IT Employment

What to do when a client won't properly license software

If a client tries to cut corners by pirating software, your IT consultancy should consider taking these recommended steps.

IT consultants often find it difficult to say no to their clients. For instance, IT consultants sometimes go along with clients' cost-cutting requests that ultimately complicate the project. One situation in which it should be easy to turn down a client's request is when it comes to properly licensing software.

Some clients may ask you to deploy OpenOffice instead of Microsoft Office; there's nothing wrong with that, as long as the software's licensing terms are honored. Other clients may ask you to: transfer OEM licenses from old machines to new workstations, deploy the same license twice, or load a pirated Microsoft Office 2007 Enterprise license scavenged from Google on a system you're reinstalling ("but it was there before, why can't you just reload it now?"). Ultimately, an IT consultancy should not want these clients.

But that's not to say that clients who initially hesitate to write a large check for software license expenses are hopeless -- far from it. Those clients usually just need to be educated, and that's part of your job as a technology consultant.

No one wants to be a chump

Ensure clients understand they're not the only ones on the block paying to properly license their software. I've had clients tell me that no one really pays for their software -- who could afford it? That's when I explain, as professionally as I can, that they're the one being the chump by trying to get something for nothing.

No one wants to pay stiff penalties

Organizations don't need to run multinational piracy rings to get in trouble. You should explain to the client that it just takes one disgruntled employee to report the company to the Business Software Alliance (BSA), which regularly files civil lawsuits that result in significant financial penalties.

No one wants operations delays

A big factor that complicates recovery efforts when a system or a server fails is the inability to locate licenses required to reinstall critical applications, office software, and financial programs. By properly licensing and recording license and registration information, it helps eliminate delays when replacing failed systems.

What your consultancy can do

If clients persist and refuse to properly license software, here are steps your office can take:

  • Review for the client again, in writing, the legal steps required to properly license the software in question.
  • Refuse to load, install, or support any software applications for which the license is known to be pirated.
  • Remind clients that properly licensed software enables recovering much more quickly from unanticipated failures.
  • Ensure clients understand that the majority of organizations, particularly those that enjoy sustained success, purchase and license their software programs.
  • Assist clients in preparing annual budgets that include the costs of required software licenses.
  • Inform clients that actively pirate software that your organization can no longer service their needs. It's unlikely the client understands the importance IT plays within their business, or that the client will make other investments necessary to properly power its company's systems, operations, and success.

No dilemmas

You should jettison deadbeat clients that try to cut corners by pirating software -- those clients are not going to be a good long-term fit for your consultancy anyway. I recommend trying the methods outlined in this article, and if that doesn't lead to progress, you should cut your losses early.

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About

Erik Eckel owns and operates two technology companies. As a managing partner with Louisville Geek, he works daily as an IT consultant to assist small businesses in overcoming technology challenges and maximizing IT investments. He is also president o...

24 comments
Niall Baird
Niall Baird

I wasn't aware that if you purchased software as OEM when you purchased a machine, and that machine died, that you couldn't reinstall this on another machine. When did this change?

Gis Bun
Gis Bun

After reading the paragraph under "No one wants to pay stiff penalties", the client may think that you [the consultant] may turn the company into BSA and not an unappreciated or disgruntled employee. The client may think it could be blackmail even though you may have little to gain out of it [assuming you charge for the labor and not charging extra for the legitimate software]. Of course, if the client dumps you, would you then report them to the BSA? [How fast does the BSA respond?]

father.nature
father.nature

All my clients sign a customer agreement form before I touch a thing. It states clearly that I work only with licensed software. I also offer in writing to assist in obtaining licenses. If a client objects, I point them toward the MS piracy site and tell them that as a business I cannot engage in or condone software piracy. I then casually inform them that the MS-ordered cease-and-desist order usually comes in the morning, the subpoena is delivered the afternoon of the same day, and that all it takes is one disgruntled employee to ruin my business, a risk I will not accept.

