ERP Systems

The Big Three in Business Software Systems: Oracle, SAP and Microsoft, how to choose.  (Part 4)

Part 4.  Licensing models

All business software systems have different ways and alternatives when it comes to licensing their products.  Knowing how an information infrastructure is built and/or the extent of re-design to which a company is prepared to go is vital in determining how the business software systems product a company chooses.

Licensing considerations represent a major step in mitigating a company’s financial and legal risks.  For American companies, especially, licensing compliance is vital to the well-being of the organization.  The Business Software Alliance (BSA) and the Software & Information Industry Association (SIIA) are two very real organizations that were formed in an effort to protect software companies from the illegal use and lost revenues that result from unlicensed or inaccurate licensing of their products.  Fines, for non-compliance can be as high as $90,000 per instance.

Business Software Systems can be licensed in a variety of ways and licensing type is determined by various factors and choices.   Be aware, that business software systems often require other pieces of software in order to work properly so licensing considerations and costs must also be factored in to your decision or recommendation.

Licensing can be user or machine based.  It can be governed by processor or unit.  It can be transferable or non-transferable.   Business software systems can be enterprise wide or location specific,  they can require user /client licenses, shared between users, checked-in and checked out like library books…these are just some of the possibilities.  Whatever the case, it is important to work with knowledgeable sales people, technical people (in-house and vendor), contracts should be involved.

Are you making this purchase as a capital purchase?  Would you like to split it between capital and expense spending? Accounting and finance should be involved in the process as well.   Due diligence at the front-end of decisions such as choosing business software systems, pay off large in the long run.  Businesses should self-audit, know how many machines must be licensed and develop a process for adding machines and retiring old or broken computers as business ebbs and flows.  Without clear procedures in place, a company is increases its compliance risks exponentially.

It is not always possible to change licensing models once one is in place.  Do your homework in order to avoid what could be a costly and disruptive refit and massive re-implementation.  Business software systems licensing is not to be taken likely.