Unit 3: Computer Software

Software License Types and Legal Use

ICT 110: IT for Business

Today's Learning Objectives

        By the end of this lecture, you will be able to evaluate different software licensing models and understand the importance of legal compliance.
    

✅ Differentiate between various software licensing models (Proprietary, Open-Source, SaaS).
✅ Analyze the pros and cons of each model for different business scenarios.
✅ Explain the business benefits of the Software-as-a-Service (SaaS) model.
✅ Understand the legal, security, and reputational risks of using unlicensed software.

What is a Software License?

You rarely "buy" software. Instead, you purchase a license.

        A software license is a legal instrument governing the use or redistribution of software. It grants the end-user permission to use one or more copies of the software under specific conditions.
    

Analogy: It's like a movie ticket. You don't own the film; you have permission to watch it under certain conditions (in this cinema, at this time).

The Three Main Licensing Models

Understanding the model is key to controlling costs, flexibility, and risk.

Proprietary (Commercial)

Source code is private. Owned and sold by a company.

Examples: Microsoft Office, Adobe Photoshop, Tally ERP

Pros: Professional support, stable, feature-rich.

Cons: High cost, vendor lock-in, limited flexibility.

Open-Source

Source code is public. Can be freely used, modified, and shared.

Examples: Linux, Odoo (ERP/CRM), Apache Web Server

Pros: Low/no cost, flexible, community support.

Cons: Support can be community-based, may require in-house expertise.

SaaS (Cloud-Based)

Software is rented, not owned. Accessed online via subscription.

Examples: Salesforce, Google Workspace, Microsoft 365

Pros: Low initial cost, accessible anywhere, automatic updates.

Cons: Ongoing fees, requires internet, data privacy concerns.

The Rise of SaaS in Business

Software-as-a-Service (SaaS) has transformed how businesses access technology.

⚡ Lower Upfront Costs: Converts a large capital expenditure (CapEx) into a predictable operational expenditure (OpEx). Great for budgeting.
📈 Scalability on Demand: Easily add or remove users as the business grows or during seasonal peaks (e.g., adding temporary staff in an HR system).
🔄 Painless Updates: The vendor manages all updates and security patches, freeing up IT resources.
🌐 Work from Anywhere: Enables remote and hybrid work models, crucial for business continuity.

SaaS has democratized access to powerful, enterprise-grade software for small and medium-sized enterprises (SMEs).

Activity: Which Model is Best?

Scenario 1: A New Startup

A new trekking agency in Pokhara needs a system to manage bookings and finances. Their budget is very tight, but one founder is tech-savvy.

Discussion: Which licensing model would you recommend and why? (Hint: Consider cost and flexibility).

Scenario 2: A Large Bank

A major commercial bank like Nabil Bank needs a new core banking system. It must be extremely secure and reliable, with 24/7 vendor support guaranteed.

Discussion: What model is the only viable choice here? (Hint: Consider risk and support).

Compliance: The Risk of Unlicensed Software

Using pirated or unlicensed software is not "saving money." It's a major business liability.

Legal & Reputational Risks

Heavy fines from software vendors (e.g., Business Software Alliance raids).
Damage to company reputation and brand trust.
Inability to work with international partners who require compliance.

Security & Operational Risks

High risk of malware, viruses, and ransomware.
No access to critical security updates.
No technical support when things go wrong, leading to downtime.
Potential for theft of sensitive company data (financials, customer lists).

Licensing Models in the Nepali Context 🇳🇵

Different models are chosen for strategic reasons in Nepal.

Proprietary Dominance: Many SMEs rely on Tally for accounting. Its proprietary license is seen as an industry standard, ensuring a large pool of trained accountants.
Custom Proprietary Platforms: Companies like eSewa and Daraz use highly customized, proprietary software. The license is for an asset they own and develop, providing a core competitive advantage.
The SaaS Shift: There is rapid adoption of SaaS for collaboration (Microsoft 365, Google Workspace) and specialized functions. Local SaaS like RealHRsoft for HR shows the model's growing popularity.
Open-Source for Infrastructure: Many tech companies and ISPs in Nepal build their core infrastructure on Open-Source software like Linux and Apache to reduce costs and increase control.

Summary & Key Takeaways

✅ A software license is a legal agreement that grants permission to use software, not ownership of it.
✅ Licensing models (Proprietary, Open-Source, SaaS) offer different trade-offs in cost, flexibility, and support. The right choice depends on the business context.
✅ SaaS has become a dominant model for businesses of all sizes due to its flexibility, scalability, and predictable costs.
✅ Compliance is non-negotiable. Using properly licensed software protects your business from major legal, financial, and security risks.

Thank You

Any Questions?

Next Topic: Introduction to Networks and Communication Elements

Back to Start