bblackmoor
bblackmoor

Commercial software poses a huge legal and financial risk to businesses. That's the main reason I suggest OpenOffice to larger businesses -- they have the most to lose. (OpenOffice is the obvious choice for small businesses and nonprofits, but larger businesses sometimes do not realize the enormous risk posed by commercial office productivity software.) http://www.blackgate.net/consulting/migrate_to_openoffice.org.pdf

melbert09
melbert09

This has happened to me a few times with clients that I have worked with. Once I came up with a Volume licensing solution with quarterly payments on properly licensing the whole estate of a company I was doing some work for. The agreement would allow us to use discounting on windows server as well. This was about ?2000 per year more over all in cost vs OEM. They decided with continuing to use OEM and Open Office. This caused additional work of maintaining a Database of all the licenses of different versions of Office. At the end of the day, I had one person spending a great deal of time supporting 2 versions of MS Office and Open Office as well as maintaining a Database of all the licence keys (servers included). Instead of standardizing, the time cost of the support person was about ?15,000 (? of their time) over the course of a year plus the lost opportunity cost of improving the over all solution. Also user frustration on who had what version of office, delay on desktop repair, etc.... Many times people do not see the cost savings of time in IT.... They just see the cost.

unhappyuser
unhappyuser

I would report them. For someone with certifications it's even more of an issue. Walking away and letting them continue to pirate can get you in trouble if it's found out later that you knew and did nothing. EMD

Justin James
Justin James

... that is supposed to be paid for, is one that I would suspect might not pay my bill either. I've had a few bosses insist that I do things like use MSDN licenses for production work. Funny thing, they were all chintzy on bonuses, expected me to pay for expenses out my my pocket (and eventually get reimburse), and were otherwise cheapskates. Anyone who reacts to "we need to pay for this" with "what can we do to not pay for it?" is also looking to not pay you too. J.Ja

CPPCrispy
CPPCrispy

"What your consultancy can do" could be that you recommend some other software that does the same thing but costs less. Example: Using a Linux based OS for a file server/web server.

NickNielsen
NickNielsen

But I'm fairly certain the OEM sale limitation is only enforceable in the United States, and may not even be enforceable in all states.

gechurch
gechurch

It has always been that way. Microsoft have reworded the clauses a few times (mostly to stop loopholes like companies selling an OEM license with a $20 mouse), but you have never been able to (legally) move an OEM license to another machine. It is tied to that machine, and if that machine dies - bad luck. That's the deal, that's why OEM licences are cheaper. It is not, as someone else stated, tied to a system ID. There are no checks done when you first install the OS and go to activate. No serial numbers are checked. There are checks done later if too much hardware changes (from memory I think there are 7 checks the OS does, and if 4 fail then you need to reactivate. Most of the checks, by the way, tie in to your network card. I think the IP address is one, and the MAC address definitely is). The reactivation will work no matter how much hardware has changed, and there is no check at the time of reactivation to ensure the same system ID or whatever is used. There is a limit on how many times you can activate automatically over the Internet though. I think a lot of people see this and mistakingly think the Internet activation failed because too much hardware changed. That's not the case. You can activate over the phone just fine, and can do it this way basically infinitely. So in practice the OEM license is not restrictive. There is nothing stopping you from using that license on another PC, or another ten PCs if you want. It's just a legal restriction. You definitely can't pull the OEM sticker off one PC and move it to another. I'm not sure where the line is drawn though. About two years ago (when I was working for a PC repair and builder shop) I read many of the OEM rules. Microsoft tightened up the wording of what constitutes a computer, and they explicitely listed all the hardware that must exist, and must be purchased together and new in order to be eligible to use an OEM licence. From memory it included pretty much everything in, and including, the case. So I think technically if you change case you need to purchase a new, retail licence.

jemorris
jemorris

I got out of the reseller end of things almost 12 years ago and I know most MS OEM software was and had been like that for several years. It was in the fine print buried deep in the EULA...

Erik Eckel
Erik Eckel

I often encourage clients to use open source software. Whenever possible, in fact. Unfortunately, a vast majority of clients find staff are often unfamiliar with the alternative interfaces, have trouble navigating menus, experience incompatibilities with third-party software (such as proprietary practice management apps, financial accounting software, etc.) and experience other issues.

