Pirated software is linked to business losses – Do not use

The TV screen comes alive with an equestrian race with a white steed leading. Even as the crowd roars, egging the riders on, the white horse comes to a sudden halt, refusing to budge. The hapless jockey dismounts and starts singing a popular wedding song, hearing which, his four-legged friend starts to gallop again, quickly overtaking the other horses. Suddenly, the horse again digs in his heels; again, the jockey hops off and waves some notes under his nose to get him going. Neighing his discomfort, the horse refuses to budge.

And then the audience realizes that it is not a race horse, but a mare used in weddings. A voiceover in the ad says, ‘Shaadi ki ghodi se race nahin jeeti jaati’ (One cannot win a horse race using a wedding mare). The accompanying visuals states ‘Ask for original Microsoft software’. The voiceover continues, ‘Business ke race mein bhi aage badhne ke liye chahiye sahi standard. Jaise original Microsoft software’. Meaning– Even Business race also needs correct standard software like original Microsoft software’ to move ahead in Business competition.

Unlicensed software is hurting most companies’ bottom line. In a bid to counter unlicensed software installation that plague the technology sector, Microsoft decided on the advertisement to highlight the fact that only a genuine pure bred can win the race and likewise only genuine software can help your business. A similar print ad has also been released. A recent survey of software company executives by KPMG LLP, the US audit, tax and advisory firm, has also revealed that unlicensed software is a significant source of revenue loss for software companies worldwide. In fact, 55% of executives estimated their firm’s revenue loss at greater than 10% of total revenue.

As software companies struggle with user compliance issues, they lose billions to unlicensed installs. For consumers who think a cheaper version of the software is more affordable, there are many pitfalls in store.

Overall, in the KPMG study, 87% of the executives claimed revenue loss due to unlicensed users; 77% of those surveyed agree with International Data Corporation (IDC) estimates that 35% of software installed is unlicensed, leading to an estimated $34 billion in lost revenue to the industry. The picture is quite grim in India, as almost 50% software is pirated. One of the major problems is the weak law enforcement and awareness. Though a number of companies have started software compliance programs, there is still have a long way to go.

The KPMG study found that 64% of software publishing executives indicated that their companies have a program designed to ensure customer compliance with software license agreements. And 36% said that they do not have compliance programs.

Executives of software companies are struggling to find answer to combat unlicensed software use. Some firms are either not executing their compliance programs or need them analyzed or overhauled. Effective compliance programs do help firms recoup revenue and maintain strong customer relationships. In fact, 20% of the KPMG survey takers say their compliance programs deliver over 5% of their ongoing software revenue streams and 30% say they derive 5% to 10% of annual revenue. Seven percent of respondents indicate that these programs actually contribute 10% or more to the top line.

When asked if compliance activities resulted in negative outcomes with customers, 94% said that customer loss is rare. And, 50% of those surveyed said customer satisfaction is a key measure used to gauge compliance-program success.

The survey notes that software companies could do a better job of helping customers understand what types of usage their license agreements allow. Only 36% make such information easily accessible.