A bad software licensing decision can be very costly. These costs include lost licensing fees, wasted hardware/telecommunications expenditures and lost personnel time. Most costly of all are the organizational resources required to implement an alternative solution. The risk of incurring these losses can be minimized by incorporating your software management objectives in your Software Licenses.

Having invested in a software solution, you want the solution to grow with your organization. To keep pace with hardware changes, the scope of your license must be sufficiently broad and flexible to allow software use in alternative environments. To keep pace with the needs of your user community, the license must give you access to software updates, enhancements and upgrades. Software licenses limited to specific hardware configurations, geographic sites and finite numbers of users frustrate these objectives. Addressing these issues in your software licenses can help insure the long-term viability of your licensed software.

The most critical issue in software licensing is whether the software performs as represented during initial sales discussions. The risks of non-performance can be minimized by incorporating software specifications, sales brochures and manuals in the warranty provisions of your licenses.

User support, training and documentation provisions should be included in your licenses. This can help to insure the commitment of your vendor to providing such support.

Finally, software reliability and cost issues can be minimized through acceptance testing requirements, response time and failure rate warranties, and access to software support professionals. Effectively minimizing your financial risks involves negotiating warranty set-off provisions, licensing fee refunds and damage clauses which address the full range of costs resulting from reliance on vendor misrepresentations.