gechurch
gechurch

I'm really surprised by your stance. Big business wants their software to Just Work. A few hundred dollars for an Office licence is insignificant compared to wasted time because of incompatibilities, or retraining. Your essay advocates throwing away all your existing Microsoft Office licences to move to OpenOffice. I consider this completely irresponsible. It is ignoring the business need in order to push an open source agenda, and it's unprofessional. There are several gaping holes in your arguments for OpenOffice. Looking at all your reasoning: 1. You claim (in your post) there are huge legal risks using Microsoft Office. I think this is crazy. As a business, you need to ensure you are correctly licensing software. It's just a fact of life, and not specific to Microsoft Office. If a company isn't tracking licences they have major problems. MS Office vs OpenOffice is a distration from the real issue - a lack of documentation, or rogue staff members installing software illegally. 2. Licencing: Any company looking to make an initial purchase should consider all options. Your essay is focusing on companies that have already standardised on Microsoft Office though. Companies that have already bought the licences, and their users and support staff are familiar with the product. To suggest they should throw away all the licneces they have already paid for is ludicrous. And your main reason for suggesting this is because of the high cost of Office - the argument doesn't make any sense! It's already a sunk cost. 3. Cross platform support: This is a fair (if obvious) point - if you need to support *nix desktops, then MS Office won't run, and OpenOffice is probably the forerunner. 4. Security: I have never seen a virus take over a machine through a macro or Office security flaw. I'm only speaking anecdotally here, but I've seen a lot of viruses (used to work for a PC repair shop). I've also never heard of anyone complaining about the insecurities in Office products. In contract, I hear heaps of people whinging on newsgroups and in person about the insecurities in Windows and IE. Macro's have been off by default in at least the last couple of version of Office, so I don't think this is a valid argument at all. 5. Features: You claim that OpenOffice has enough features for the majority of users. Ok, but what if you're not in the majority? Try explaining to that user that you are going to throw away their perfectly good, already paid for Office version so they won't have access to a feature they need to get their job done any more. Your quote that "most users don't even know half the features included in the software they buy" also misses the point massively. There have been several studies done that have found that most people only use (from memory) about 10% of the feature set in Word. The problem is, not everyone uses the same 10%. Microsoft would love to simplify Word (or to not have bothered coding so many new features in the first place), but the reality is every feature in it is important to a significant chunk of users. You mention that OpenOffice now supports VBA, but what you don't mention is how limited it is. Many functions don't work, so most non-trivial code won't run. Suddenly the $210 sticker price of MS Office is starting to look very cheap, compared to having IT staff debug and re-code existing macros to work with OpenOffice (assuming they don't use features that OpenOffice don't support yet). Not to mention the risk of introducing new bugs, and the potential for downtime, corrupted data etc this risk brings. You then mention the additional features that OpenOffice supports that MS Office doesn't (this is a dubious list, but my response is long enough without getting into that). You do not list the (far more significant) list of features that MS Office provides the OpenOffice doesn't though. Again, I consider this to be irresponsible and unprofessional. 6. File format compatibility: This section is very misleading. You claim that Microsoft change their document format with every release (they don't - they did it once with Office 2007). You then claim that OpenOffice opens Microsoft formats. It doesn't read the 2007 formats - you need the free converter to do that, and even then it doesn't read them - you have to save in the old format first. In contrast, once you've installed the converter older Microsoft Office apps will natively open the new formats (no save step needed). You also claim that OpenOffice does a better job of opening old Office documents than Microsoft Office does, and that compatibility issues are only "small" and "less common" opening old Office documents in OpenOffice than opening them in MS Office. This is complete garbage, as anyone who has tested OpenOffice will attest. I had to use OpenOffice at a past employer, and opening documents created in MS Word was generally poor. Very basic documents were fine, but anything that involved positioning of tables or images, the header, or use of styles was always poor. I wasted several hours trying to get some of our templates looking right. Your final comment that "Businesses have a greater chance of retaining access to older documents by migrating to OpenOffice.org" is just crap. The code to open the old documents is already there in MS Office. OpenOffice have to try and emulate the way MS Office render documents (including copying rendering bugs), and that's an impossible job to get perfect. 