Microsoft toughened up its stance on under-licensed organisations today, announcing it is to formalise its process for reporting midmarket firms guilty of operating unlicensed software to enforcement body the Business Software Alliance (BSA).

Currently, firms with under 250 PCs that are suspected of not having sufficient Microsoft licences will be contacted by letter by the vendor and given 14 days to respond to a questionnaire designed to assess their licence status. Ram Dhaliwal, licensing programmes manager at Microsoft, said that around 97 percent of firms contacted in this way respond and begin the process with Microsoft to ensure they are properly licensed. But he added that the company would now be more focused in pursuing the "two to three percent" that fail to respond.

"In the past, we have continued to send them letter after letter," he said, "but now we'll contact them again giving them another five days to respond and then contact them a final time notifying them they have 10 days to respond or we will refer them to the BSA."

Dhaliwal said firms could contact Microsoft at any stage during the process and begin negotiations to resolve the issue. "We are trying to leave as many doors open as possible," he said. "If they co-operate with us we'll just charge them for any licensing shortfall – if it goes to the BSA there will probably be legal costs and possibly a fine."

Microsoft said it had sympathy for firms that found managing software licences difficult, particularly in the wake of mergers or expansion, but it insisted that there was no longer an excuse for failing to respond to requests from the vendor for information on their licence status.

"We understand there are challenges," admitted Dhaliwal, "but we've set up resources and tools to help customers manage their licences. We've taken a long time to reach this point, but we've run it past customers and feel there is now no choice but to take this step with those companies that refuse to engage."

Bola Rotibi of analysts Ovum said that the move marked a shift in Microsoft's approach to asset management, but insisted the company was justified in taking a more aggressive stance to under-licensed firms. "Midmarket firms traditionally haven’t been as good at licence management, but with the tools now available there really is no excuse anymore," she said.