Understanding Two Common Types of Software Licenses
While the concept of software licensing is straightforward, understanding the difference between a named user license vs concurrent user license can be confusing for first-time buyers. Here are some common questions that new buyers often ask.
What is a Named User License?
What is a Concurrent User License?
For example, Company A acquires a 20-user concurrent license to ‘Software Solution’ and 50 users have a valid login setup by an IT Administrator. Using this example, no more than 20 users of any combination from the pool of 50-potential users (regardless of role or status) may login to the software at the same time.
How Do Software License Types Impact Overall Pricing?
Many publishers provide role-based user licenses and prices to neutralize pricing discrepancies in their models. For example, limited use licenses for those that only need to access reporting can often do so at a reduced price in a named license model. This approach helps offset the price of adding another "full" user license when he or she may only access the software once in a while or for limited functions.
Some software publishers also offer license price bundles and quantity price breaks to marginalize competitive price imbalances.
How Does a License Type Impact Our IT Administrator?
In a named user license model however, the role of IT Administrator can be easier than in a concurrent license model. Recalling our example of Company A and concurrent licensing previously, the IT Administrator now has to track and forecast user access points limited to 20 users from a potential pool of 50 users in the organization. This can become problematic if 20 users are currently logged in at the same point when the 21st user attempts to login. Decisions to be made include:
- How does the IT Administrator prioritize who should have access?
- Which user should be logged out?
- Are there users consuming a license that aren’t actively using the software?
Concurrent license sometimes creates challenges such as these that an IT Administrator has to account for.
Is There an Advantage to Concurrent User Licensing?
In both examples, the number of users defined in the system is irrelevant as long as the maximum number of users accessing the software at once is not exceeded.
Can I Make License Changes Throughout the Year?
Upon increasing user licenses, software publishers typically pro-rate the annual license fee based on the outstanding term of the current contract. For example (assuming a calendar contract year), if your renewal is coming due in December and the annual license amount is $1,200, when you add a license in July, the amount owed will be $600 or the pro-rated balance until your next renewal term.
Deactivate (inactivate) or reallocate (reassign) user logins that no longer need access to the software in order to avoid incurring unnecessary license fees. Some publishers allow you to archive users for read-only access, too.
Concurrent User Tip:
Grow into concurrent users by purchasing only a predetermined number of licenses for training and go-live. You can always add more concurrent licenses after go-live based on user requirements and system warning notices as you approach license limits.
Guest Article by RKL eSolutions
This guest article, written by Walt Goodfield, is provided by RKL eSolutions. Walt has been selling, implementing, and supporting ERP software for over 25 years with industry-leading publishers: Sage, Infor, and Aptean.
Currently, he's Chief Business Officer at RKL eSolutions, driving revenue growth through new customer acquisition, customer advocacy, and strategic business partner alliances. RKL eSolutions delivers industry solutions for Entertainment, Non Profits, Residential Care, Discrete Manufacturers, F&B, Pharmaceuticals & Nutritional Supplements, Distributors, and more!