Fighting Piracy Without Alienating Customers (Mar. 18, '14)

Fighting Piracy Without Alienating Customers

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Fighting Piracy Without Alienating Customers

Software execs discuss their strategies for dealing with licensing infringement while protecting important business relationships

By Leslie T. O'Neill

IBSMA's 2014 Compliance Manager Summit closed with a panel discussion about a topic that had been quietly simmering under the surface all day: piracy. Executives representing the license management organizations from Oracle, IBM, V.i. Labs and Flexera Software weighed in on their fights against piracy, how they handle distrust with customers, and ways honest customers can stay above the fray.

"The [software company compliance] programs that hit the happy medium between asset management and compliance first will be respected and at the forefront of the industry," said Jonathan Koop, Vice President of License Management Services at Oracle. "We're all, as vendors and publishers, still causing distrust with customers—they're not seeing a difference between a punitive experience and asset management. When blood's in the water, behavior changes."

As Vice President of Products and Strategy at V.i. Labs, Victor DeMarines works to eradicate misuse and piracy of software. His company provides software vendors with usage tracking software and revenue recovery services. He calls the data about software piracy "remarkable," pointing out that, although the Asian Pacific region is the top offender, the U.S. and countries in Western Europe are among the top five areas stealing software.

Jonathan KoopVic DeMarines and Amy KonaryMathieu BaissacBrian Turner

Jonathan Koop (Oracle), Victor DeMarines (V.i. Labs), Amy Konary (IDC), Mathieu Baissac (Flexera Software) and Brian Turner (IBM)


"With actual infringements, what's the relationship to the vendor? Fifty percent are customers, and 50 percent are prospects. It's not just small or medium companies. We're seeing large organizations with complex networks—even incidents of piracy in companies with great relationships with the vendor," DeMarines asserted.

And that's where it gets tricky for these executives. They're aware of software misuse, but they're also wary of alienating a potential customer or, especially, a strategic customer with sales accounts that are critical to the business.

"We are trying to respect and develop a relationship. We want to give them the benefit of the doubt. [Our organization] is not designed to be purely punitive. We spend significant time on training and education," said Koop. 

IBM's Brian Turner, Program Director of Endpoint Management, agreed that the tone you take with customers is important, and he described IBM's approach as one that also emphasizes customer education.

"We take a two-prong approach. We say, 'here're some free [software asset management] tools, maybe it will help. And take some consulting along with it'," he said.

Panel moderator Amy Konary, IDC's Research Vice President of Software Licensing and Provisioning and Delivery, asked the executives if moving to a usage-based pricing model for their software would prevent incidents of misuse. Although most of the panelists weren't eager to commit to that idea, possibly because of the extensive retooling of their products such a move would require, Mathieu Baissac made a bold prediction.

"We will end up with usage-based pricing—it's the only true way to measure. Cloud, virtualization, [and other] technologies are changing so much, current licensing models will be obsolete in four to five years," said the Vice President of Product Management at Flexera Software.

"Most producers aren't interested in charging for pay-for-use, but pay-for-overage. It's a compromise between enterprise CIOs that want a fairly predictable budget and producers giving a flexible model for software use," added Baissac.  

The panelists agreed that cloud computing and SaaS (software as a service) applications will force customers to also adopt software asset management (SAM) tools. With SAM, customers can be proactive about their licensing agreements, rather than simply react to an audit.

"In five years, I'd like to think that audits will go away. The objective is to give the customer visibility and control, and automation and tooling to know when to true up and stay compliant on an ongoing basis. Keeping up to date is a challenge that we need to automate and do as friction-less a possible," said Turner.

Still, no one believes that they'll ever be able to stop enforcing compliance with license agreements entirely. They acknowledged that some geographies—namely China, Thailand and Vietnam—are especially challenging right now. Instead, they strive for a balance that supports and helps honest customers as well enables them to recover revenue from dishonest prospects.

"How do I have a healthy and constructive asset management offering while having some compliance component to my business?" asked Koop. "That's what I aspire to."

Leslie T. O'Neill is a writer based in Pleasanton, CA.

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