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Marius Haman, BSAMarius Haman, BSA

South Africa’s small and medium enterprises (SMEs) still have their collective head in the sand when it comes to the implications of software piracy.

Software piracy cost business in SA over R5.7 million in 2012. Besides avoiding the risk of penalties, each additional dollar invested in properly licensed software has an estimated return on investment (ROI) of almost R200. This compares to a little over R150 return from each additional dollar worth of pirated software put into use.

Far too many companies believe software piracy is not a “real” crime. They justify their use of unlicensed software by referencing the ease with which they could download it; or by arguing that knowledge should be shared, or that software is simply too expensive. Often, companies under-license their software by adding more users than they are licensed to do.

It is important for companies to understand that if they are caught using unlicensed software, they are guilty of fraud, following the introduction of the new Companies Act. By using pirated and unlicensed software, companies are putting themselves at risk of financial, reputational and operational damage – often with serious long-term consequences. A company may believe it is saving money in the short term by not paying for its software licences; but the repercussions for using unlicensed software can be severe and costly.

Companies found to be using unlicensed software might be made to pay damages amounting to the outstanding licence fees; they may be summoned to appear in court; they could have their premises raided and their software and even PCs confiscated; and in extreme cases, their companies could even be deregistered under the provisions of the Companies Act. Losing an entire company would be a devastating price to pay in the long run for a short-term saving on software licence fees.

A greater appreciation of the value of software, rather than looking at it as a basic utility, ensures that software accounting will rise up the agenda. Software management should be an important consideration, not an after-thought – ultimately, this will help safeguard a company’s financial and operational future.

About the author:
Marius Haman is chairman of the BSA South Africa committee.