An ERP software license by its very nature is a grant of a restricted right to access the ERP vendor’s software for a limited period under a limited set of conditions.  The ERP vendor’s unstated goal is to retain as much control over the product for the duration of the license grant so it can extract additional licensing fees.

In contrast, your goal should be to obtain as many indicia of ownership as possible. In a word, the one thing to focus on during the negotiation process that will benefit you the most over the lifecycle of the license is: flexibility.

By focusing on flexibility, you seek to avoid inadvertent breaches of the license, non-compliance penalties and being over or under licensed. The practical way this plays out in a negotiation can be challenging. At a minimum you would need to focus on at least the following issues:

  • Correctly identifying the entity or entities that will need a license;


  • Ensuring those entities have the right to access or use the software;


  • Anticipating changing business needs and making sure the license allows you to address those needs;


  • Negotiating future options that allow you to license additional users for a set period of time at a discount;


  • Transitional use rights that allow divested affiliates or business entities to use the software for a defined period of time;


  • Access to the software by third party service providers or consultants;


  • Expanded warranty obligations;


  • The ability to delete or “shelve” users that are not being utilized;


  • Maintenance caps;


  • The ability to adjust maintenance payments to reflect the number of users being used;


  • The ability to obtain different product versions or varying product releases;


  • Expanded support or maintenance obligations.

Ultimately, you want to obtain the flexibility to run your business without having to worry about licensing scenarios that lead to unnecessary costs and risks. By focusing on flexibility, anticipating your changing business needs, and negotiating contracts that meet your needs, you minimize the likelihood of inadvertent breaches of the license and costly non-compliance penalties.