Technology In Check

In a somewhat loose way staying within the theme of operating systems, we’re next going to look at the different types of software licenses that are available. This item is of particular importance for small and medium businesses because it offers a glimpse into something that has mainly been within the purview of larger companies - Open Licensing.

Generally speaking there are 3 different types of software licenses: Retail, OEM, and Open Licenses, sometimes called Usage Licenses or Value Licenses. The differences between them are sometimes significant, but the important part is that using the correct license type can save your business money, measured sometimes in the thousands of dollars.

Let’s start by explaining Retail licenses, since they’re the easiest to understand. A good example is when you go to a store to buy a package off the shelf, or download a purchase from the Internet. You have the right to use the software on one computer (in most cases), and only one. If your computer dies, you can usually transfer the license to another computer. These licenses do not expire - which means you can continue to use the software on one machine, until you no longer require it..

Next is OEM licenses, or Original Equipment Manufacturer, which are slightly more complicated. These are the licenses you acquire at the time you purchase a computer. So for example, if you buy a machine from a major manufacturer, you might buy an operating system to run on it, as well as some office software to use. When your computer arrives it will have a license sticker on it for each piece of software you purchased licenses for. These licenses cost less than retail, but they’re only good on that single computer, and for the life of the computer. When the computer dies or is thrown away, those licenses die with it. You cannot transfer the licenses from one machine to another. Another limitation of OEM licenses is that they usually must be purchased within a certain time frame of the computer being purchased, often 90 days. You can’t buy a computer, then go back to the manufacturer 6 months later and ask to buy more software. Also, not all software is available through this model.

After that is Open licensing, or Value licensing. These are typically only available through a reseller authorized by the manufacturer, such as how CPG Systems is authorized to sell Microsoft and AVG Anti-Virus licenses among others. Open licenses cost noticeably less than retail licenses, but more than OEM. The difference however is in the license rights; Open licenses grant rights to use software on a given number of computers, however the licenses are transferable between computers - the licenses don’t die when the computer does. The catch is that there are sometimes minimum purchase requirements for Open licenses. With Microsoft for example, an order must include 3 (three) licenses of something at a minimum. It could be one operating system, and two office suites,but it must be a minimum of three. Of course if you only need to buy one license, there are some creative ways to use this limitation that can still save a company some money.

So how does this translate in the real world, and how can it save you money? Well, using Microsoft’s Office 2007 Professional edition as an example, if you were to buy a retail license from a major Canadian office supply chain, the cost of a single license is CAD $689.99. The same item going through a major Canadian computer manufacturer (the OEM portion of our example) costs CAD $490.00. And buying an Open license for the same item from CPG Systems will cost CAD $589.00. So if you were buying for 5 computers, you could save at least $500 on the licensing costs over retail. Hardly chump change for any business.

The licensing landscape is rarely so cut and dry though, especially in this world of virtual computers and ever evolving software. As always, consult your IT services provider to determine the best licensing model for your business and to help you start saving money.