Types of software license for business
In previous article we talked about (types of software used in business) as “part (1)”. There are types of software used in business and for each of them you need to have software licence. All software applications need a software license in order to run. A licence describes terms and conditions under which you can use and distribute software.
Common types of software licence(s) used in business
Proprietary software is software developed by a supplier and made available for use under an end-user licence agreement, which you effectively accept when you install the software.
There are three different types of proprietary software license(s):
- Per device licences are usually for one installation of the software on a server, computer, phone or other device.
This is the most common type of licence for software. Some versions of this type of licence may require you to activate the software. This allows the supplier to check that the software is installed on just one PC.
- Per user licences are common where more than one person can use the software simultaneously.
The licence is usually for a specified maximum number of users.
- Site licences are much less restrictive. They typically allow as many users as you wish at one location.
Licensing also applies to open source software, but terms and conditions of use are generally more lenient.
Software licensing and the law
The licence sets out how you can use the software. It usually prohibits you from doing certain things, like:
- making copies and passing them on
- selling your licence to someone else
Most proprietary software is copyrighted and comes without the source code, i.e. the code originally written by the programmer. Without this code, neither you nor any other software supplier can make changes to the software package.
When you buy proprietary software, you buy the right to use it in a specific way. The software company retains ownership of the software.
Software license(s) are often expensive. It may be tempting to buy just one licence for a product and copy it for several users. However, you and your business could face prosecution if they discover you doing this.
Be wary of buying very cheap software or operating systems as they may well have pirated by criminals. Consider investing in software that monitors applications running on your system and builds up an inventory for you. This is a good investment, partly for your own resource management and partly because it helps you counter allegations of running unlicensed software.
Advantages of open source software for business
Open source software is made available under a licence that allows you to modify, make copies and pass the source code on to anyone. So of course the software comes with its source code released – which you can change to meet your needs.
Pros and cons of open source software
The advantages of open source software include:
- lower software licensing costs
- no supplier lock-in
- freedom to do what you want with the software
- open standards that support collaborative development
- freedom to upgrade software as it suits your business
The main disadvantages of open source software are:
- it may be difficult to get commercial grade support with agreed response timescales
- some proprietary formats such as Microsoft Word’s ‘.doc’ format are so widely used that other formats may be less acceptable for business
Open source licenses (software license)
Licences for open source software vary. Some require you to make any changes made to the source code publicly available, while others will allow you to keep those changes private.
You should read the terms of the licence carefully before using or changing the software.
Open source software is usually available for free download or off-the-shelf at a low cost.
What is Software as a Service (SaaS)?
SaaS is a software licensing and delivery model in which software is:
- licensed on a subscription basis – usually monthly or annually
- centrally hosted in the cloud
- accessed via a browser over an internet connection
SaaS is an alternative to the traditional on- premise software installations. It has become a common method of delivering many business applications, including:
- office and communication software
- payroll and accounting programs
- customer relationship management software
- HR management software
- enterprise resource planning programs
- corporate performance management suites
- mobile applications
SaaS offers many potential advantages over the traditional models of business software installation, including:
- Lower up-front cost– SaaS is generally subscription based, and has no up-front license fees resulting in lower initial costs. The SaaS provider manages the IT infrastructure that is running the software, which brings down fees for hardware and software maintenance.
- Quick set up and deployment– SaaS application is already installed and configured in the cloud. This minimizes common delays resulting from often lengthy traditional software deployment.
- Easy upgrades– The SaaS providers deal with hardware and software updates, deploying upgrades centrally to the hosted applications and removing this workload and responsibility from you.
- Accessibility– Then all you need to access a SaaS application is a browser and an internet connection. This is generally available on a wide range of devices and from anywhere in the world, making SaaS more accessible than the traditional business software installation.
- Scalability– SaaS providers generally offer many subscription options and flexibility to change subscriptions as and when needed, e.g. when your business grows, or more users need to access the service.
SaaS, and more widely cloud computing, can help you make the most of a limited IT budget, while giving you access to the latest technology and professional support. However, you should consider some potential disadvantages before making a final decision.
Disadvantages of SaaS
SaaS model sometimes has certain shortcomings, including:
- Lack of control – in-house software application give businesses a higher degree of control than hosted solutions where control resides with a third party. So typically everyone has to use the latest version of the software application and cannot defer upgrades or changes in the features.
- Security and data concerns -of course access management and the privacy of sensitive information is a major consideration around cloud and hosted services.
- Limited range of applications– while SaaS is becoming more popular, there are still many applications that don’t offer a hosted platform.
- Connectivity requirement– since SaaS model is based on web delivery, if your internet service fails, you will lose access to your software or data
- Performance– SaaS may run at somewhat slower speeds than on- premise client or server applications, so it’s worth keeping performance in mind your software isn’t hosted on a local machine.