South African companies paid almost R5,2-million in damages for using unlicensed software in 2017 up from R3,6-million in 2016.
This is according to data from BSA The Software Alliance, which received 281 reports in South Africa alleging the use of unlicensed software products of BSA member companies – up considerably up from 230 leads in 2016.
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, says Darren Olivier, partner at Adams & Adams, legal counsel for BSA.
“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 says.
The result has been a 13% increase in settlements paid in 2017, with the settlements total reaching almost R2,5-million.
While the average settlement paid by companies in 2017 was around R36 094, in some cases the amount owed was far greater, with one company paying a hefty 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, says Olivier. “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.”
As unlicensed software has not been updated with the latest security features, he explains that it leaves businesses vulnerable to cyberattack.
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. Indeed, 77% of South African organisations have experienced some form of economic crime. What’s more, instances of cybercrime totaled 29% of economic crimes reported.
Olivier notes that it is likely the percentage of unlicensed software on South African computers has increased over the past year. “We received many more leads this year, which is an indicator that the amount of pirated software is greater than in previous years,” he says.
Often unlicensed software is not so much a case of deliberate piracy as it is a result of poor software asset management (SAM).
“For this reason, the BSA encourages all businesses to ensure they have effective SAM practices in place,” says Billa Coetsee, chair of the BSA SA committee. “Companies should be able to confirm what software they are using and are licensed to use – this will help them to identify unlicensed software and can also bring about cost savings. Even the most basic SAM practices such as regular inventories and software use policies can help.”