7. User Training: This, to my mind, misrepresents the real issues. You claim that MS Office 2003 and the OpenOffice interfaces are similar, and you are right. Office 2007 is a very significant change. But you know what - you don't have to upgrade! Stick to Office 2003 and you will have zero re-training! Duh - I can't believe I had to say that! You also show a couple of screenshots which show how similarly named the menu's are, but the same isn't true for the menu items. Some are similar or identical, but many aren't. Performing anything but the most trivial tasks (bold, italic, print etc) you will find differences. We all know users don't like change. Many find computers hard enough to use, without needlessly changing things. You are advocating causing frustration and inefficiency, and for no good reason. You also make no mention of existing documentation. When I was working at the PC repair shop I would have users come in struggling through a "Learn Microsoft Word" book. They often bought a computer from us which has OpenOffice installed. They would show me the screenshot and instructions in the book, then point to the screen asking "I can't find that button". 8. Technical Support: You are arguing that big business should consider moving to OpenOffice, but you state in your article that newsgroups etc should be good enough. No big business, anywhere, ever, would consider this! They want contracts, with guarantees in them. They want to know, for sure, 100% that if they have a critical problem that it will be solved, and quickly. You do mention the options for paid support, but there was no mention of this (ongoing) cost in the licensing cost section. Misleading. You also make no mention of the in-house IT staff. I can run users through a lot of menus in Word over the phone. I can't do the same in OpenOffice because I'm not as familiar with it. I dare say IT staff in a business that is already using MS Office would be the same. On top of that, the problems they have with Microsoft Office would be well known and documented because it's already in use. You are replacing those known issues with the unknown. Not to mention that you now have to remake all your companies Ghost images. Or remove MS Office and install OpenOffice on every PC. That's a massive and potentially very expensive undertaking. Oh, and how many pieces of business software rely on MS Office being installed already? Thinking of my clients, about 80% of them have to use Microsoft Office. They have Access databases, or programs that have macro's or addins for Word and Outlook. Oh yeah - Outlook. There's another massive issue. What do you use for an email client if you move to OpenOffice? Does it support Exchange? I guarantee you will have a lot of angry users if you tell them you are taking Outlook away from them. 9. Accessibility: You, thankfully, credit MS Office with having better support for people with disabilities. You unfortunately then downplay the significance of this issue, because OpenOffice is getting there, and what it's got is good enough for most people. Great! Have fun explaining to blind Betty that you're making her work life harder unnecessarily. "Sure, it sucks for you Betty... but it's more than sufficient to support the accessibility requirements of most employees"! 10. Legal Risk: I agree there's bugger all legal risk in OpenOffice, and that there's less risk than with Microsoft Office. As above, I feel that if IT staff are installing Microsoft Office illegally you have to deal with that problem, not throw away Office and move to open source. But with OpenOffice there's no chance of this. Overall, I'm astounded by your article. It is in places false, is blatently misleading in many other places, it doesn't factor in any of the benefits Microsoft Office provides over OpenOffice, it doesn't portray a realistic picture of the actual costs involved, it glosses over many of OpenOffice's weaknesses, and it doesn't make mention of the (likely very significant) dependencies on the Microsoft product that may exist. It does not advocate sitting down and evaluating all considerations, but instead pushes a preconceived idea that OpenOffice is an obvious better product for all businesses. If someone put that proposal forward to me, I would either stare at them with amazement or laugh at them (depending on my mood). If they were an outside consultant (as you appear to be) I would sack them. The proposal shows such a lack of understaning of business needs (and costs) that I would have no faith in the person that presented it to me. In fact, one of my clients sacked their IT guy and hired my company because of a proposal very similar to yours. He was a Linux gut (fair enough) and had started installing a Linux server or two (no problems there), but then proposed they get rid of their already paid for Exchange licences, and remove Office on all the desktop and move to OpenOffice. From memory I think he might have even been pushing them to move to Linux on the desktops. This client is far from technical (in fact they are the least technically savvy company I do work for - twice in the last few months I have been called out to fix network problems that were solved by plugging the blue cable back into the wall). The client may not be technically savvy, but they can see when a proposal is bad for their business.

