Software Licensing Paper
Software licensing and piracy: It still amazes me how many organizations continue to run their business without proper licensing? Time and time again, we come into organizations that are running their business using some type of software applications to create revenue for their organizations or to create efficiencies in their organization and yet many of the organizations fail to have proper licensing. Let’s talk a little bit about this.
Software licensing, you know, people look at it and they don’t see the value in software. Today especially they see it so simple. You just grab an application, you copy it and install it and use somebody’s license key and they think it’s all so simple. Why should someone pay so much money for this?
And the question comes down to not—what does a software cost. We’d really need to flick that around and go, why do we need that software? Let’s think about this. Organizations use software applications to create efficiencies in their organizations, ease of use, and ease of work. I have seen organizations that use applications that, used to take 20 people to do the work and now they are getting all that work done with two or three people and yet there’s still a challenge for these people to understand the value of purchasing that software.
I have seen instances where organizations are running their company and these are large organizations over a hundred people, having very little license software in the entire organization. My advice to any business owner or IT Person listening or reading this right now is to make sure that you have an accurate inventory of all the software you use.
If you don’t need a piece of software, then don’t use it, you know don’t buy the license. But really you need to understand that you have an obligation to the developer of that software, the manufacturer to pay the licensing fee, you‘re using their intellectual property. Let’s be blunt here, just so that everybody understands it. You are stealing, when you use unlicensed software, it’s theft, you know, we look at unlicensed software and people use it and think oh, you know, “it didn’t cost anything therefore why should I pay for it” or “I'm only using it once in a while” but it really comes down to if you use this software even once and it benefits your organization, why not pay for it?
If you can't afford it, then don’t use it or hire someone who has a licensed copy, pay them what you need to and have the work done what you need to do. It’s not worth putting your business at risk, that’s right, you have got to understand there’s a risk to operating with unlicensed software.
Gone are the days now of going to the corner store and having someone to install a computer for you with all of that free software on it. You know if I think now about the cost of software, let’s say an office package. First is the cost of that same office package say 15 years ago. You know, maybe an office it used to cost $3500.00, $5000.00. Today you can buy that same office suite as little as $500.00. Why would we pirate that software? Hey, if you are a home user or student, most companies have extremely attractive pricing for you.
Take for instance Microsoft Office, you can get for under a hundred dollars the same with applications from companies like Auto Desk, for Auto CAD, they have home versions of their software, academic licensing for their software. They’re not to be used in commercial environments but they are there for you to purchase and become educated and proficient with those applications and use them for your home uses.
Why buy software? You know what? I’ll get back to that in a moment. The reality is – Where are the inefficiencies in your organizations? You really need to stop and take a look at that. What’s it costing your organization? Where areyou losing money? Where are you inefficient? Why? Because, what it really comes down to is it’s not the dollars and cents that you pay for a software license, it’s really the dollars that you burn and throw out the window through inefficiencies in your organization.
When we take a look at a company, our highest and most—our greatest expense on our balance sheet, is the cost of our employees? Go ahead and take a look at your balance sheet now, pull it out. Now you tell me what the largest expense is. Sure if you’re a manufacturing company perhaps the cost of your materials are the highest however, for many organizations, if we get away from that the second most highest cost is going to be the cost of your employees.
So that employee cost, when we are inefficient, meaning our computers are running slow or we’re having then do tasks manually, they could be automated through proper licensing of software or line of business applications, then what’s really happening is we’re throwing money out of the window to have these people work extra hours to do something that they could be doing in less time, making them more efficient. Now let’s talk about purchasing software for your business.
Line of business applications—what do I mean by a line of business applications? Everybody is in a specific type of business. If you’re a not for profit, you’re in some type of humanitarian work or you’re working for a cause, there’s probably donations and activities that you need to track. You need some type of a database application to manage your events, activities, to be able to track how efficient you are, how many people you’re serving in your community, and be able to report that back to your donors and funders.
If you’re a ‘for profit’ organization, you have to have some type of application that manages your relations, your interactions with your costumers. These are typically enterprise resource planning or costumer relationship management applications, therefore automating and tasking your organization really not—it’s not just about automating the task in your organization but it’s also to give you a view of the data, for example what the data is that really alerts you to what’s going on, what’s happening in your business. Where are you wasting money? Where are you making money? Were you making the right choices, were you making the wrong choices? Until you can really view the information form your organization, you don’t really know what’s going on.
You know there are many successful businesses that said , when they were asked “Why didn’t you quit?” And the answer that came back to is “I didn’t realize how bad off I was. I didn’t know I was already bankrupt.” So how do you get to bankruptcy, how do you get to inefficiency? It’s when you really don’t know, you don’t have the information in front of you available to allow you to process what your business is doing. Would you rather know up front and be able to of course correct it along the way so you’ll be able to push your business in the direction that it needs to go so that it can grow and service a greater community, serve more clientele and really help you be more successful in your mission whether that’s for profit or it’s for serving a greater cause.
Buying licenses, I said I get back to this. Well here we are. Microsoft Word is a great productivity suite and it’s very inexpensive. Look at all the tools you get in there, spreadsheets, word processors, maybe some presentation applications. These tools are the epicenter for most businesses. Aside from email, I suspect that the majority of business used is primarily word processing. Secondary to that would be using spreadsheets, databases, and presentation software, all in one suite.
They always say that the average employee for even numbers, let’s say they make $50,000.00 a year, let me say it cost $25.00 an hour. Could you imagine the amount of time it would take for an employee today on a typewriter to create a proposal where they have to type everything up? You know what, I don’t even want to think about it nor do you, because it’s not the case. However, what we do want is we want that employee be able to be productive and creative and stay in the moment when they’re working on that application. We don’t have them worry about losing information and knowing that their system’s are going to crash.
Also we want them using the best tools that are available, the software that’s got the features that we need today, and generally that’s staying in touch with the releases that organizations make on their software. So there’s something called software assurance. Now, software assurance or maintenance is to keep you current with the versions of software that are released. So purchase the licenses for your business, make sure that you have a license, the antivirus program. Make sure that your office suite is licensed, that your operating system is licensed. Your Windows or other operating system needs to be licensed so that you get the security patches and updates.
Your mail server, your server applications, you’re line of business applications, make the investment. You can amortize this over multiple years. I recently made a purchase in a line of business application that if I swallowed the pill up front with the amount of $35,000.00 investment. However, when I spread that out over five years, this is little as $500.00 a month. Why wouldn’t I buy that application?
I really look at the efficiencies it’s going to create for my organization and I can easily see that type of return on a monthly basis and know that it’s going to be greater as time goes along.
So buy those licenses and make sure you’re current. Avoid breaking the law and stealing someone’s intellectual property. If you’re making money, if you’re in business, you need to have licensed software.
Don’t jeopardize your business, your reputation, your career, by using unlicensed software. Purchase the best software that you can afford and make sure you use it, learn how to use it and be efficient on it. Get the support you need so that your computers and your network are stable so you don’t have crashing systems. You know it’s the same thing with running licensed software. Make sure that you’re paying someone to take care of your computer systems, that you have a dedicated resource of experts that understand how technologies works.
You know a good technology company will come in and learn your business and apply technology appropriately to that. You don’t need to understand technology. You need a trusted partner that you can work with so that you can become more efficient at what you do. Good business, licensed software, pays for support and is more efficient.
In closing, I have one simple question for yoy “Are you in business to be successful?” You know the answer to that. I’ll be happy to speak with you about any of the issues covered in this paper. I look forward to speaking to you. Please contact me , Jeff Brodie. at 416-335-9390.