Clinical Commissioning Groups taking their place, Microsoft has decided to play ‘hardball’ threatening the NHS with hugely increased licence fees as compensation for licence violations. Microsoft’s letter stated that the NHS’s reorganisation made “this latest review and subsequent re-allocation necessary“. It further told the NHS bodies to “assess their software estate and ‘cough’ for any identified shortfall by 30 June.” Microsoft admitted that it had received its data on breaches of licence fees from the Government Quango, the Health and Social Care Information Centre and checked it’s sales ledgers to clarify the records it had received. Microsoft stated “this has enabled us to carefully identify and prioritise specific areas of non-compliance risk across SQL, Office, Project, Visio and Windows projects based on the declared or known PC and mobile device and seat count”.Microsoft further added they would engage with every NHS organisation across the country over the next 3 to 6 months, but as a priority “we will look at the highest risk organisations in the NHS and start this process in July.”

Any central or local government body can use the Public Sector Agreement 2012, an agreement between Microsoft and Central Government to provide discounts to public cash austere authorities, in some cases a discount worth as much as 28%. Microsoft’s letter further threatened “this is your decision, but given your high risk status, without action you will be asked to undertake a software licensing review ……..if further non-compliance is identified and commitment is not given to resolve it, you may be liable for the full amount.”

The NHS however, did not react in the way Microsoft hoped; in a letter from the head of the NHS Customer Engagement at the Health and Social Care Information Centre, sent to all NHS Trusts, ostensibly informing the Trusts to halt all but ‘emergency procurement’ of Microsoft software. He told the Trusts that “joint discussions” between the Department of Health, the Cabinet Office, NHS England and Microsoft “have now started with the objective of putting in place a new and better agreement for the NHS during August 2014”.

The engagement between the NHS and Microsoft is still ongoing, but the NHS is not alone in not fully comprehending its software holdings; whether all of its software is licensed and, whether all of its licensed software is in fact being used.

Unlicensed Software Costs

In 2012, a building company based in Blackpool agreed a settlement figure of some £10,000 over its use of unlicensed Microsoft and Autodesk products with the Business Software Alliance (BSA) following an audit of its IT systems. The BSA said “the company had been using Autodesk’s AutoCAD software and Microsoft Office without a licence” and as part of the settlement, the company agreed to cease using these products. A British property security firm was fined £18,000 for unlicensed software, a label-making company paid out nearly £25,000 for its use of unlicensed Microsoft software.

Visit Google and type in “cost of unlicensed software” or “businesses fined for unlicensed software” and the results are vast, too numerous to list in this article. Companies continue to risk criminal proceedings and the BSA and FAST (Federation Against Software Theft) actively promote whistle blowing on their respective websites.

Is All Software Required?

Not as dangerous to either the home or corporate user, but just as costly, is the software purchased, licensed but just not used.

Within the MOD, even under the Enterprise Agreement signed some years ago between Microsoft and No. 10, applications such as Visio and Project reside on user’s desktops and laptops which are not used. This is costing the MOD and ultimately every UK tax payer, a vast sum of money every year. It is believed that the MOD are not the only organisation within the UK, or the world, that has software that they pay licences for but simply do not use.

Where We Can Help

Regency IT Consulting, in partnership with Complyman, have a new IT Asset and Licensing Management Service offering on the Regency GCloud listing at where we provide you with a accurate picture of your software assets and their licensing status.

Can you afford to carry on as you are?

Give us a call on 01242 225 682