Jeep16
Jeep16

I always encourage getting SA with the volume license - the CFO likes the predictable software cost and you have the option of bringing everything up to the same/latest version. Comparing these costs to retail costs for a smaller company show the 'savings' which helps the company see the value.

rcm0502
rcm0502

The client possibly can stab you in the back later and report you for installing pirated software which can get you into deep hot water legally and financially. It is not worth destroying your career/reputation dealing with such clients. If a client insists on you installing unlicensed software just make it clear in writing you are not going to be going down that slippery slope and move on.

tbmay
tbmay

When I first started this business, I had to make that judgment. What you said is dead on. It's not surprise that happened to me exactly as you said. I refused to support bootlegged software, this business got mad, and refused to pay my bill. If you ever decide to strike out on your own because you're looking for a new challenge after decades of working for someone else, understand, at that point you're going to have to get comfortable with running a business. This includes collections, telling potential clients no to things like pirated software, negotiation, etc etc. The technical work will seem like a very small part of it.

Niall Baird
Niall Baird

That's cr@p (I don't mean your answer, but you should have the ability to reinstall the software onto another machine if you completely uninstall it from the original, or if your original machine breaks.) What happens if you break your hard drive AND processor?

NickNielsen
NickNielsen

Mostly with your number 6. [i]File format compatibility: This section is very misleading. You claim that Microsoft change their document format with every release (they don't - they did it once with Office 2007).[/i] You are correct, the basic formats do not change. But more than one complex document saved in a newer version of Office cannot then be opened in an older version of Office, even though the file formats are the "same." [i]You then claim that OpenOffice opens Microsoft formats. It doesn't read the 2007 formats - you need the free converter to do that, and even then it doesn't read them - you have to save in the old format first. In contrast, once you've installed the converter older Microsoft Office apps will natively open the new formats (no save step needed). [/i] OpenOffice version 3.0 and higher open Office 2007 documents natively, no save step needed. [i]You also claim that OpenOffice does a better job of opening old Office documents than Microsoft Office does, and that compatibility issues are only "small" and "less common" opening old Office documents in OpenOffice than opening them in MS Office. This is complete garbage, as anyone who has tested OpenOffice will attest. [/i] I don't know how many times I've opened MS Office documents with OpenOffice after Word or Excel report "The file is corrupt and cannot be opened". I've just as often opened Office 4 and Office 5 documents that Office 2007 and higher no longer support. Your statement is complete garbage, as anyone who has used OpenOffice to recover "corrupt" MS Office documents will attest. Throughout your post, you raise several valid points, but your justifications in this paragraph are outdated or incorrect. I'm really not quite sure what your issue is here, unless it's that OpenOffice doesn't always render a document exactly as it was formatted in MS Office. But then, MS Office sometimes has the same problem, with adjacent PCs with identical images not rendering the same document identically.

robo_dev
robo_dev

SPA = software publishers assoc However, it is possible that the company might sue you or do some other type of retribution. Your evidence must be clear and well documented. If it's a he-said-she-said thing, you will not win. Years ago I reported a fairly big issue of this sort to a large company CIO. What was happening was one lazy IT guy was installing pirated Novell licenses all over the company..these servers were running for more than a year with no legal license, (and he never bothered to install backup hardware/software either). I worked up my courage and told the CIO. His response was to keep it quiet and fix the problem. There were no ramifications for the IT guy, and none for me, although my morale plummeted as I lost respect for the CIO.

Bduffel
Bduffel

The OEM software purchased on a system is tied to the Serial Number of the computer.

jstevens
jstevens

Most offer a call in reactivation in the case that you need to replace /upgrade the processor .. Changing the HD doesn't invalidate any portion of the OEM eula. The Items that usually cause the reactivation on OEM OS's from what I have expirienced- Proc, Mother board, and occasionally large changes in memory. and don't get me started on the EULA for the OEM version of office ... look at the section regarding network use rights ..

jemorris
jemorris

Back in the mid '90s I was working for a VAR and several "anti-pirating" campaigns had just started picking up some steam; large fines for end user businesses as well as some VARs each knowingly using/selling pirated software. I saw a billboard in the Dallas area encouraging disgruntled employees to turn in their employer/ex-employer if they knew that pirated software was being used and heard these billboards were also in many other large cities like Miami and Chicago prominently placed along freeways. We often consulted with another VAR from another town on tech issues. The owner of the company I worked for and the owner of the other were cousins. In the town where this other VAR was located there was a shop that was selling major software products at 40% or less the actual street selling price. Some of it was OEM but most of it was full retail boxed product, none of it was educational system marked packaging. The owner of the other company eventually got his hands on a printed price sheet from the shop selling the pirated goods so he called one the pirating hot-lines. Two days later federal marshals with special investigators walked in his door and thoroughly went through his records and those of his biggest customers. The investigators only found minor issues but the embarrassment of having several large clients also investigated cost him quite a bit of business, almost to the point of closing. About a year later we had a similar situation arise in the town where I was working. A reseller, fairly new reseller I might add, opened up shop downtown in the business district selling OEM type machines you might find at flea markets or right off the docks with incredibly cheap pricing on MS Office, Harvard Graphics, Corel Draw & more. We're talking anywhere from 25% to 40% of normal retail pricing. Remembering what had just happened to my bosses cousin, I went to a public phone near where public faxing services offered so I could fax the price list to whomever I got to talk to. I first called the MS anti-pirating hotline and was on hold for over 45 minutes before I gave up, then I tried the BSA number and hung up after 20 minutes on hold. I wasn't sure why I was on hold for so long, were they that busy or were they even interested? Who knows.

gene
gene

The CIO's response is not that uncommon in my experience. It can be the case that the CIO wants to correct the problem without "rocking the boat". Unfortunately, I have seen incidences where it was clear that the CIO was aware of the pirating, but felt caught and then invested in the proper licensing. That type of CIO usually means trouble down the line...

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