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Aussie firms face millions of dollars in fees for 'accidental piracy'

Aussie firms face millions of dollars in fees for 'accidental piracy'

98 per cent of firms are out of compliance with software licence agreements

Almost all Australian companies with a turnover of more than $100 million are "accidental software pirates", according to a new report.

This is leading to companies paying unbudgeted software True-up fees in excess of $1 million as a result of out of compliance agreements.

The survey was conducted among senior IT executives in Australia working in organisations with $100m or greater turnover.

The report revealed a staggering 98 per cent of organisations are out of compliance with their software licence agreements.

Over the past 18-24 months, 84 per cent were audited by their software vendors (65 per cent of which were for a million dollars or more).

Flexera APAC vice president, Tom Canning, said software licence audits were a legitimate way for vendors to ensure they’re getting paid for their software that’s actually being used.

"However, CFOs are often unaware of software contract provisions permitting these audits, which can result in true-up bills in excess of one million dollars,” he said.

“Additionally, many organisations are now adopting virtualisation strategies without realising that the added complexity of these environments makes them even more vulnerable to being out of compliance with existing software licences.”

The report found 95 per cent of organisations surveyed who deployed virtualisation technologies, all received true-up penalties of $5 million or more.

Read more: Tech watch: Everything and anything

Canning said CFOs needed to take the necessary steps to reduce their risk by implementing Software Licence Optimisation processes and technologies to help ensure continual compliance.

Almost two-thirds of Australian enterprises were invoiced $1 million or more for true-ups, with 97 per cent of respondents reporting audit fees of $100,000 or more within the last year.

Additionally, 29 per cent said their true-ups were $5M or more.

These numbers, when compared to Flexera Software’s global 2014 Software Pricing and Licensing Survey, reveal that Australian enterprises are facing significantly higher true-ups than their global counterparts and they are being audited 13 per cent more frequently.

Read more: Business benefits of virtualisation are not well understood: Flexera

It also reveals organisations, especially larger ones, can continue to expect frequent audits from the vendors that supply their mission-critical applications, with 84 per cent of respondents reporting having been audited in the last 18-24 months.

It found 37 per cent of respondents were audited three or more times during this same period.

For enterprises with $1 billion or more in revenues, almost half – 47 per cent – reported being audited three times or more over the last 18-24 months.

All of the major software vendors use audits as a means to capture additional revenue from customers’ non-compliant use.

However some vendors are more aggressive in their auditing practices than others.

For example, Microsoft was the most frequent auditor, with 60 per cent of respondents reporting that they have been audited by Microsoft within the last year.

Within that same timeframe, 51 per cent report having been audited by IBM, 23 per cent by Oracle, 17 per cent by SAP, 16 per cent by Adobe, and 14 per cent by Symantec.


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