Technology is paramount to an organization’s success and it comes with the dire need for task automation, which is possible only with different software integrations. It doesn’t only reduce the overall manual labor but also enhances a company’s efficiency upon the path of achieving the goals. But from a developer’s point of view, software license keys are important. Let us read forth to understand software licensing and its importance for an organization.

What is a Software License?

A software license is an instrument that legally binds the user to the guidelines stated for its use as well as its redistribution by its creator.

Whether it is for communication with the employees or with the customers, for business management processes or a heap of other tasks, every business in the present day uses different software. In most cases, before software installation, license activation is required. This comes with a series of terms and conditions to be agreed upon before certain software is downloaded or accessed.

Following are the contents of a software license:

• General Information such as the length of the agreement, the date from which the agreement would be effective etc.
• Mention of the parties involved in the agreement.
• Terms of the agreement such as the price to be paid or flat fee, whether the code will be included or not, maintenance, refunds, support etc.
• Elaborated details as well as signatures.

The crucial clauses of a software license agreement are:

Types of User Licenses

There are various kinds of user licenses and non-compliance of these might end up the user under penalization.

1. Public Domain: A software in a public domain means that it can be used or modified by the end-user without any restrictions. These are thus considered as permissive software.
2. Permissive License: It is like the public domain, but carries limitations as to how an end-user can modify or use it. With this type of licensing, the software creators can retain their intellectual property without copyright being compromised.
3. Restrictive Licenses: As the name is suggestive, such licenses do not allow any redistribution or use without their name. This license is also known as reciprocal license or copyleft license.
4. LGPL: With this license type, the end-user can modify the program and assimilate the derivative version into a proprietary software product. They can license this product as per their terms and at their own discretion.

Benefits of User Licenses

A strong software licensing comes with the assurance of safeguarding your company’s reputation and credibility in the market.

Some disadvantages or limitations of the end-user licensing are:

• The lack of exclusivity puts your company at risk of high competition due to multiple businesses competing in the same marketplace by accessing the same tools and software as your organization.
• Most of the licenses are offered for a limited period of time and need constant renewal.
• A license might agree on a certain percentage of royalties but doesn’t come with an assurance of cash generation after its software implementation.
• The IP address is always at risk of theft.
• The validation of royalty statements might pose to be a big issue resulting in royalty litigation.

It is advisable that prior to going ahead with a licensing agreement, one must be aware of its various models such as perpetual licenses, subscription-based licenses etc. The use of home version software is always against the license agreements. SaaS is usually beneficial for a company’s growth, as it significantly cuts down the license cost. Even though the licenses come with their share of limitations which adversely affect the businesses at times, yet, the fact that these licensing agreements are crucial for a smooth working and understanding between a service provider and the end-user, cannot be ignored.