Software Licensing: Why It's Important and How It Can Help You

by David Burkett, Jul 12, 2016

With software becoming more prevalent in our everyday lives, we should become familiar with important concepts such as software licensing. Despite software licensing presenting as quite a tricky concept, consumers should endeavour to learn the ins and outs of it in order to improve software innovation.

What Is Software Licensing?

A software license is a legal instrument allowing consumers to use or redistribute software. Without the license agreement, using the software would constitute a breach of copyright law. The particular license agreement will explain to the end-user how they can use the software. All software must be legally licensed before it can be installed. Where software licensing becomes confusing is in the different types of licenses and the rights attached to the various licenses.

Methods for Licensing Software

An end-user license agreement (EULA) is one approach vendors can take to license their software. This is a contract between the licensor and purchaser, establishing the purchaser's right to use the software. The contract may include the different ways the software can be used as well as any rights the buyer has obtained by purchasing the software. This is one of the more basic and commonly used ways to license software.
If you're using SaaS and as a result your applications are cloud based, the software license is usually subscription based. That is, you will pay for each user on a monthly (or some other period) basis. This type of software license offers greater flexibility. It is also beneficial in that you only pay for what you need " allowing you to scale your business without repercussions.
There's also the question of whether you can re-sell your software license if you're no longer using it. There is no black and white answer to this question. The answer can generally be found in the EULA. From a legal standpoint there may be question marks over the enforceability of EULA's given to users after they purchased the software given they weren't aware of these conditions at the time the contract was formed. However I will not go into depth about questions of law.
Another method of licensing software is by white labelling it. This is where a product is created by one company and then re-branded by another company. As a result, the software/product belongs to the company that created it. There is a software license in place which permits the company benefiting from the white label to use the software.

Why Software Licensing Is Important

Businesses must be savvy in the licenses they purchase to ensure firstly they are using software legally and secondly, they aren't paying for licenses that aren't being used. By acquiring too many software licenses you're wasting company resources, without enough you leave yourself liable to a potential lawsuit (which is quite costly). Finding the right license agreement can also make it easier to manage software in your company.

How Does Licensing Work On The WorkingMouse Platform

The License Agreement between WorkingMouse and our customers gives them access to use the platform for developing and maintaining their software application(s). It allows customers to issue support tickets to WorkingMouse for assistance with server administration, bug fixing and minor enhancements. The license ensures WorkingMouse can support customers as they embark on their journey. 
WorkingMouse also offers an innovation platform which is used by multiple businesses. Since all these businesses use the same underlying platform they will all feel the benefit of improvements. For this reason, a business that starts using the platform will feel many benefits immediately, e.g. a mobile-app can operate in an offline/online mode and re-sync with the server as required. Everyone gets the capability as it's built into the platform. If a company did not want to share a new capability it is possible to fork the code base and they could continue on their own branch. However, this would mean they would then not receive any more benefits from being inside the business collective hence the innovation process slows down.
There is a notable difference between a capability and a plug-in. A business owns its plug-ins and these do not have to be shared as stated in the license management section. WorkingMouse's innovation platform allows users to benefit from rapid development and a collaborative environment. This is made possible by the license agreement. If you would like to read more about our innovation platform, check out our whitepaper.