Many leaders of small and medium businesses (SMBs) are not IT experts and some don’t have an IT expert on staff. As a result, there may be details that escape notice. One of the critically important details that is often overlooked in IT is software licensing.
In this article, we'll provide a thorough overview of software licenses. We’ll outline what software licenses are and how they work, explore the implications of using software without a license (or overusing a license), explain why renewal dates are important, and discuss some free options that might not require a license.
Depending on the size of your organization and number of devices, managing software licenses can be a big job. At Kelser, we provide software license management support for all of our managed IT service customers. This includes tracking renewal dates, adding and deleting users (to maximize cost efficiencies), and monitoring software for end of life.
Having said that, we understand that managed IT support isn’t right for everyone.
That’s why we provide articles like this one that business leaders like you can use to make the best informed decisions about the technology that fuels your business so you can grow your business and stay competitive.
What Is A Software License?
This may seem fundamental, but just to ensure we're on the same page, we'll provide a definition of a software license.
A software license is a legally binding contract between a software developer and a person or organization. The license gives the person or organization the right to use the software for its intended purpose.
Most software licenses do not allow the software to be altered.
A license typically grants usage rights for one user or “seat,” meaning that organizations need to purchase a license for each person who uses the software.
Some licenses, however, grant permission for multiple users. That’s why it's important to know what type of licenses you have or plan to purchase and the advantages or disadvantages of either option.
Related article: IT Software & Hardware LIcensing: Why Understanding It Is Important
What Options Do I Have When Purchasing A Software License?
When purchasing a software license, you often have the choice to purchase a perpetual or annual license, as well as software support or maintenance.
1. Perpetual License
When you purchase a perpetual license, you pay the usage fee upfront and can continue to use the software indefinitely.
2. Annual License
As the name implies, an annual license needs to be reviewed each year and either renewed, negotiated, or terminated.
3. Software Support
From time to time, software will break. Software support covers IT that provide fixes for small and major bugs in the software.
4. Software Maintenance
Maintenance service covers routine and other procedures necessary to improve the way software functions. It includes fixing bugs and adjusting software to better align with your unique objectives and needs.
Depending on the software type and availability of maintenance, many businesses opt to include maintenance in their licensing agreements to build in agility and responsiveness to meet the needs of their users.
sKeep in mind that even perpetual licenses require support and maintenance renewals each year.
What Happens If I Use Software Without A License?
Some SMB leaders mistakenly assume that all software licenses are multi-use, allowing different employees access to the software using multiple devices. Others assume that one license is sufficient for their entire organization. While this can sometimes be true, it isn’t always the case.
Using software that you don’t have the correct usage rights (or licenses) for (known as pirated software) is illegal and is a form of copyright infringement.
Violation of software copyright law can lead to legal fallout for companies and individuals. It can also result in fines (of up to 10 times the original value of the software), prosecution, and even jail time.
In addition, using software that's reached its end of life could open the door to malicious actors looking to exploit a cybersecurity vulnerability to gain unauthorized access to your network and data. This can lead to cyber threats including malware, ransomware, and data breaches.
Is There Any Software That Can Be Used Without A License?
Some types of software can be used without a license.
“Freeware” or “open-source software” are freely licensed and available for use by anyone. In addition, developers make the source code for this type of software freely available so anyone can study or change it, make improvements, or customize it to their specific needs.
As with any software agreement, it is important to read and understand the end user licensing agreement (EULA) for “free” software. This is particularly important because some licensing agreements specify that the software is free for home use, but not for commercial use.
How Do I Know If A Software License Needs To Be Renewed?
Most software vendors will alert users at a small company directly when a license is coming up for renewal.
Larger companies often have a software manager or group that is notified of upcoming software expirations. This person or group typically handles software renewals for the entire organization.
The key here is to pay attention. Different software licenses will expire at different times. Also, not all developers send email notifications.
In order to minimize the impact of expired software on your organization (and the potential for downtime or increased cyber risks), you need to renew your license, negotiate the existing agreement, or have another solution in place and ready to go.
What’s The Bottom Line?
In this article, we’ve explored key information you should know about software licenses.
After reading this article, you know what a software license is, what your options are when purchasing licenses, the potential hazards of using software without a license, free software alternatives, and how to know when software licenses need to be renewed.
You may already have the in-house resources in place to manage your software licenses internally. If not, you may be considering working with an external partner who can manage your licenses for you.
While both solutions can work, you'll need to figure out which is right for you. So, whether you outsource management of your software licenses or have the capacity to handle it internally, the important thing is to pay attention and know when your renewals are coming up, so you aren’t surprised and so your business isn’t taken offline by a simple software license renewal.
Managed IT service and solution providers offer a full suite of services that often include software license management. Read this article to learn more: What Is Managed IT? What's Included? What Does It Cost?
If you’d like to learn more about managed IT, we are always available to talk with you about your technology pain points and see if we would be a good fit to work with to help you solve them. Click the button below to set up a phone call with a member of our team.
Not ready for a conversation? Start with a self-assessment! Click on the link below for a free managed IT checklist you can use to determine if managed IT support services and solutions might be a good option for you. Use the checklist to:
✔️Evaluate your current IT infrastructure and processes
✔️Identify your current IT gaps versus what your business needs
✔️Ensure that your organization has the technology it needs to be successful
