Avoid Licensing Issues

What Licences do you need

graham Tuesday March 20, 2018

You have licences for your phone apps, applications on your PC, your car (look closely at the handbook). Even tractors now come with licences which restrict the farmer's ability to operate them.

Too many licences and you waste money, but if you consume more than you have licences for, you risk substantial civil law penalties.

Organisations struggle with both sides of the equation: knowing what licences they own, and what licences they need. Why?

Organisations vary widely in how good their records are of what licences they have acquired. It's common to see purchasing and asset records which are so vague you can't tell exactly what has been bought, due to short entry fields in accounting systems. Often the original purchase order and invoice don't help much either, unless you keep correspondence to link the supplier's product code to the licence bought.

Some managers prefer to avoid the corporate purchasing route, because it restricts them some way. However good the central record keepers, there will be licences corporate don't know about.

Licences can be acquired "bundled" with hardware or other software, and never appear on a purchase order or asset list.


Licences can be amended after purchase, including by: enterprise agreements, volume purchase agreements, upgrade purchases, support and maintenance agreements. An example is where a perpetual licence gets converted into a subscription, such as Office 365 or Adobe Creative Cloud.

Changes to existing licences can be buried in an agreement made for another purpose. They wording of the new agreement might give no hint of that effect, unless read by someone acutely aware of the possibility. I have seen a new agreement for a "free upgrade", signed by a manager with very modest purchasing authority, which had potential costs of millions of dollars.

When it comes to what licences you need, the situation can be just as complex.

Licences are often measured in strange quantities, and the quantity in use can change through changes elsewhere in the organisation, or even outside.

Say you let suppliers or customers transact with you via your web site- do you need to buy licences to your accounting software for them, or even Windows? Sometimes, yes.

Say you virtualise a server, or migrate it to the Cloud- what is the impact on those licences? Sometimes, you can get more value from the existing licence. Sometimes, the licence requirements escalate out of all proportion.

I even crossed swords with a vendor selling an 'Inactive User' licence- that's right, a licence for non-use of software by someone who no longer works here!

Software installed for one purpose might be used for another, requiring a different licence; for example, bundling arrangement may restrict what you can do with the licence; or software licensed for development- does the licence cover testing? Do you need a separate licence for Disaster Recovery preparation?

Suppliers commonly repackage software with different name, version number, tier (like Professional or Enterprise) or content of a bundle. Changes can be subtle but accumulate. Say a software upgrade pushes some existing functionality you use into a more expensive tier, or a uses a different licence model to before. If you are entitled to the upgrade, must you accept those changes?

Suppliers often audit their customers, and may express the results in a form which ignores what the customer bought and instead lists the products the vendor would sell today. For example, bundles are unpacked or ignored, Enterprise tiers substituted for more basic levels, pessimistic assumptions made on usage. This can make it seem like you are under-licensed when you are not.

There's no substitute for knowing both what you are entitled to and what you have installed. Have you made enough preparations to be confident in both?

If you can't be certain, your supplier will be along presently to tell you. Keep your cheque book handy.

Do you have experience of being unexpectedly found to be under-licensed? Let us know with a comment.

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