What Is an Enterprise Software License Agreement

What happens, for example, if the client company is acquired or merges with a larger company? Suddenly, many more people are using your product, and support may need to be increased. However, they are trapped in an unlimited usage license agreement. To resolve issues related to acquisitions and mergers, a software company may need to evaluate all the “change of control” clauses contained in the original agreement. An agreement can quickly become much more complex. SALES AND USE TAXES: Licensee is responsible for reviewing and remitting all federal, state and local sales taxes and/or use taxes and/or sales taxes and/or import duties of any government agency levied during the term of or after termination of this License, including, but not limited to, taxes levied retroactively by a tax authority. less the taxes levied by the Licensor from the Licensee at the time of purchase. Under no circumstances shall licensor be responsible for determining whether the corresponding tax is due by licensee. However, verifying the actual supply of devices can be tedious for suppliers. Some vendors may assume that software consumption begins when the device is received by the customer`s VAR or OEM.

Since the language of the contract may take into account a deployed software unit, even if the software is later uninstalled, it is important to have a mutual understanding of what software “deployment” means. An enterprise agreement, also known as an enterprise license, allows a customer to purchase software for an entire company at a discounted price. The agreement is usually limited to a certain period of time. Monitoring of the vendor`s software consumption also did not record actual usage. After these errors in calculating supplier consumption and non-compliance with the ELA were identified and corrected, the supplier finally granted ELA a credit of US$2 million. This explosion has made it difficult for companies to track their various software licenses. In addition, Blissfully`s report showed that SaaS waste has almost doubled year-over-year. For businesses, it`s easy to end up with duplicate or orphaned apps.

This waste is especially evident when there is no clear protocol for processes such as procurement and employee onboarding and offboarding. What followed was an ELA audit that found that ELA was severely overused in some software and severely underutilized in others. In addition, the software substitution method was found to be non-compliant according to ELA, which provided use cases to quantify and use software substitution credits for underutilized software. It is important to negotiate and insert contractual language that establishes the customer`s right to request on-site ELA audits as part of the agreement. Otherwise, customers waive their rights to review the contract and review its use and deployment. To protect businesses and maximize their ELAs, customers should negotiate to ensure that the substitution methodology within the ELA is clearly defined, including examples of how uneployed software units can be replaced into credits and how these credits can be used to leverage other software offerings. In this particular example, it is important to include a “change of management” clause. Another approach is to specify a specific period for your enterprise license. Most major software companies avoid unlimited licenses unless they offer execution options. While this type of agreement doesn`t need to be too difficult, it`s important to spend the time it takes to get it right. LEGAL AGREEMENT: Given the license fees you have paid for the Software, you (the company for which the Software is purchased, hereinafter referred to as the “Licensee”) agree and agree to be bound by the terms of this EULA with Licensor.

For example, when a Fortune 1000 company was informed by its server storage software provider that its $10 million ELA had been fully consumed halfway through a 36-month agreement, the potential impact was significant. Could enterprise licensing agreements be one of the solutions your business needs to maximize profits and minimize SaaS waste? Above all, make sure you make a deal that works for you and doesn`t contain any binding limits. Let`s say your business grows and changes in direction are likely. In this case, you must make sure that there are no clauses that penalize the development of your organization. ELAs should help your business operations become more efficient, not compromise your flexibility. So work with the vendor to develop the licensing program and pricing model that works for both parties. This is critical because software associated with storage, networking, and other hardware is consumed when the associated hardware is deployed, and software vendors may assume that software consumption and maintenance must begin with deploying devices. Create a common contractual definition of the deployment. Does the license term start as soon as you receive the associated hardware, even before installation? Or does the deployment start at the beginning of use? Make sure you and the provider are on the same page to avoid future conflicts. There are several important factors to consider when designing an enterprise license agreement for your customer. What do they need the software for? What limits would be stressful? What kind of flexibility would allow them to be more efficient in their business operations? Correct pricing can only be carried out after these initial requirements have been set out in the agreement. Reduced expenses: Since you effectively pre-purchase software for all your foreseeable needs, most vendors offer significant discounts on ELAs, but keep in mind that you need to understand your software license management for ELAs to save money.

Otherwise, ELAs will only contribute to your company`s SaaS waste. Recently, Cisco made a significant advance in its ELA program. It now allows customers to combine multiple technology architectures under a single set of basic conditions. Now, for the first time, customers can have a single agreement that allows them to negotiate and manage their investment with Cisco. It takes the guesswork out of understanding a company`s demands and reduces friction between IT and purchasing by providing 3-5 year coverage across multiple technology areas. It`s still better suited for growing businesses, but it also offers a 20% growth allocation before additional licenses need to be purchased. Have a system to receive regular consumption reports from the supplier. Plus, you need a journal to regularly share this information with IT, purchasing, and asset management. .