vendors offer licensing policies catering to the differing
requirements of various organizations. So what's on
offer and how does one pick the best policy? by Brian
all know that a software license grants an organization
or individual the legal right to use the software. But
a software licensing policy formulated by the vendor
also takes into account other factors like upgrades/updates,
support (AMC), software piracy control, and the manner
in which the software can be used. Enterprise customers
look up to a software contract as a means of investment
protection and to ensure support. Vendors have devised
their own unique policies to address such customer concerns.
So how does an enterprise decide which is the most suitable
Says K. Chandrashekaran, Director, Network Systems and
Support, Cognizant Technology Solutions, "The business
model and requirements of a business should decide the
licensing policy of a company. Software development
organizations can go in for 'term license and per seat'
wherever possible, because the software development
life-cycle has now shrunk to a few weeks. The business
requirement and technology deployed would be other considerations
that would determine the type of licensing a company
A threat that all enterprises face is change in licensing
terms and fluctuating AMC fees (more on this in our
next story). "Change in the licensing policy often
leads to unplanned expenditure on upgrading/updating
the products to ensure one has the latest, even if one
does not require it immediately. But to protect investments,
an organization is compelled to tow the line,"
So how does an enterprise prepare for anticipated changes?
Wherever possible, enterprises should get into a long-term
contract (something similar to Enterprise Agreement
offered by Microsoft), for frequently used products,
to protect their investments and to stay up-to-date.
Licenses can be broadly classified into two categories'perpetual'
and 'term license.' The perpetual license has no limitation
on the period of usage, as the user owns the license.
The term license has a limited period of validityabout
one or two years.
Licenses could be per seat (per desktop) or per server
or a combination of both. If a desktop needs to access
multiple servers, per seat license would be more economical,
than a per server license. In fact vendors like Novell
are moving from the server-centric to a user-centric
model as it gives customers more flexibility in deploying
applications across multiple servers.
We asked vendors what kind of software licensing policies
they offer Indian enterprises. While some policies might
appear to be too harsh, others are customer friendly
and take important things like upgrades and investment
protection into consideration.
Basically, Microsoft offers three forms of licensing:
OEM License, Retail License and Volume Licensing.
OEM License: For the PC manufacturer who bundles the
operating system with the PC.
Retail License: For products that can be bought off
the shelf. In this case, the product comes with a single
Volume License: For those whose requirement is large
and will spend a minimum of Rs 5 lakh on a specific
According to Microsoft India, the most commonly used
licensing here is Open Licensing. With this form of
licensing small businesses can start their businesses
with minimum Rs 5 lakh, and depending on the requirement,
as and when they grow, can qualify for higher licensing
In addition, the company introduced a new policy for
businesses last year. On May 10, 2001, Microsoft announced
its Software Assurance programan update to its
existing Volume Licensing programs Open License 5.0
and Enterprise Agreement 5.0 to version 6.0. Businesses
could sign up for this program between October 1, 2001
and July 31, 2002. Those signing up were expected to
pay annual fees for specific software products in advance.
That would enable them to receive any upgrades and updates
for that software product (as and when available), within
a two year period. Software Assurance can be renewed
after two years.
The Software Assurance program is a departure from the
traditional way in which enterprises purchased and upgraded
software. Rather than upgrading their software when
they wanted to, or when their IT budgets provided for
it, enterprises now pay for upgrades in advance. The
program received mixed responses from the industry,
and some were against the idea of paying for software
Says Deepak Shagrithaya, Program Manager-Licensing,
Microsoft Corporation India, "Software Assurance
is a new, simpler way of upgrading to the latest versions
of software, and one that is easier to understand and
administer. From customer feedback we learnt that License
5.0 was quite complex in nature primarily because it
was offering too many options. Large organizations found
it very difficult to maintain different versions of
software on different desktops at different locations.
The objective of the new licensing program was to make
that simple. We kept aside all those upgrade facilities
that were available, and replaced that with the Software
Shagrithaya also informs that from August 1, 2002, the
customer can no longer buy Software Assurance separately.
Software Assurance now comes only with the license.
Alternatively, one can buy Software Assurance separately
when renewing the expiry of the existing Software Assurance.
In addition, Microsoft has another form of licensing
called the Enterprise Agreement. This is suitable for
businesses that want to standardize on Microsoft products
across the Enterprise, in accordance with their infrastructure.
The Enterprise Agreement is for a period of three years
and will include licenses as well as upgrades for that
period. This program is aimed at customers who have
200 or more desktops. It is also aimed at customers
who are looking at the latest technology upgrades and
who have standard infrastructure across the organization.
