Warning: This Simple IT Mistake Can Kill Your Business!

The use of pirated and unlicensed software may not be that common on the commercial level than it is on the consumer level. However, the implications for businesses using unlicensed software are worse due to the risk of fines, security and maintenance concerns, and damage that is caused to their brand image.

According to the Business Software Alliance’s Global Business Survey conducted last year, the worth of unlicensed software use amounts to $60 billion worldwide. In North America alone, the cost of using unlicensed software was $10.9 billion and even that is far less than those in other regions. The survey further reports that although IT managers across the world acknowledge the issues and concerns of using unlicensed software, less than half of them report to using fully licensed software.

This goes to show the seriousness and concern of businesses that rely on using pirated software to perform business functions.

Dangers of unlicensed software use

Security risks

“There is a disturbing disconnect between awareness of the dangers of unlicensed software usage and actual steps taken to address the problem. Users realize that unlicensed software can introduce malware and leave them vulnerable to hacker intrusion and data loss, yet many fail to do anything to protect themselves or their organizations.”

— Roland Chan, BSA Senior Director of Compliance Programs, Asia Pacific

Businesses that use pirated software are very likely to experience software security issues as the vendor from whom they purchase the software is not a certified distributor of the software. In essence, the person who sells the software is somebody who the business does not know about leads to trust issues. This is exacerbated when the unlicensed software that is purchased form a critical part of the entire business operation.

More importantly, a business cannot determine if the unlicensed software has any kind of viruses such as malware or Trojans which can disrupt the system nor can they check if it functions smoothly. For instance, it is very common for businesses to download software applications from internet and use an unlicensed product key to gain access to the full features.

However, the downloaded software can contain many viruses, a fact that is only realized in the event of a major system failure or data corruption.

Risk of penalties

Organizations should also not underestimate the risk of penalties which they may be charged with for using illegal software.

One example of this is of a small business that was recently fined for not complying with Adobe’s license policy.  The firm, which was using the Adobe Master Collection software suite, had obtained a 2-user license policy. However, their IT staff member installed the applications on each staff member’s computer, a direct breach of the 2-user license policy. The firm was then caught and fined by Adobe who levied a fine substantial enough for the business to be on the verge of bankruptcy.

Businesses should take these risks into account and always opt for investing and installing fully license software as the costs of not complying with the software policy will significantly outweigh that of the software.

Diminishes brand image

Following from the previous point, a business that has a record of being taken to court for illegal software use tarnishes its image and reputation. The company can face plenty of embarrassment from being referenced in the news and can lose trust and integrity in the eyes of its customers.

It is thus of vital importance that companies strictly comply with the software policy by investing in fully licensed software. They should make sure to closely review the terms and conditions and ensure that their operations are in compliance.

Other compliance requirements that every businesses must adhere to

For business to follow compliance requirements, they must know and adhere to the following:


These are requirements which must be implemented by organizations’ executives such as directors, managers, and shareholders. Internal requirements are the most overlooked and need to be documented in order to avoid lawsuits.

  • Corporations

Corporations face the most stringent compliance requirements that involve organizing annual shareholder meetings, forming and maintaining bylaws, and having a record of all transfers of their stock.

  • LLCs

LLCs do not have to meet strict compliance requirements; however, it is strongly advised that they maintain and regularly update their transaction, adjust any operational or governance standards, and also conduct annual meetings of managers.


External requirements are those which are enforced by the state in which your business operates as well as the state in which you are registered to conduct your transactions. These are as follows:

Annual reports

Every business is required to produce and disclose their annual report so that all of their transactions and business activity can be scrutinized. This also involves paying a fee that can range between $10,000 and $300,000.

 Franchise tax

Businesses also have to pay a franchise tax. This is a fee that is paid to the state for being able to conduct business transactions in the region and for operating as a LLC or a corporation.

Compliance and the Cloud: Debunk the Myths

It is no secret that the benefits of the cloud are enormous. The cloud enables scaling, rapid deployment and provisioning, all of which means that users can enter new markets more quickly and integrate acquired companies easily. And they can do all this while reducing waste, shortening deployment times and more importantly, lowering costs.

But despite the growing numbers of businesses that are adopting the cloud worldwide, there are still some companies that are reluctant to move their workloads to the cloud. This is sadly due to the fact that there are still many negative myths which surround the cloud and compliance in the cloud. It is important to point out that most standards of compliance which govern IT management are not designed with cloud in mind. For example, compliance standards are mostly concerned with maintaining the integrity of data and not locking down entire virtual environments. So, it’s quite easy for companies who look forward to adopting cloud services to be confronted with many questions regarding compliance in the cloud, which sadly remain unanswered…that is, until now.

MYTH #1: Security is Security After all!

When talking about IT infrastructure, security is usually at the top of the list, and for good reason. But when it comes to a regulated environment, you soon find out that there is no such thing as being “good enough”. This is the reason why companies who look to adopt the cloud need to ensure that their data is properly protected. This also means making sure that your network is kept safe from malware and from the prying eyes of cyber criminals.

Apart from keeping your antivirus software up-too-date, businesses also need to address the security behavior of their entire organization. This means keeping track of what and how information is being shared? Who has access to data and how that data is being protected from unauthorized access? Do you have network segregation and are you using VLAN tagging? VLAN tagging allows parts of the network to be compartmentalized into distinct VLANs, which enables users to create small quarantine zones between machines and consequently reduces data exposure. When it comes to security, it’s important that you leave nothing to assumption. Here are some tips to make sure your data remains safe on the cloud.

  • Use a commercial firewall.
  • Use a managed switch which will be able to handle VLANs.
  • Invest in a good anti-virus software.

MYTH #2: Get Compliant Capabilities with a Single Vendor

With the increasing interest in compliance in the cloud, many service providers are ready to offer a wide array of compliant capable products. But, unfortunately, the truth is that it is not possible for a single vendor to address the many requirements of various regulatory mandates. In other words, there is really no silver bullet when it comes to compliance in the cloud. So, rather than relying solely on a single vendor (or product), businesses should turn towards implementing a more holistic approach to their security strategy which focuses on the big picture when it comes to the regulatory requirements regarding compliance and the cloud.

It is important to remember that the consumers and not the cloud providers, have to deal with the burden of compliance. And while there might be some grey areas when it comes to regulatory services, it is important for businesses to not hinge their compliance status on a provider who claims to be 100% compliant. Here are a few tips to make sure you get the most bang for your buck when it comes getting compliant cloud services.

  • Develop a feasible plan that will help you address any gaps in compliance.
  • Work closely with providers and 3rd party vendors to understand the elements of an audit and who those audits are addressed.

No matter how large or small a business, the protection and integrity of data is of utmost importance. Compliance issues in cloud services could lead to loss in sales, fines, and disrupted operations which is the reason why compliance is necessary to thrive in the cloud.