The first fundamental thing a business needs to look at when buying software is whether they feel that the version they buy is the only version that they will run in a period of two years. If they want to be able to deploy a new version in 12 months, when it releases, there are options for the licensing system from, say Microsoft that will allow them to do it. I will explain.
David mentions the current ways to buy software, here is a Microsoft perspective:
OEM: you get the operating system, the Applications (office) under OEM. They remain licensed to the computer that you purchased with them preloaded. You cannot transfer the license, or add to a new computer when you decommission the old one.
Licensing: many different, confusing versions exist.
For example, if you are a charity company as defined by Microsoft, you have access to a charity-licensing program. If you are a business, it is the business program. There is an academic program as well. These all fall under the open business program.
Under open business, you need to buy a license per system, with a minimum of five licenses. You also need to buy a media kit, which has the software on it for installation. The installation “keys” are a part of the licenses.
You also have an optional product called software assurance (SA) this is invaluable. It is an insurance policy against new release software, which may occur in two years, but after the expiry of the SA, you renew again for another two years. This ensures that you won’t have to pay the initial upfront cost for the software again, and saves businesses money.
Open value is a better business system. With open value, you can change your OEM licenses to Open Value within 90 days of purchasing the OEM license. The OEM license becomes an open value license, and can be moved from an old system to a new system when you upgrade. The Open Value system allows payment upfront or per annum. The term is three years and SA is provided for the term of the contract. The minimum license level is five licenses.
The new system is SaaS. You pay per month, and pay the provider a predetermined fee, usually as a part of your managed services contract with them. They provide you the software via a hosting system, either in-house at your business or off-site at a hosting service. They report to the vendor as to the amount of usage per month, from information you provide.
The thing is that you can branch out into other areas with SaaS, if you have a mobile workforce, you can use a NextG type device with a notebook or thin client/netbook and access the software remotely. You don’t have a concern about files saved to hard drives, as they aren’t, they are saved to the hosting environment.
The best thing to remember about licensing/box product/OEM arrangements is that the reseller that you engage with will assist you in choosing the best method for you. If they don’t want to talk about licensing, and instead only want you to look at OEM, get a second opinion. And if it is all a bit confusing, ask the SmartCompany team. They have helped me in the past and the expert information is invaluable.