E-business raises licensing issues

More than one e-business venture has come up against software licensing with a thud, says consultant Wayne Jackson.

More than one e-business venture has come up against software licensing with a thud, says consultant Wayne Jackson.

As businesses open their systems to the outside world they may find themselves having to license more users outside the organisation than inside, Jackson told attendees at last week’s CIO conference in Auckland.

Jackson, a software licensing specialist and director of Auckland-based Accordo Group, says e-business is a serious challenge to software vendors as it is introducing more ways in which software can be accessed and used. He says software vendors have clauses, usually called "product use rights", to help them adapt to these changes. “They need to have these clauses but it means licensing is a moving target.”

Software vendors are changing licensing to suit the new environment. Microsoft, for example, has introduced per-processor licensing for Microsoft SQL 2000 which covers all users accessing the SQL database regardless of whether they are inside or outside the organisation. Earlier versions of SQL use client access licences (CALs) for internal users and an Internet Connector licence - which carries an estimated retail price of $7300 ex GST - for unlimited outside users.

“You have to accept that licensing is not static and is evolving,” says Jackson. “Ensure that software licensing is pro-actively investigated particularly if you’re embarking on any e-venture of any kind. Keep abreast of changes and analyse the impact.”

Software rental through application service providers is another trend impacting licensing, says Jackson. “Will software rental really lower software costs? They may lower the overall cost so you need to evaluate on a case-by-case basis. If you’re asking whether ASPs will lower software licensing costs in isolation, I would say probably not. The software will probably be quite a small proportion of the cost of renting the overall service. However, [ASPs] may deliver greater flexibility, especially for products you only use occasionally.”

Jackson believes there is still shakeout to come in the ASP market.

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