How to Manage Software Licensing in Enterprise Software Deployments

How to Manage Software Licencing in Enterprise Software Deployments

Software licensing can be a complex and overwhelming process for any enterprise software deployment.

It’s especially complex for those who ignore licensing arrangements to their legal detriment/peril.

So, while this topic is a bit of a “yawn,” it’s an important one, particularly for our clients whose reputation often requires their complete compliance.

At DEV.co, we work with client accounts daily, and these types of agreements are a mainstay.

With the ever-evolving landscape of software development, understanding all the ins and outs of software licensing is essential to ensure compliance with the legal requirements of the licensing firm.

This article will explore how to manage software licensing in an enterprise setting, including topics such as ownership rights, types of licenses, license management tools, and more.

By taking into account these considerations when managing your company’s licenses, you can ensure that your organization remains compliant while also maximizing cost savings.

What is a software license?

A software license is a legal agreement between the owner of the software (the licensor) and the user (the licensee).

It defines the rights, restrictions, and obligations that the user is allowed to exercise with the software product.

The license grants various rights to use, modify, or redistribute the software for different purposes.

In our work developing custom software solutions at DEV.co, we often deal with and negotiate contracts for various types of licenses.

In custom scenarios where multiple users are at stake and modifications need to occur, licensing can become expensive and oftentimes restrictive.

How does an enterprise license agreement work?

Enterprise software licenses function in a variety of ways. Generally, they grant the user a range of rights with regards to the product, such as the right to install, access, and run the software on specific hardware.

They also specify any restrictions it has with respect to modification and redistribution.

Depending on the type of license, users may be able to transfer the license to another user or company, while in other cases they may not.

Why do software licenses matter?

Software licenses are important from a legal perspective because they are contractual enterprise license agreements between the licensor and licensee which set out the rights, restrictions, and obligations of each party.

This ensures that both parties understand their responsibilities and can help to reduce or eliminate any disputes or misunderstandings.

Software licenses provide a valuable layer of protection for both the licensor and licensee.

And, given the amount of revenue available to software firms, having a licensing agreement is a critical piece for ensuring the protection of software company profits going forward:

size of us software market
Source

From a legal standpoint, it is important for enterprise organizations to have a clearly defined and legally binding agreement between both parties that outlines the rights, restrictions and limitations of each.

This helps to ensure that the software is used in accordance with applicable laws and regulations, while also providing protection from potential disputes or contract breaches.

Types of software licensing models

When managing software licenses in an enterprise setting, it is important to understand the various types of software licenses available. There are a variety of license models that grant users different rights and restrictions for using the software product, such as open source, end user license agreements (EULA), subscription-based, pay-per-use, and more.

Each type has its own unique features that must be taken into account when selecting the appropriate license for your organization. Understanding these differences will help you make informed decisions about which type best suits your needs and the company(s) distributing your license.

  • Single-user license: A single-user license is an agreement between a software developer and an individual user that gives the user the right to use a particular version of the software.
  • Multi-user license: A multi-user license is an agreement between a software developer and multiple users that provides the right to use a particular version of the software. This type of license is often used in enterprise settings as it allows for multiple people to access and use the software at once, making it more efficient and cost-effective.
  • Site license: A site license is an agreement between a software publisher and an organization which grants the organization the right to install and use the software on multiple computers within the same physical location. Unlike single-user and multi-user licenses, site licenses often come with additional features such as priority access to technical support and product upgrades.
  • Floating/Concurrent use license: Floating or concurrent use licenses are typically used in enterprise settings where a large number of users need to access and use the same software product. This type of license grants multiple users the right to access and use the software at the same time, using the same license key.
  • OEM Partner License: An OEM (Original Equipment Manufacturer) partner license is an agreement between a software publisher and a hardware manufacturer that grants the hardware manufacturer the right to install and bundle the software with their systems. This type of enterprise license agreement is often used in the enterprise setting, as it allows for an organization to purchase the necessary licenses needed to support the hardware they have purchased.
  • Open-source software (OSS) licenses: OSS licenses are an important component of software development. These licenses allow for users to use, modify, and distribute software without having to worry about restrictions such as those found in traditional proprietary licenses. OSS licenses provide developers with a number of advantages including the freedom to customize their codebase, improved accessibility, and cost savings due to lack of associated license fees. We discuss open source licensing a bit more in detail below.
  • Network node licensing: Network node licensing is a type of software licensing that gives organizations the right to install and use the software on multiple computers connected to the same network.
  • Subscription licenses: Subscription licenses (often referred to as “software as a service or SaaS” contracts) are a type of software license that grants users access to use the software for a certain period of time, typically on a monthly or annual basis. This type of license is becoming increasingly popular as it allows organizations to have access to the most up-to-date versions of software without having to purchase individual licenses for each user.

