License Types and Models

Hello LinkedIn network,

In our ongoing series on License Compliance, we now differentiate between just some of the various models and types of software licenses that are available (and there are a lot!). Understanding these distinctions is key to effectively managing software assets and ensuring compliance. I would always strongly recommend that you all pay very close attention to the vendor EULA, or your respective agreements, to ensure each and every definition is properly understood and managed as they can be surprisingly detailed and / or restrictive. The below models and types are the more typical that are found across the industry.

License Models

Perpetual License

A perpetual software license allows users to use the software indefinitely, typically for a one-time cost. While this might seem to reduce lifetime ownership costs, it's important to be aware that additional expenses can arise for software upgrades, vendor support, and ongoing maintenance.

Subscription License

Subscription-based software licenses are purchased on a monthly or annual basis and grant the user rights to operate the software only during the specified subscription period. This model is gaining popularity as many software companies shift towards subscription-based business models to provide better service for their customers. Subscription packages often include customer service, software maintenance, and regular upgrades. For SaaS licenses, the vendor may also provide the necessary IT infrastructure to support the application, further simplifying the user's responsibilities.

License Types

Understanding the specifics of each type is crucial for compliance and effective software asset management. Take time to investigate what exactly a vendor EULA says a user, device, service, etc actually means. It could mean the difference between being compliant and being dangerously non-compliant.

Per-User License

This type of license typically allows for unlimited use of the software on all devices associated with a specific user. It's important to note that the definition of use under a per-user license isn't always limited to active use. In many cases, simply having the software installed on the user's device constitutes use. This flexibility makes the per-user license particularly suitable for individuals who use multiple devices, as it provides the freedom to access the software on any of their devices. However, organizations need to be vigilant in managing how many users have the software installed, even if it's not actively being used, to ensure compliance with the license terms.

Per-Device License

Under the Device-Based model, licenses are required for each device on which the software is used, whether physical or virtual. Each device requires its own license, and like the per-user license, this is not limited to active use. The presence of the software on a device, whether in use or not, necessitates a license. This model necessitates careful management of software deployment across all devices to maintain compliance, especially in environments where software may be installed across a variety of physical and virtual platforms.

Per-Asset License

In the Asset-Based model, licenses are required for each asset that is tracked by or input into the software. This includes both physical and virtual assets. A key aspect of this model is that it often encompasses decommissioned assets that are retained for record-keeping purposes. Therefore, it's crucial for organizations to meticulously monitor their asset inventory to avoid overconsumption of licenses. This thorough monitoring is particularly important as even assets no longer in active use can still require a license, potentially impacting the overall licensing costs and compliance.

Concurrent User License

This model necessitates licenses for the maximum number of users authorized to access or use the software simultaneously during a specified period. Notably, this licensing approach is typically independent of the number of connections or sessions a single user might initiate. It's the number of users simultaneously using the software that determines the licensing requirement, not the number of sessions or connections to the software. This model is particularly suited for environments where users need intermittent access to the software and can be an efficient way to manage licenses when user access is not constant.

Site License

A site license tyoically allows a program to be installed on an unlimited number of computers within the specified site's location. This type of license is not always restricted to a single physical location but may also extend company-wide, accommodating installations across various locations under the company’s operation. It is particularly beneficial for organizations with a large number of users at a single site or across multiple locations, providing the flexibility to deploy the software wherever it's needed within the company’s operational scope.

Throughput License

The throughput model is based on the total amount of data that is passed through or processed by the software. In this model, your access to and utilization of the software is directly tied to the amount of throughput you purchase. This means that the license grants usage rights in relation to the volume of data processed, making it a fitting choice for businesses where software usage is heavily data-dependent. Organizations using this model need to carefully plan their data processing needs to align with the throughput capacity they have licensed, ensuring they remain within their purchased limits to maintain compliance.

Moving Forward

With some greater insights into the various software license models and types, you're better equipped to navigate the complexities of software licensing. I invite you to share your thoughts and questions on these models and types of licenses. Let’s continue to build our knowledge together.

In our next article, we will be tackling the topic of software asset management, offering guidance for effective strategies and best practices to optimize the use and oversight of your software licenses.