South Africa: Unlicensed Software Costs Rise Dramatically

SOUTH African companies paid almost R5,2 million (about 422 000) in damages for using unlicensed software in 2017, up from R3,6 million in the previous year.

This is according to data from the BSA | The Software Alliance, the non-profit, global trade association created to advance the goals of the software industry and its hardware partners. BSA is formerly Business Software Alliance.

The significant increase in unlicensed software payments, which includes settlements as well as the cost of acquiring new software to become compliant, is the result of more accurate leads from informers, said Darren Olivier, Partner at Adams & Adams, legal counsel for BSA.

In 2017 BSA received 281 reports in South Africa alleging the use of unlicensed software products of BSA member companies - this up considerably up from 230 leads in 2016.

"BSA's recent social media campaign also helped to create awareness among local companies about the need to comply with existing legislation in order to avoid legal action," Olivier said.

While the average settlement paid by companies in 2017 was around R36 094, in some cases the amount owed was far greater, as is evidenced by Shereno Printers, a print and design company based in Gauteng, which ended up paying a hefty settlement amount of R260 000 last year in an out of court settlement.

Aside from settlements, companies also paid more than R2,6 million in licenses purchased to legalise their unlicensed software.

The ramifications of software piracy extend beyond financial implications as it also results in potential job losses and loss in tax revenue.

"This is not to mention the financial and reputational damage brought about by security breaches and lost data," commented Olivier.

As unlicensed software has not been updated with the latest security features, it leaves businesses vulnerable to cyber attack.

This is a particular problem for companies operating in South Africa where economic crime has recently reached record levels, according to the Global Economic Crime Survey.

It is reported 77 percent of South African organisations have experienced some form of economic crime.

Instances of cybercrime totaled 29 percent of economic crimes reported.

BSA has thus encouraged all businesses to ensure they have effective software asset management (SAM) practices in place.