Some license agreements also allow for volume license discounts, which are negotiated between licensee (buyer) and licensor (software vendors) at the time of purchase.

What are the best types of software licenses?

The best type of software is free 🙂

For the rest, it really depends.

The best types of software licenses depend upon the needs of your organization and the type of software you are deploying.

In general, single-user licenses are best for organizations with only one user needing access to the software, while multi-user licenses provide greater flexibility when multiple users require access.

Site licenses can be beneficial for organizations with many users, as they allow access to the software on multiple computers or devices.

For open-source software (OSS) licenses, the GNU General Public License (GPL) is one of the most popular and widely used free software licenses.

When it comes to volume licensing agreements, these are typically best for larger organizations that need to purchase large quantities of software products.

These agreements are typically negotiated directly with the software vendor and can provide cost savings and other benefits to organizations.

What are the ownership rights of a software license?

Software licenses grant ownership rights to the user. Depending on the type of license, this may include the right to modify, copy, or redistribute the software product as determined by the licensor’s agreement.

Generally speaking, most software licenses do not grant the right to resell, lease, or sublicense software products. It is important to ensure that your company fully understands the terms and conditions of each license before agreeing to it.

How do you manage a software license?

Software license management is an important part of enterprise software deployment. Organizations should have appropriate policies, procedures, and tools in place to ensure that their licenses remain compliant with industry regulations.

License Management Tools

To make managing software licenses easier, many organizations now use various tools for tracking and monitoring their licensure.

Yes, there is software to help you manage the licenses to your software (even if that sounds redundant) from other software companies.

These tools help enterprises to easily manage licenses, ensuring compliance and helping to ensure that your company is maximizing cost savings when deploying new software.

Some of the most popular license management tools include:

  • Microsoft License Manager (MLM)
  • Snow Software
  • Oracle License Management
  • Flexera

These tools help companies track their licenses and manage them in an automated way.

Thoughts about open-source software

Open-source software has become increasingly popular in the enterprise software development market.

Even proprietary systems are increasingly made from an open-source base. Source.

Open-source software (OSS) is a type of software that is released under an open-source license, which allows users the freedom to view, modify, and redistribute the source code (sometimes freely without restriction, sometimes with restriction), allowing software application development across a wide variety of disciplines.

This type of licensing allows developers around the world to collaborate on a single project, often resulting in the creation of innovative software and solutions that would otherwise be difficult to develop.

Due to its widespread availability, open-source software is often used by organizations to save money on development costs with a free pricing model and simply “support” for a fee. It also provides an opportunity for developers to access high-quality code without having to pay for expensive licenses.

However, there are a multiplicity of software resellers, open-source consulting firms and other IT companies that not only sell open-source software, but they also provide support agreements to enterprise companies who may need assistance in managing, providing software updates and otherwise supporting even the best open-source tools.

That’s something we do regularly and seamlessly.

If you need help managing your software, are looking at engaging in an open-source project or simply need help with licensing of a given solution, get in touch! We can help!

How to avoid legal issues with software licensing?

Unfortunately, not all software is open source.

In many cases, you’ll need to not only pay for the software, but also make sure you’re in compliance with the MSA (master services agreement) of the licensing company.

Firstly, it is important to ensure that all users are aware of their responsibilities when it comes to software licensing. Companies should also make sure that all software is properly licensed and registered prior to deployment.

Secondly, organizations should have thorough policies in place so that employees understand the company’s stance on software usage and licensing. This will help ensure compliance with industry standards and regulations.

Finally, enterprises should implement a license management tool to ensure that all licenses are tracked, monitored, and managed effectively. By taking advantage of these tools, companies can maximize their cost savings while also ensuring compliance with industry standards.

Ryan Nead