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Counting the cost of unlicensed software

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South African companies paid more than R3,64-million for using unlicensed software in 2016, according to data from BSA | The Software Alliance.

The figure includes settlements (R1,66-million) and the cost of acquiring new software to become compliant (R1,98-million).

In 2016 BSA received 230 reports in South Africa alleging the use of unlicensed software products of BSA member companies. Most of these reports came via BSA’s No Piracy portal  from current or former employees, detailing the amount of software installed without the appropriate license coverage.

“Software piracy negatively impacts software publishers and creates unfair competition for legitimate companies. But, more than that, it exposes organisations to legal, financial and reputational damage through security breaches and data loss, not to mention the negative economic impacts through job losses and lost tax revenue,” says Darren Olivier, partner at Adams & Adams and legal counsel for BSA.

“Often, IT departments are not even aware that staff have installed unlicensed software on their networks,” he says. “This makes the business more vulnerable to cyber-attack because unlicensed software is not patched with the latest security updates, which increases the likelihood of malware entering the network. Should that malware expose sensitive company and client information, the reputational damage could be massive and it will take a long time before the business can rebuild that trust with customers, if at all.”

South Africa tops the global stats for economic crimes, with cybercrime now the fourth most reported economic crime in the country.

In South Africa, 33% of software installed on computers is not properly licensed, representing a value of $274-million. While this is a slight decrease from previous surveys, BSA notes a need for increased awareness on the risks of installing and using pirated software, as well as increased cooperation between the public and private sectors to combat software piracy.