Many companies either do not realize that they have a piracy problem, or underestimate the scope of it. The fact is that piracy continues to be a worldwide problem and for many software companies, revenue losses from the use of unlicensed software amounts to at least 10 percent of their revenue.
The good news is that software companies can recapture much of that lost revenue by striving to reach Software Compliance Maturity.
While the process is not an easy one, companies reaching Software Compliance Maturity gain a significant competitive advantage by recapturing revenue lost to unpaid use, accelerating compliance, and protecting the integrity of their intellectual property.
As detailed below, a company’s transition to Software Compliance Maturity typically occurs in five stages:
At this level, the software company is unaware, or does not care, about the misuse of their intellectual property. They might understand that unpaid software is a problem, but not realize the severity of it, or the impact it is having on their top line. They still might mistakenly see pirated use as a form of viral marketing.
Once the software company realizes that unpaid use is a problem, the natural reaction is to form a product-wide licensing strategy. An effort to standardize on either a homegrown or third-party licensing platform is undertaken at the department/management level. From a legal perspective, nascent ad hoc efforts to stop distribution through takedown notices might begin.
The software company has started to realize the large scope of the misuse problem, and the focus is on stopping misuse through legal efforts or technology. Early Software Intelligence Pilot Projects, such as implementing V.i. Lab's CodeArmor Intelligence Solution, are undertaken. The data that comes in from these Software Intelligence programs helps to convince the company that despite the work on licensing, there an active unlicensed user community.
Management makes combating misuse a major initiative for the company. A formal plan and funding is introduced. Compliance is now seen as a corporate strategy, and compliance efforts become a high priority. The compliance department demands better data on the misuse of applications, so Software Intelligence tracking moves past the pilot stage and is deployed into several core products.
Now the software company has absorbed the software compliance strategy into the DNA of the company. From the top down, the company embraces a coordinated compliance plan. Seamless coordination between executive management with legal, sales, development and product management is established, and a 3- to 5-year plan is implemented to deliver a superior customer experience, license entitlement, and a coordinated compliance program led by sales and supported by legal.
The strategy is now recognized by the CEO and the shareholders as a competitive differentiator for the company.
Software licensing and protection is now balanced with customer experience, and compliance efforts are contributing more than 10 percent (and upwards of 30 percent in some cases) of the software company's top line revenue.
Despite numerous efforts through legal channels to stop the spread of pirated software, and misplaced hopes that users of pirated software will eventually become “addicted” to the product and convert to paying customers, the fact is that piracy will continue until meaningful steps are taken to ensure compliance.
The best way for a company to combat software piracy and misuse is to make a coordinated effort to reach Software Compliance Maturity. Doing so will not only help to recoup lost revenue, it will also give the company a significant competitive advantage over their slower-moving rivals.
Vice President, Products & Strategy at Revulytics
Victor DeMarines brings extensive security product management and marketing experience to Revulytics, where he is responsible for product strategy and direction. He is a frequent speaker and author on topics including piracy, reverse engineering and the protection of intellectual property.
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