Like ripples in a pond, the effects of software piracy are felt throughout the South African information technology (IT) distribution channel. While local and international software developers are also victims of software piracy, it is South African distributors and resellers supplying the end user who are most adversely affected by software piracy. In IT circles, this link between the developer (also known as a vendor), distributor, reseller and the end user is known as the channel.
For developers, every unlicensed copy of software that is in use means lost revenue and less money to spend on activities such as product development, marketing and training, and channel development. Many vendors have implemented various channel programs to encourage technology resellers and distributors to promote their products and assist them with marketing.
Such programs are particularly important to smaller software resellers because the resultant boost in sales and the shared marketing expenses from these programs help these small businesses to up-skill their staff and save on marketing costs. However, with high software piracy rates, vendors are finding it increasingly difficult to fund channel programs, leaving resellers to bear the brunt of marketing costs on their own.
Even though the cost in lost marketing support can be substantial, it does not compare to the cost of lost customer confidence. When using illegal software, end-users lose many of the vendor guarantees that come with every licensed software copy. In most cases, they are unable to access vendors' service centres for assistance, leaving them stranded with faulty software that cannot be fixed. Such bad customer experiences can drive existing customers away, and through word of mouth, even potential customers can be discouraged.
For software resellers, the sales transaction does not end when the customer walks out of the door with their software package. There are additional services such as custom design, installation and other support services that may be required by customers. Because such support services are generally not available on unlicensed software, local resellers are robbed of this additional source of revenue whenever unlicensed software is purchased.
The software distribution industry is a major part of South Africa's overall IT industry. To keep this industry growing and presenting further opportunities to local entrepreneurs looking to get a piece of the technology pie, it is imperative that software piracy be fought and eradicated.
