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Understanding how volume software licensing (VSL) works can give you an advantage in your software acquisition or license renewal process.
Though volume software licenses may seem geared toward large corporations, many software developers also offer specific programs for small businesses. For example, Adobe’s Transactional Licensing Program helps companies with smaller orders get the benefit of volume pricing. Understanding how volume software licensing (VSL) works can give you an advantage in your software acquisition or license renewal process.
Why you need licenses
The Copyright Act, Title 17 of the U.S. Code, protects software developers. This law gives the software developer "exclusive rights to reproduce the copyrighted work" and "to distribute copies...of the copyrighted work." Violators of the law can be fined or suffer other penalties.
The Software & Information Industry Association (SIIA) states that when you purchase a software license, you can only copy the software for use onto
a single computer. You can make an archival backup copy, and you may also copy the software for activation of the computer after repairs.
According to the Business Software Association (BSA), a company can unknowingly be out of compliance in three ways: end-user piracy, using counterfeit software or overuse of a license. Piracy is the reproduction of software without authorization. It is a serious problem around the world, and some companies unknowingly acquire counterfeit software.
Whenever a business installs more copies of a program than it has the license to, it is in violation of copyright law. This scenario can happen easily without careful management. A well-chosen or upgraded volume software license can be invaluable in helping anticipate or provide for unplanned needs.
Types of licenses
A software license is a contract between the software manufacturer and the software user. It is sometimes called an End User License Agreement (EULA). The EULA usually comes in the software box or pops up on-screen when the software is installed.
Gartner, a leading IT research firm, has identified four types of software licenses in the marketplace: perpetual license, term license, appliance license and subscription license. The perpetual license is the most common type of license used. With a perpetual license, customers have the right to use the software forever. However, this does not usually include rights to free updates. Updates generally require an additional contract.
A term license, also called a lease license or rental license, gives a customer the right to use the software for a specific length of time. The cost is usually paid up front. When the term expires, another fee is charged for another term. A maintenance contract often accompanies this arrangement. Updates are generally not included.
An appliance license is for software loaded on a hardware device by the same manufacturer, with both software and hardware sold together as a package. An example is the software loaded onto a network attached storage device. Appliance license ownership is perpetual and sometimes updates are included. Rules regarding transfer of these licenses to another hardware system vary by vendor, however. For example, copies of the Microsoft Windows operating system purchased on a new PC cannot legally be transferred.
The subscription license, also known as an on-demand license, is an up-and-coming model that has been a response by software developers to improve the transparency and flexibility of licensing. It is similar to the term license in that customers purchase the right to use the software for a specified period of time. However, with the subscription license, customers also have the right to updates and a certain amount of maintenance and technical support. Often customers can pay by the month, quarter or year.
At the end of the agreed term, customers can renew or cancel licenses as needed. Since the upfront costs are lower, some software that was previously too expensive for small- and medium-sized businesses is now within their budgets. And the shorter-term commitment allows for closer evaluation of the software’s usefulness at the end of the contract.
Improved purchasing power
With a better understanding of VSL, you can improve your purchasing power. There is an advantage in combining different license purchases to move into a higher tier.
For example, a company getting Symantec’s Client Security corporate edition antivirus for 125 users would also be looking to get mail security for Microsoft Exchange. They would license that per mailbox. So they would be getting 125 licenses of mail security and 125 licenses of client security. If you did those separately in different orders, each purchase would fall into the 100- to 249-license tier. But by placing them on the same order, the purchase will bump up to the 250- to 499-license tier. Each time you go up a license tier, the price drops.
Software asset management
Although an obvious benefit for VSL is to save money, it is also really the first step toward effective software asset management. Being up to date on your software inventory can save money with upgrades, whether you are purchasing additional licenses or moving to the latest version. Armed with this information, you also have the ability to put software only where it’s needed, to more easily install updates and patches and to eliminate unused or obsolete software.
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