Software Licenses

What are Software Licenses?

A software license agreement is a legally binding company contract between an end user/licensee and the owner/ licensor. It provides guidelines on the use of the software, number of licenses, payment, tenure and installation.

It also indicates your company’s ability to copy, modify, or redistribute it, along with the details of fees for licensing, support, and maintenance.

The roles and responsibilities of both parties are highlighted and warranties related to software performance in accordance with its published specifications outlined.

Why are Software Licenses important for business today?

Having an up to date and comprehensive set of software license agreements enables your company to:

• Keep track of software expiry dates to ensure renewal or replacements are planned in advance
• Mitigate the risk of infringing copyright law
• Terminate any agreement where software expectations or requirements are not met

Why is it important for an event tomorrow?

Having an up to date and comprehensive set of software license agreements is important for an event tomorrow, as it helps:

• Account for the cost of these licenses to estimate your company’s valuation
• Assess information on agreements that allow for portability of licenses post transaction, reducing compliance risk and licensing costs
• Budget in advance by providing information on license renewal dates and redundant licenses

Pros of Software Licenses

• Lowers the risk of software performing below agreed specifications
• Lowers the risk of distributing software within your company against the terms of the agreements
• Budget in advance as software costs become more predictable and easier to forecast with a software agreement
• Clarity and transparency of the terms and conditions related to software usage such as the number of end-users and installations
• Access to expert advice and solutions whenever your employees have a concern or query regarding software use

Cons of not addressing this topic

• Illegal use of software may lead to significant legal liabilities
• Increase in business risks such as data thefts and malware attacks, if software used is pirated or illegal
• Over-utilization of resources as your company may end up paying for licenses that are not being used
• Operational inefficiency may arise due to undefined scope of services.