What is a Software License?

Oct 24, 2013 by Seth Rodriquez

When I started as the Purchasing Coordinator for The Mirazon Group in 2007, I had no clue what I was signing up for. I was pursuing a graduate degree in archaeology and was just looking for a part-time job to help pay the bills. After my interview, I remember being confused about the term “license” and had to ask my future boss the question: “What is a software license?”

So let me throw a line out to everyone who is in the same boat I was in. Maybe, for whatever reason, you have been thrust into the IT industry with little to no background knowledge and now you are in charge of tracking your company’s software licenses … or worse, you are in charge of recommending what types of licensing to buy. If that is you, then here is some basic training for you.

Software Licensing Defined

In short, a software license can be defined as follows:

A software license is a set of rights granted by the manufacturer that governs how the software may be used.

Still confused?  Let me try again:

Just like having a driver’s license gives you permission to drive a car on public roads, a software license gives you permission to use a piece of software in a certain way.

If you don’t have a driver’s license, then legally you can’t operate a car. The same is true with software licensing: if you don’t have a software license, then legally you can’t operate that software.

What’s the Big Deal?

Maybe you’re saying, “I still don’t get it. What’s the big deal? I bought the software, so that makes it mine and I should be able to use it however I want.” Well … not exactly.  Let me give you some background information.

When you buy a blender, you go to the store, pay the cashier, and take it home. Then you can use it however you want. You can blend smoothies, make a frappuccino, or shred your credit cards. You can use it as a paperweight, turn it into a work of art, or throw it at the neighbor’s cat. You can use it to do whatever because you own it.

But the same is not true with software licenses. When you buy a piece of software, you are not buying the software itself. If you take the time to read the “Terms of Service” you will find that the manufacturer retains ownership of the software. What you are actually buying is a license: “a set of rights granted by the manufacturer that governs how the software may be used.” So unlike the blender, you can’t do whatever you want because you don’t own the software itself.

So instead of thinking in terms of “owning” the software, think of it as just borrowing it. When you borrow a blender from a friend, you usually tell them what you need it for and when you will give it back. Then you take it home and (if you’re a good friend) you will use it only in the way you told your friend you would … instead of filling it with colored sand and turning it into “art.” A software license is similar, but it is couched in official legal terms instead of just an informal, verbal agreement. But in both cases, you admit that you don’t own the piece of property and that you are only going to use it in a certain way.

At the same time, one big difference between software licensing and borrowing your friend’s blender is that most of the time the license you purchase is a perpetual license: you have the manufacturer’s permission to use that software forever.  You could say that you have the software on “permanent loan.”  (An exception to this would be a subscription license, where the manufacturer grants you permission to use the software for only a limited period of time.)

How Does This Apply to My Company?

So what’s the point?  You need to understand that, most likely, you don’t own any of the software your company is using. You only own certain types of license agreements that grant you a certain set of rights to use that software. And although many types of licenses are similar, there are some significant differences that you need to watch out for. One of them we have already mentioned: a subscription license is a set of use rights that expires after a certain date. Other restrictions could be what hardware you’re allowed to use that software on, or how many copies of the software you are allowed to run, or how many users are allowed to access it.  There are a variety of ways that a manufacturer can restrict or expand a customer’s use rights.

So welcome to the world of software licensing. As with many things in the IT industry, it takes a mental shift to get your head around it. In future posts, I will be attempting to help you even more by walking you through the complex world of Microsoft licensing.

Software licensing can be confusing, but Mirazon is here to help.  Give a call at 502-240-0404 or send an email to sales@mirazon.com with your questions.


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