Computer software for business

Types of software licences for business

Guide

When you use software, it's important to know about software licences. A licence describes the terms and conditions under which you can use and share the software.

Virtually all proprietary software comes with licences.

What is proprietary software?

Proprietary software is commercial software that you buy, lease or license from a specific supplier or developer. Legally, the software remains the property of its creator, but you can use it within a set of rules specified in an end-user licence agreement. You effectively accept this agreement and the terms of the licence when you install the software, before using the product.

Common types of software licences

There are three different types of proprietary software licenses:

Per device licences

Per device licences are common for installing software on a single server, computer, phone or another device. This is the most common type of software licence. Some versions may require you to activate the software. This allows the supplier to check that the software is installed on just one device.

Per user licences

Per user licences are common where more than one person can use the software simultaneously. The licence is usually for a specified maximum number of users.

Site licences

Site licences are much less restrictive than per device or per user licence. They typically allow as many users or devices as you wish at one location.

Licensing also applies to open source software, but terms and conditions of use are generally more lenient - see more on open source licensing.

Software licensing and legal considerations

Software users need to understand the law around software licensing. When you buy proprietary software, you are essentially buying the right to use it in a specific way. The software company retains full ownership of the software.

The licence serves as a legal framework that protects the intellectual property rights of the software creators, and ensures responsible and fair usage by the end user.

The licence also usually prevents you from doing certain things, like:

  • making copies and passing them on
  • selling your licence to someone else

Most proprietary software is copyrighted, meaning it comes without the source code written by the programmer. Without this code, it's not possible to make changes to the software package.

Risks of unauthorised duplication

Software licences are often expensive. While you may be tempted to buy a single licence and copy it for several users, such practices are considered 'unauthorised duplication'.

They violate the terms and conditions of the licence agreement which restrict the use of software to a specified number of users of devices.

Unauthorised duplication can lead to serious consequences, including fines and legal prosecution for you and your business. Make sure that you buy the appropriate number of licences for your intended usage to ensure compliance with legal and ethical standards.

Avoid software piracy risks

Buying and using pirated software also poses significant risks to businesses.

Avoid buying very cheap software or operating systems. Prices that seem too good to be true likely involve unauthorised copies or versions of software pirated by criminals. Such software often comes bundled with malware, viruses or other malicious elements, potentially making your systems vulnerable.

To avoid the risks associated with piracy, buy your software from reputable sources, and make sure that it comes with proper licensing documentation.

Consider using a legitimate software that monitors applications on your system and maintains an inventory. This investment can help you manage your resources, as well as mitigate legal risks of using unlicensed software.