South African companies paid more than R3.64 million for using unlicensed software in 2016. This is according to data from BSA | The Software Alliance, a non-profit, global trade association created to advance the goals of the software industry and its hardware partners. This 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, legal counsel for BSA.

In one case presided over by BSA, an architecture firm Zulu Architectural Designers was found using unlicensed software of BSA members and is set to pay over R100,000 in damages. In another case, a telecommunications firm Comsol operating out of Midrand paid nearly R80,000 in damages for copyright infringement. Ultimately, both companies paid more to use unlicensed software than they would have paid if they had initially used legitimate licenses.

“Often, IT departments are not even aware that staff have installed unlicensed software on their networks. 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,” says Darren Olivier

South Africa tops the global stats for economic crimes, with cybercrime now the fourth most reported economic crime in the country. Almost a third of surveyed organisations reported cybercrimes in the past 24 months, which makes it critically important for a company to be aware of what software is on its network. One of the best ways to improve software license compliance is through raising awareness of the negative financial and operational impacts faced by companies that use unlicensed software.

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.

To encourage compliance and best practice, BSA offers an up to R100,000 reward to those who report piracy on its website, if the information provided results in a settlement. All information relating to the copying, downloading, sharing, selling or installing of unlicensed software onto work computers will be treated as confidential.