Understanding Your Software License Options

July 23rd, 2012

Do you realize the different options you may have for licensing your company software agreements?

Today’s post is by Mark Davis; Sr. Vice President of Operations and CTO at SafeSourcing.

Many times when procurement teams are dealing with IT spends, specifically software solutions, they are unaware of the different options available to them; options that could save them money because they are more geared to the way their company will use the software than the default method the vendor is proposing.  Almost every vendor has a default method of licensing and yet almost every vendor when pressed for an alternative method that fits the customer better will agree in order to get the business.

In today’s blog we will be looking at some of the different models of licensing that are available to you.

Per-Seat Licensing – This type of software licensing is grounded in the number of users you will have accessing the application.  Per set licensing requires a license to be purchased for each user and is a good model for companies who will have a small and select group of employees using the system.  With this model it is easy to control who is accessing the software, however it can lack flexibility to add new users and temporarily share the use of the tool if the need arises. 

Concurrent User Licensing – This type of licensing is a variation of the per-seat model where a company purchases a block of user licenses that can be connected at any one point in time to the software.  For example if a company purchased 25 concurrent licenses the software would allow any 25 users to connect to the system and would block the 26th user attempting to connect.   In this example as soon as someone logs off new users can log on.   The benefit to this model is that it allows a greater group of users to leverage smaller number license packs for software that is not continually used all the time by each member. 

Per Server Licensing –Per server licensing is generally related to mission critical enterprise solutions and is a license purchased for every server the software is installed on.  The price of these licenses is generally much higher as they come with the permission for an unlimited number of users to connect to the solution.  Often web-based or database technology will be deployed using the model of licensing so that users can be added as frequently as necessary without having to worry about auditing the license count.  Accessibility to the system is only limited by what the administrator configures. 

Transaction Based Licensing – Transaction based licensing offers a company the complete flexibility of unlimited users while allowing the cost to grow as the business grows.    Other advantages of models like this involve all of the benefits of purchasing unlimited contract software and software without the upfront financial commitment to the hardware and software.

Annual Subscription Based Licensing – Many SaaS licenses are based upon a subscription license.  These types of licenses give a company unlimited access to the hosted system and tools for an agreed upon period of time.  This model is good for solutions that are already in use by a company and has a high level of use already throughout the company.  One advantage is that there are no further worries as it relates to licenses and tracking once the agreement is completed and it provides availability to any user in the company that needs access.  Like with all SaaS software license models there are no requirements of hardware to be purchased and the maintenance of the system is handled by the host company.

For more information about how SafeSourcing can assist with sourcing your software projects, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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