The Basics of Licensing Enterprise Software

"A copy" means one copy--the software can only be used on one computer. If, as is normal, multiple copies are needed in an enterprise situation, then multiple licenses are required. This can be arranged in several ways.
Per user licenses
In this arrangement, the end user pays for the software to be used on specific computers. Although there may be volume discounts for multiples of five or ten, the user is in fact paying for a number of individual licenses. This can be useful for specialized applications, as when only one or two workers in an organization need drafting or graphic design applications. A variant, per dongle licensing, allows one specific person to use the software on any computer in the organization.
Per concurrent user contracts
This setup allows the company to install the software on a server for use by anyone in the organization, but only by a certain number of people at a time. If the software is licensed for five users and five people are using it, a sixth person who needs the program will have to wait until one of the first five stop using it.
Other license options
Per server licenses, which allow the application to be installed on a given number of servers, and site or company licenses can also be negotiated. This is particularly convenient since enterprise software often comes in suites of interrelated applications and uses may arise for capabilities that were not foreseen in the original business plan.
General user responsibilities
Since the user has custody of the publisher's property, they have to take care of it. In particular, they are expected to prevent unauthorized users from pirating the software. This makes the security of the installation keys for multiuser applications a matter of some importance. The user must also make sure no one reverse engineers the software in their possession to clone the programs. Other requirements may be spelled out in the end user agreement, which should be scrutinized by the user's legal staff to prevent inadvertent infractions.
The cloud
A newer licensing model involves software "in the cloud," served from the publisher's own hardware. In this sort of contract, users pay for exactly what they use, and if they develop a need for another application or need to have more users, that can be arranged almost instantly for a very modest extra cost. Cloud software is often managed from a graphical user interface, requiring far less technical skill than the on site installation and maintenance of proprietary software.
Software licensing is complex, and dealing with its implications may take up much of an IT manager's time. Failure to properly license the enterprise software a business uses can lead to legal action and substantial loss of reputation. Whatever an organization's needs, it pays to take the time to get the licenses right.