By now, it's obvious that the economy and the technology sector in particular, are in the midst of a significant downturn. But hand-wringing over ever-dropping stock prices, new rounds of lay-offs and lowered earnings do not constitute a strategy.

In many respects, contrary to popular belief, IT should not be viewed as a cost center but as an integral part of business strategy. While continuing expenditure in IT is difficult during an economic slump, targeted investment can realize significant overall cost savings.

One way in which this can be achieved is through software compliance. Vast chunks of an IT budget can be saved during the course of a year by ensuring that software is accounted for and properly licensed. It is estimated that on average a company can save between 10 percent and 30 percent of its IT budget by introducing a compliance program.

For example, the U.K. companies N-Power Yorkshire Ltd. (previously Yorkshire Electricity Group) has managed to reduce its budget by 15 percent year on year, Braintree Council has saved £1 million ($1.4m) and Scottish Widows compliance program has saved half a million. In terms of these figures, it is staggering to find that so many organizations have not yet undertaken a compliance project and do not recognize the potentially huge cost savings involved.

On the contrary, corporate piracy levels are currently running at 26 percent in the U.K. This figure is especially surprising when you consider that Microsoft licensing changes will require all companies to be able to prove compliance by July 2002. As most companies use Microsoft software in some capacity, many will need to reconcile their software against licenses, before it is too late. Unless users know exactly what software they have, they will come unstuck.

Probably one of the biggest incentives for companies to become compliant are the consequences of being found to be involved in software piracy. Not only can this result in a hefty fine but can also lead to a criminal record and a possible prison sentence for company directors, which does little for a business's reputation. For example, Hampshire police recently found themselves in the situation where they were caught having purchased £5 million ($7.3m) worth of counterfeit software for themselves and 20 other police stations. On discovery the culprit, guilty of supplying the software, was fined and imprisoned for two years.

The essential component for any software compliance plan is the audit which can lead to cost savings throughout the business, not just the IT Department. Firstly, substantial cost reductions are possible by checking if the company possesses too much software for its requirements. Unless you audit your software you won't know what software you have installed or where it is located. You probably have many versions of the same package or have several packages that do the same job in different parts of the company. You may not know until someone experiences a problem with it, which may require an upgrade, more training, or a time-consuming search for a solution.

The audit can identify your software for you and the reconciliation will highlight any software that needs to be upgraded, redeployed, shortfalls rectified or license agreements renegotiated. Simply by standardizing on a single version application, or on one type of email client, you immediately cut the burden on your support service - and slash your training costs at the same time. You may also save money on hardware upgrades, by concentrating your hardware where it's needed and cutting down on panic purchasing.

The process for becoming software compliant is quite simple and can be done in four easy steps:

  • establish policies and procedures;
  • conduct a software audit;
  • reconciliation to determine correct licenses;
  • ongoing management.

While it is no secret that there has been a significant downturn in the economy, until now it has been little known that compliance can offer return on investment. Companies that previously would have laid off thousands of employees as a knee-jerk reaction in the short term, should now think twice. New legislation in the U.K. under the Whistle Blowers Act enables employees to blow the whistle on its company's software infringements without the fear of legal proceedings or retribution. In fact, employees sacked for blowing the whistle can now claim an award of up to £50,000 from the Employment Tribunal, another cost that companies in today's climate can do without.

This should make organizations that have become accustomed to thinking software compliance is a necessary evil, think differently. Organizations such as FAST are not just waiting in the wings to imprison the under licensed, but exist to promote software environments that are not only legal but can engender significant monetary benefits when they are most needed.

Ten Top Tips to Buying Software

Below are ten simple steps you should use to make sure you are buying legitimate software:

1. Buy only from reputable dealers.
2. Get a written quote listing hardware/software specification
    and version.
3. Make sure you get an itemized invoice giving details of all
    hardware and software supplied.
4. Make sure you get software licenses - these are important
    documents.
5. Once you have bought your hardware do not allow dealers to
    install software onto your computer without them providing
    licenses, etc.
6. Remember even shareware must be deleted or purchased after
    the initial evaluation period.
7. If possible buy from a dealer recommended by the publisher.
8. Make sure that you understand that bundled software may come
    pre-installed on your computer and you may not receive the
    media.
9. If in doubt ask for help.
10. Contact FAST.

Beware...

  • If there are no relevant software license documents.
  • If the artwork on the media and packaging looks unprofessional.
  • If the registration screens show somebody else's details.
  • If the dealer is refusing to give you the product ID/ Serial number.
  • If the software is being sold at a much cheaper price than it should be.

Richard Willmott, general manager, FAST Corporate Services (www.fast.org.uk). The Federation Against Software Theft (FAST) was set up in 1984 by the British Computer Society's Copyright Committee. It was the first software copyright organization.