In today’s software-driven world, navigating software licensing is essential for businesses. The licensing landscape has evolved, especially with the shift to cloud and subscription-based models, and compliance is no longer as simple as just “having the software.” That’s why we at runPCrun take licensing seriously and won’t install software we consider unlicensed or non-compliant—no exceptions.
Compliance Risks and Penalties
Failure to adhere to software licensing agreements can result in severe financial and legal consequences. Companies found using unlicensed software may face substantial fines, legal action from vendors, and reputational damage. Additionally, non-compliance can lead to operational disruptions, including software audits that divert resources and halt business operations. To mitigate these risks, organisations must understand licensing terms, track software usage, and implement compliance best practices. Organizations like the Business Software Alliance (BSA) take unlicensed software usage very seriously and often impose steep penalties.
User-Based vs. Device-Based Licensing
Software licenses typically fall under either user-based or device-based models. A 10-user license, for example, allows up to 10 individuals to access the program regardless of the device, whereas device-based licenses restrict usage to a fixed number of machines. Misinterpreting these licensing models can lead to compliance violations, exposing businesses to the penalties mentioned earlier.
Client Access Licenses (CALs)
Server software like Microsoft Windows Server or SQL Server often requires additional Client Access Licenses (CALs) beyond the software purchase itself. For example, while your Windows Server license might include five CALs, you’ll need to buy additional CALs to allow more users or devices to access the server. If businesses fail to purchase the necessary CALs, they risk non-compliance, which can result in the financial and operational consequences previously discussed.
OEM Licensing
Many companies don’t realize that OEM licenses (Original Equipment Manufacturer) are bound to the device they were first installed on. OEM licenses are less expensive than retail versions, but they are non-transferrable to new machines. If you upgrade your hardware, you’ll need to repurchase the software. This licensing model used to be a popular option for businesses looking for cost-effective solutions but has now been largely overtaken by Software as a Service (SaaS) models.
Home/Student and “Free for Non-Commercial Use” Licenses in Business
We frequently see cases where businesses have installed Microsoft Office Home & Student or other “Free for Non-Commercial Use” software on their office machines. This usage is not permitted under these license types. Commercial use of non-commercial licenses is a violation of licensing agreements and exposes your business to risk. Always ensure software licenses are appropriate for business environments.
Abusing Office 365 Licensing by Sharing a Single User Account
Another common licensing violation we encounter is the misuse of Microsoft 365 (formerly Office 365) licenses by logging in a single user account on multiple machines to avoid purchasing additional licenses. Microsoft 365 licenses are per user, not per device, meaning each person using the software requires their own licensed account. While a licensed user can install Office on multiple personal devices, sharing a single user login across multiple employees – effectively using one license for multiple users – is a direct violation of Microsoft’s terms.
Although this method may seem like a way to reduce costs, it carries the same compliance risks and consequences if detected.
Open-Source Alternatives
If cost or simply tracking licenses is a concern, consider open-source software. Many open-source tools offer high-quality alternatives without licensing fees or restrictions on business use – removing the risk of compliance issues.
Protect Your Business from Compliance Risks
With increased scrutiny from organizations like the Federation Against Software Theft, staying compliant is essential. Random audits and employee grievances are common sources of exposure to licensing violations, and they could lead to significant financial penalties or even legal action. Don’t risk your business reputation and resources to cut licensing corners.
Businesses should ensure they are properly licensed to avoid exposure to audits or penalties. If you need guidance on choosing the right licensing model, we are happy to help ensure full compliance.
Let us help ensure you’re fully licensed and compliant.