The maker of image editing and documentation software
has three volume licensing programs.
Transactional Licensing Program: The Adobe Open Options
Transactional License Program (TLP) is for organizations
with as few as ten workstations that need volume licensing.
This program is open to corporate, government, education,
and small business customers. TLP covers most Adobe
products and is available worldwide. There are no contracts
to sign or records to keep, and there is no need to
forecast future software consumption. The Adobe Open
Options TLP evaluates each transaction separately and
applies the appropriate volume discount level.
Contractual Licensing Program: The Adobe Open Options
Contractual License Program (CLP) simplifies software
administration through a single licensing agreement
that is effective worldwide. By participating in the
CLP, one gets the benefit of a large-purchase discount,
and has the option to spread license fees, and thus
expenditure over the duration of the agreement. Open
to corporate, government, education, and small-business
customers, this program covers most Adobe products.
CLP is a two-year contract between Adobe and the customer.
Site Licensing Program: The Adobe Open Options Site
License Program (SLP) simplifies deployment of Adobe
Acrobat 5.0 throughout the organization. According to
Adobe, participation in the SLP simplifies software
installation with a single site-license serial number
and it reduces compliance risks too. The program's convenient
six-month reporting plan provides easy budgeting and
forecastingespecially useful for purchasing departments.
The Adobe Open Options SLP is open to corporate, government,
education, and small business customers worldwide.
All licenses are on per seat basis. TLP is available
through Distributors and Resellers whereas CLP and SLP
can only be sold through an ALC (Adobe Licensing Centre),
which is Wipro Infotech in India.
The maker of design software offers three types of licensing
Standalone license: Where the license is to be used
on one computer and at one location.
Network license: Where the license allows the software
to be installed on a networkit could be used through
a number of computers. The license is issued based on
the number of users that are allowed access to the network.
instance, if the network license is for five users,
then only five users can access the software through
the server at any point of time.
Student license: Where the license allows for the software
to be installed on a single computer for only education
Autodesk's licenses are governed by the following policies:
is non-exclusive: This means the user is only allowed
to install and use the software. The user is not allowed
to rent, lease, reverse-engineer, reproduce (other
than the installation process), alter, adapt or circumvent
the copy protection devise without the consent of
It is non-transferable: The software cannot be transferred
to another user without the consent of Autodesk.
user is only allowed to use the software in the country
in which the software was purchased.
the software purchased is an upgrade version, then
the previous version has to be deleted within 60 days
after installation of the upgrade version.
NetWare 6.0, the network operating system from Novell,
comes with a server license plus five user connection
licenses. An organization can later go in for additive
licenses, in multiples of five. Customers also have
the option of buying a server license plus 50 connection
licenses. For Novell GroupWise one needs to buy only
as many licenses as the number of post offices used.
Novell also has software and licensing policies for
SMEs. For its Small Business products, it offers per
user connection licenses. So a business that has bought
five licenses can go in for one more later, if required.
"For a small organization an increment from 5 to
10 would take a longer time. That's why we also offer
an increment from 5 to 6. This way, licenses are not
wasted," says Ashit Panjwani, National Manager,
Alliance and Marketing, Onward Novell Software (I).
Onward Novell also offers special pricing to existing
customers. Those using older versions of its products
pay approximately 60 percent of the price of the new
product (i.e. approximately 40 percent discount).
Responding to customer concerns about upgrades and updates,
Onward Novell has introduced two upgrade programs and
made its licensing policies more user-centric.
The Upgrade Protection program is a long-term upgrade
protection plan. It's similar to Microsoft's Software
Assurance program, in the sense customers pay in advance
for software updates/upgrades to be released in future.
could opt for a one- or two-year contract with Novell.
The Upgrade Promotion program is a short-term, limited
upgrade protection plan that may be announced periodically
just before a product launch. If a business has an immediate
need for the current version of a particular software,
they may go ahead and upgrade (without waiting for the
new version to be launched), and when a new version
of that product is launched in the subsequent months,
the company receives the upgrade either free of cost
or at minimum cost.
Besides user-based licensing Novell also offers CPU-based
pricing for Novell Portal Services.
Says Panjwani, "We have moved from a server-centric
model to a user-centric model. So now if a company has
500 users it can distribute the application across various
servers. Earlier, the license was restricted to one
Symantec, a developer of Internet and Enterprise security
solutions, announced the Symantec Security License Program
in July 2002. The objective of this program is to make
it easy and cost-effective for companies of all sizes
to purchase Symantec enterprise security software solutions.
