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Can a Software License Be Too Strict?

March 07, 2014
By Mae Kowalke, Software Licensing Contributor

As software distribution changes, licensing and entitlement management evolves as well. One question many independent software vendors have been asking themselves lately is whether to be compliance aware or actually limit the ability of users to go beyond their entitlement.

The answer to this question largely depends on the market and type of use, according to Mathieu Baissac, VP of Product Management at Flexera Software.

“Producers determine enforcement policy by understanding their markets and what works best for their customers,” he noted in a recent interview with The ITAM Review. “Application Producers have different options as they weigh how strict their enforcement policies should be.”

If the market for the software requires general flexibility, it may not be to the advantage of the software developer to take a hardline stance when it comes to licensing. Instead of ensuring that the developer gets all the revenue that it’s due, strict compliance in this case could instead act as a mechanism to lose customers and alienate them away from future sales.

In the case of specialized and expensive software that will levy significant additional costs against customers with compliance overages, however, it makes more sense to set strict compliance standards and deny access when these limits are breached.

“Strict enforcement may be more appropriate when non-compliance would result in significant cost overages untenable by the customer,” noted Baissac, “like those developed for the engineering field.   It’s critical that producers be able to make their own decisions around enforcement, and then have the flexibility to build that policy into their software quickly and easily.”

A new licensing and compliance model is thus gaining favor: usage-based licensing. In this model, usage is captured by the application and then shared with producers. This is not unlike cellular plans where customers purchase a number of voice minutes per month but can go beyond those limits for a cost.

Compliance-aware software can offer a full range of both compliant and non-compliant use. In this case, its ‘s one that can be set dynamically by the producer.

This approach adds complexity to software licensing and entitlement, however, something that many developers are currently ill-equipped to handle. As I noted in an article earlier this week, a new study by IDC and Flexera found that only 39 percent of developers use third-party licensing and entitlement management to offer flexible, adaptable licensing to meet the requirements of changing software licensing demands.

“For enterprise users of software, complexity will not go away – and therefore compliance issues are here to stay,” said Baissac in the ITAM Review piece. “Software Asset Management has emerged as a discipline to help enterprises ‘future-proof’ their software estates, and stay on top of compliance irrespective of the changes occurring in the technology landscape.”

Edited by Blaise McNamee

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