Unlicensed software use rampant among small businesses

A third of UK small businesses are infringing copyrights by using unlicensed software, research finds.

According to a study commissioned by software lobbying group BSA | The Software Alliance, 30 per cent of UK small businesses have admitted to installing software onto more PCs than their licence agreement allows.

Companies are also guilty of using the wrong kind of licence for their organisation (for example an academic licence in a commercial environment).

Cost cutting is a major incentive for infringing copyright law. Another 30 per cent of businesses would buy the wrong kind of licence to save money.

This may be a false economy as unlicensed software use often leads to enforcement action. As a representative of the software industry, BSA regularly takes legal action against companies for unlicensed software use, which results in the companies paying hefty financial damages.

BSA UK committee chair Michala Wardell says, ‘It’s shocking that almost a third of small businesses are infringing the Copyright Act when it comes to managing their software. And simply bewildering that many of these businesses don’t change their software management practices until they face a legal challenge.

‘Given the costs involved, you’d think the job of sorting out software licences would be a priority from the word ‘go’.’

The research suggests that growing businesses are particularly likely to have too few licences for their software with well over a third (39 per cent) of businesses surveyed often allocating additional PCs and software to employees before paying for additional licences.

Businesses going through a merger and acquisition are also susceptible to falling foul of copyright law; important given that M&A activity still appears to be buoyant among SMEs.

For nearly half of the SMEs (49 per cent) that have merged with another firm, a software audit was not carried out on the organisation acquired, while 37 per cent of respondents admit to either inheriting or possibly inheriting unlicensed software as a result of failing to follow due diligence during an acquisition.

These admissions flag up concern among the businesses surveyed with 78 per cent now believing that businesses need to be more educated on the risks of becoming under-licensed following M&A activity.

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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