Business FAQ

• "Information Technology (IT) is typically among an organization’s top five expenditures, yet research reveals that an average of 10 to 25% of a company’s total IT spend is wasted or used unwisely. Gartner, Inc. predicts that through 2007, 65 percent of enterprises will grossly mismanage complexity and risk [of IT assets], stifling productivity and earnings, and inflating costs by at least 25 percent." (CFO.com, March 24, 2004)
• What is vicarious liability? The law states that senior management of a company can be held responsible for software noncompliance regardless of which employee has broken the law. Software piracy and vicarious liability.
• What is Sarbanes-Oxley (SOX)? The Sarbanes-Oxley Act of 2002 in the U.S. and Turnbull in the UK are driving forces accelerating the wider adoption of SAM practices. Section 404 addresses intangible assets such as software.
• What is the real impact of a software non-compliance event? Indirect costs can be up to six times the amount of the settlement. These include the cost of purchasing software licenses to bring the company into compliance, which can run several times that of the normal purchase price, legal fees, lost productivity, negative publicity, stress and frustration. The company continues to be monitored for software compliance for several years to come.
• Is software considered by accounting to be an asset? Software can be considered an asset (capitalized) and depreciated if it costs more than a certain amount. Companies have a wide array of policies for approving software purchases and expenses.
• What is so difficult about SAM from a business perspective? Traditional asset tracking methods are insufficient because software is intangible and trivial to duplicate. Changes in the legislation, case law and accounting rules governing SAM are ongoing. Enforcement is uneven. SAM is not well understood. Management changes can derail existing programs. Every employee add/change/move can result in the need for new or different software.