Software licensing made simple

A universally understood utility payment system would greatly simplify the software licensing process, argues Mark Johnson.

Not only is the software licensing process difficult to manage within a company in terms of keeping track of the number of software licences against the number of users, but different rules apply to separate vendors' products.

End users need this complexity removed, or they could be in trouble. Software is now as important to the effective running of a business as the supply of basic utilities such as the telephone. The distribution of software should be billed for and delivered electronically to end users.

By creating a universally understood utility payment system, the software licensing process would be instantly simplified.

A utility-style system would log what software a company has and alert the IT manager each time a new user is added. Payment would then be required for use.

Alternatively, a simple direct debit-style system could be introduced where companies give 'meter readings' of software users and are billed accordingly.

Currently, software licences are bought outright with new users added on as necessary. A leasing approach would make more commercial sense for the business, and enable the reseller to create a regular, more long-term relationship and generate revenues from other opportunities arising from that extended relationship.

The current system frustrates both resellers and their customers because of its complexity. The delivery of essential software to business end users is an area where the channel can provide value. It is important that vendors, resellers and distributors co-operate to reduce the complexity of the current system.

It is the reseller's role to help customers understand how licensing programmes work, to add more value and to maintain an ongoing relationship.

IT managers cannot dedicate time to understanding the fundamentals of each vendor's licensing programme, as they rely on the reseller to ensure they are legally licensed.

The problem with software licence avoidance is not always dishonesty, but the difficulty of using the current system.

While fraud does have a major impact on the industry, it is lack of end user understanding that plays a significant role in reduced revenue. By addressing this issue alone, the industry could significantly reduce the licence avoidance problem.

Mark Johnson is general manager for software at Ideal Hardware.