The Hard Truth About Software Licensing

You think software is expensive? Wait until you start using it for free. The fees add up when businesses are caught using pirated or improperly licensed software. And groups such as the Business Software Alliance and the Software & Information Industry Association are on the hunt for offenders.

But many companies guilty of pirating software are not blatant pirates--they're just disorganized��. If you track your software, you can keep not only authorities at bay, but also keep from buying unneeded software and better prepare hardware for upcoming software requirements. Some ways to get in line:

• Find the right tools. A number of affordable tools automatically looks for licensed and unlicensed software on your computers and forecasts licensing needs. Check out BSA-recommended Attest Gasp , Express Metrix Express Software Manager and FrontRange Solutions Centennial Discovery .
• Save your receipts. Proof of purchase is necessary for more than just preparing for the risk of an audit by the alliance. "If you ever want to sell your business, these records are going to be required, plus there's all kinds of potential tax issues involved, says Rob Scott, a lawyer who specializes in BSA defense as a partner of Dallas-based Scott and Scott.
• Ask your reseller for help. If you truly don't have the budget, you can turn to your software reseller for assistance. "Choose the ones that can manage this for you as much as possible and consolidate it so that you can go to one online portal and look at all of your entitlements, Scott says.

If all this isn't enough to get you to take the straight and narrow, remember this: Fees from an audit can rack up into the hundreds of thousands of dollars. Says Scott: "It's a lot cheaper to do it as an internal project with the guidance of a consultant or a law firm than it is to respond to an adversarial process like a [BSA] audit."

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This article was originally published in the August 2010 print edition of Entrepreneur with the headline: The Hard Truth About Software Licensing.