Unlicensed Software and Malware Go Hand-in-Hand

Software has become an essential tool for global businesses to perform their fundamental everyday tasks. Software adds value in the way organizations conduct business, improve profitability, reach new markets, and gain competitive advantages. Too often, however, the benefits of these efforts are marginalized by the widespread use of unlicensed software and the often-crippling security threats that accompany it.

That’s one of the main takeaways from the BSA | The Software Alliance’s 2018 Global Software Survey: Software Management: Security Imperative, Business Opportunity. The survey conducted by BSA, the leading advocate for the global software industry, quantifies the volume and value of unlicensed software installed on personal computers in more than 110 countries and regions, and includes nearly 23,000 responses from consumers, employees, and CIOs in those areas.

Despite a global two-point drop in unlicensed software installation rates during the last two years, the survey disclosed that unlicensed software is still being used around the globe at alarming rates, accounting for 37 percent of software installed on personal computers. Regionally, the unlicensed usage rates keep showing dire numbers: Asia Pacific, Central and Eastern Europe at 57%, Latin America at 52%, Middle East and Africa at 56%, North America at 16%, and Western Europe at 26%. The aggregation of all the individual license breaches translates into startling losses for software manufacturers in the trenches and consequently national economies that account for $16.4B in Asia-Pacific, $9.5B in Western Europe and North America, $5B in Latin America, $3.1B in Middle East and Africa, $2.9B in Central & Eastern Europe. That’s to say that the value of unlicensed software is estimated at $46 billion worldwide.

Although some of the abatement comes from fewer PC shipments, the BSA recommends organizations to embrace a three-step process consisting of assessing trustworthy data, improving management across the entire IT asset life cycle, and optimizing the analysis in key functional areas. Furthermore, governments, commonly the largest users of software in the world, can lead by example, increase public education and awareness, modernize laws to account for new innovations, and create a conducive environment for enforcement.

In addition, the survey found the link between increasing malware attacks and unlicensed software to be indisputable, as a higher rate of unlicensed software use correlates directly with the higher likelihood of a debilitating malware infection.

The report noted that organizations face a 33% chance of encountering malware when they obtain or install unlicensed software, and, dealing with the malware associated with unlicensed software can cost more than $10,000 per infected computer. Sixty-eight percent of computer users and 48 percent of CIOs rated malware among the top three reasons not to use unlicensed software. As a result, many CIOs are realizing the true costs of unlicensed software including the loss of corporate or personal data, system downtime, network outages, and the cost of disinfecting systems.

In China, for example, 66% of software is reportedly unlicensed and the country has incurred devastating malware attacks that crippled an estimated 40,000 Chinese institutions, halted the electronic payment systems throughout the country at PetroChina’s gas stations, shut down ATMs run by the Bank of China, and impacted the operations of major companies like China Telecom and Hainan Airlines.

While the overall findings indicate that unlicensed software usage is still widespread, several other key trends emerged that greatly impact the enterprise landscape:

• CIOs are finding unlicensed software is increasingly risky and expensive
• Improving software compliance is now an economic enabler and security imperative
• Organizations can take meaningful steps today to improve software management and achieve important gains

What is the takeaway for ISVs? While the survey was focused on enterprise CIOs and end users, the data suggests that ISVs can help compliance efforts by offering licensing models that make enterprise licensing easier to implement and manage. Today’s software managers require flexibility in licensing, delivery, reporting, and management, which ultimately serves to cut costs as well. For example, the BSA report highlighted a 12,000 employee German company, OSI International Foods, that had reduced post-licensing costs by more than 30 percent by implementing a more effective software licensing model.

Furthermore, ISVs can help to reduce the risks of malware by integrating strong protection measures into their software to prevent illegal software copying and counterfeiting and enable secure licensing via hardware devices or machine bound licensing to make it more difficult to employ unlicensed copies.