Software Licensing and Why It’s Important for SMB’s

Posted on August 25, 2016
By: Dan Miller
software licensing

Software is at the core in our everyday business and personal lives. Software Licensing and Why It’s Important for SMB’s is the difference between staying in business or NOT. It is mandatory that you become familiar with software licensing. Despite software licensing presenting as quite a tricky concept, consumers should endeavour to learn the ins and outs of it in order to improve software innovation.

What Is Software Licensing?

A Software Licensing and Why It’s Important for SMB’s is because it is a legal instrument allowing consumers to use or redistribute software. Without the software license agreement, using the software would constitute a breach of copyright law. The particular license agreement will explain to the business owner and end-user how they can use the software. All software must be legally licensed before it can be installed. Where software licensing becomes confusing is in the different types of licenses and the rights attached to the various licenses.

Methods for Licensing Software

An end-user license agreement (EULA) is one approach vendors can take to license their software. This is a contract between the licensor and purchaser, establishing the purchaser’s right to use the software. The contract may include the different ways the software can be used as well as any rights the buyer has obtained by purchasing the software. This is one of the more basic and commonly used ways to license software. If you’re using SaaS (Software as a Service) and as a result your applications are cloud based, the software license is usually subscription based. That is, you will pay for each user on a monthly (or some other period) basis. This type of software license offers greater flexibility. It is also beneficial in that you only pay for what you need – allowing you to scale your business without repercussions. There’s also the question of whether you can re-sell your software license if you’re no longer using it. The answer can generally be found in the EULA. From a legal standpoint there may be question marks over the enforceability of EULA’s given to users after they purchased the software given they weren’t aware of these conditions at the time the contract was formed.

Why Software Licensing Is Important

Businesses must be savvy in the licenses they purchase to ensure firstly they are using software legally and secondly, they aren’t paying for licenses that aren’t being used. By acquiring too many software licenses you’re wasting company resources, without enough you leave yourself liable to a potential lawsuit (which is quite costly). Finding the right license agreement can also make it easier to manage software in your company. Software Asset Management (SAM) is a must have in SMB’s.

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