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All the latest from Indigo Technologies

Monday, 21 November 2011

Licensing and the Law

By Sean Thomson, Director, Indigo Technologies

Software licenses are notoriously challenging. As virtualisation becomes a growing trend, the definitions of who is licensed to use what and where are blurring.

Organisations are moving from physical to virtual spaces and can access software from a variety of devices. As software licensing adapts to the virtual world, businesses have to keep up the pace.

Companies are increasingly under threat of legal action and stricter licensing laws, as the economic climate prompts cash-strapped software suppliers to crack down on compliance.  Software suppliers are giving businesses they suspect of breaching licensing agreements 30 days to prove their software is fully licensed or risk expensive fines.

Having the right licenses ensures your business is using software legally. Software compliance is being able to demonstrate that you have the correct type of license. Traditional licensing models can be based on the number of users, number of computers or number and power of CPU’s.

Determining what is best for your company can be confusing. At Indigo, we have compiled the following list of Do’s and Don’ts for businesses when dealing with their software licensing:


  • Do track software installation and use - Businesses may be overlooking costly maintenance payments on applications that are not being used.
  • Do have central control - A central location or person in charge of keeping proof of software licenses so that they are easily accessible for review.
  • Do track renewal dates - Companies not following up or keeping track of software license agreements and dates for renewal can leave businesses vulnerable to lapses in software assurance.
  • Do communicate between departments - Lack of communication between IT operations and other departments can limit the potential for software being installed and used in accordance with respective licence agreements. IT personnel need to be well informed when making software purchasing decisions.
  • Do think strategically - Buying licenses without determining what the business requires in the long term can be an expensive mistake.
  • Do apply the product use rights - Product Use Rights define what can be done with a piece of software and at what level or numbers. Complying with the product use rights can significantly reduce a company’s license consumption. And reduced consumption means lower on going license and maintenance costs.


  • Don’t allow employees to make ad hoc purchases - Not controlling authorised purchases can cause licensing confusion.
  • Don’t assume licensing rules don’t change - Licensing rules change frequently and companies need to stay on top of all the rules and regulations. The virtual world is more dynamic and there are new rights and restrictions that organisations must continuously follow to ensure software license compliance.
  • Don’t copy or distribute software - Unless your organisation has a licence from the owner of the software to copy and distribute computer software, copying is illegal.
  • Don’t overlook the licensing terms - Terms can vary from one piece of software to another, even when from the same supplier. Many companies fail to recognise the differences in definitions of licenses and product use rights from different software suppliers. Complex technological changes such as virtualisation make it harder for companies to be sure they are using licenses correctly.

With the wide spread adoption of portable computers, virtualisation and cloud computing, it is important that you match your software licensing to the needs of your business. Computing environments are becoming more complex making it possible for organisations to be using more software than intended with the original license.

As your business grows make sure that your licenses reflect the growth of your workforce. Step out of line and you face the prospect of an expensive process that may also involve hefty fines as a result of not holding the correct types or number of licenses.

Choosing the right software licensing agreement for your business gives the right to use the software you need, it also helps you manage your software assets more effectively. Honing in on the benefits, software licence management holds the potential to make significant cost savings, avoiding duplication and the shortcomings of paying for software that your business does not require. It is surprising that few companies release the potential savings in time and money they can make by monitoring and managing software license usage.

Recognising the complexities and the risks associated with unmanaged software licenses, Indigo have invested in a dedicated licensing specialist to help address the frustrating job of managing software rights and keep our clients on the right track.

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