The program's two volume license options provide consistent
product offerings, discounts and support for the entire
range of Symantec solutions.
The Symantec Value Program is a single-purchase, certificate-based
plan ideal for small- to mid-sized companies operating
within a single country. It offers incentives for orders
of as few as one server or 10 desktop licenses, and
allows companies to mix-and-match purchases within a
product family to increase the discount level. Companies
can purchase a software media pack and the number of
necessary licenses via one purchase order. The Symantec
Elite Program is a simple contractual plan enabling
larger companies to leverage their volume purchasing
power to achieve greater value from their software license
purchases. This program provides companies the choice
of two purchasing options. The Commit option allows
organizations to maximize their two-year volume discounts
with an up-front purchase commitment; the Forecast option
helps companies minimize their up-front capital outlay
by requiring an initial purchase of 25 percent of the
Symantec is also introducing Gold Maintenance, a support
program providing upgrade insurance, security content
updates and Gold Technical Support. With Gold Technical
Support customers will receive 24x7 Web support and
toll-free telephone support during standard business
hours. Gold Maintenance is required with an Elite Program
purchase and can be added onto Value Program purchases.
The program ensures that customers always have the latest
software versions available and the technical support
they need effectively utilize Symantec enterprise security
solutions. Customers can also choose to upgrade their
support to Platinum or Premium Platinum levels for live,
round-the-clock coverage, advanced wireless security
alerting or dedicated Technical Account Management.
"From July 1, 2002, all new license purchases are
supported by the Symantec Security License Program,"
informs Ambrish Deshpande, Manager-Channel Sales and
Marketing. "From June 3, 2002, no new Global License
Program contracts has been accepted. Existing contracts,
has been honored through the term of each agreement."
The maker of Web development tools offers the Macromedia
Volume License Program (MVLP). According to Macromedia,
the program offers flexible licensing solutions that
help volume customers save time and money.
they are a commercial, government or education customers,
the MVLP offers point-based discounts, the ability to
mix products, and streamlined account management, making
it easy to purchase and track licenses.
The MVLP provides customers with a cumulative points
based licensing option with no contract required. Purchase
levels allow customers to achieve deeper volume discounts
based on the cumulative point total over a rolling eight-quarter
(24 months) period.
The MVLP is a points based system. Discount levels are
calculated simply by adding the total points on the
order with subsequent orders contributing to advancing
levels of discount.
Subscriptions: Software subscription entitles the customer
to free version upgrades (e.g., 4.0 to 5.0), updates
(e.g., 4.1 to 4.3) and bug fixes during the active subscription
period. The subscription period of coverage is two years.
Licensing: For tools like Flash MX, Dreamweaver MX,
Fireworks MX, Freehand 10.0, Director 8.5 and Authorware
6.0, the licensing is per seat (per desktop). The same
applies to Studio i.e. software bundles like Studio
MX, E-learning Suite.
Coldfusion MX is available in Professional and Enterprise
editions and its licensing is per Server. Jrun 4.0 licensing
is per CPU.
For its FLEXCUBE application i-Flex Solutions offers
a perpetual license for enterprise-wide usage for a
bank/financial institution. The conditions attached
to the licensing of FLEXCUBE pertain to the number of
authorized users in restricted premises and locations.
The license cost is dependent on the areas and the scale
of operations of the institution. i-Flex offers various
payment options including a deferred payment mode as
in ASP rentals.
"We deliver the application to the end-user in
both the ownership model as well as 'pay-per-use' ASP
rental model," says Atul Gupta, Head-ASP Business
Group, i-Flex Solutions. "The pricing for both
options is calculated based on the areas of business
as well as the volume of business in these areas. Thus
the license fee to be paid would vary for small, mid-
and top-tier companies depending on its volume of business.
In the ownership model license fee is paid upfront and
on completion of the implementation, while in the ASP
option the application rentals are paid on a recurring
basis over a pre-defined period of time based on the
usage of the application."
Sun offers uniform licensing policies worldwide, and
licenses are not specific to any country. Sun's Operating
Systems are bundled with servers with unlimited user
For other specific software, server-based licensing,
user-based licensing and on-site licensing are the three
options available for the customers.
Sun also offers Incentives and discounts on volume-based
Pereira can be reached at email@example.com
: We regret the omission of several major companies
in this story. Many private limited companies refused
to reveal their software licensing policies. Others
failed to respond to our questionnaire even after being
contacted a whole month in advance: Ed.