Financial Directors (FDs) in the UK have increased spending on software but feel poor management is restricting the positive impact it can have on their organisations. This is the finding of research carried out amongst 250 UK FDs, which shows that only 7% say they are very confident that the software in their organisations is correctly deployed.

The research found that 85% of FDs are responsible for software licensing in their organisations, with almost all (98%) agreeing that software is important to the running of their business. However, just 6% feel they are getting the best out of their software investments, while almost two thirds (65%) are not happy with the way it is being managed.

In spite of this concern, the majority of the FDs surveyed (81%) say their software spend has increased in the past five years, making up 6%-10% of capital expenditure for 70% of organisations.

Although spending on software has increased, businesses are clearly feeling the pinch of the recession with 85% citing funding as a major barrier to managing their software assets more closely. More alarmingly, only 12% of FDs think that Intellectual Property (IP) is valued within their company, which might explain why almost 30% of those surveyed admitted that illegal software could be in use in their organisation.

Some of the worst performing organisations when it comes to software management are in the public sector. Only 35% of FDs in the education sector are confident that their software is deployed correctly. The healthcare sector is the worst performing when it comes to annual software reviews with almost a third of organisations not undertaking a software audit in the last 12 months.

In order to get the most out of their investments, FDs need to take a longer-term view about managing their software assets. Good planning will help mitigate the risks associated with unlicensed software use, such as operational continuity problems, brand and reputational damage and financial risks, all of which are potentially threatening to SMEs.

Importantly, managing software can also save money by helping companies from over-licensing – i.e. purchasing licenses they do not need – and making sure that employees have the correct software tools to do their jobs effectively.

Richard Anning, Head of the Institute of Chartered Accountants in England and Wales IT Faculty said: “Good business software is a fundamental aspect of how businesses operate in the twenty first century. Our advice to our members always is to keep up to date with software licensing, undertaking an annual audit of software held in the organisation if required. It is also important to ensure you are not compromised by changing circumstances, such as test, acceptance and live environments, and that your business continuity plans are covered.”

Reducing the levels of software piracy could benefit the UK’s economy substantially. A 2010 study produced by IDC found that by reducing the 27 percent software piracy rate in the UK by 10 percentage points over four years, 13,011 high-tech jobs, £5.4bn in new economic activity and £1.5bn in new taxes could be created by 2013, with 87 percent of those benefits remaining in the local economy.

What should companies do?

If you are concerned about your software licensing, there are a number of sources that can be contacted for help. Publishers and software suppliers should be the first port of call to answer any questions you may have regarding your licensing situation.