Hard bargains and software licenses: with the software licensing ground rules changed and changing, caveat emptor is not a warning, it's a mandatory exercise - Technology

University Business, July-August, 2002 by Tom Warger

The tumultuous and fast-changing world of commercial software licensing has spread to college and university campuses. Gone are the quieter days when educational discounts satisfied the needs of vendors and institutions of higher education. Today's license negotiations are hard bargains; discounts depend heavily on the size of the sale, and market-leading software companies feel little incentive to lower their prices or make concessions on the terms of their licenses. Academic institutions rely on software for just about every aspect of their work but have been slow in learning how to win favorable deals in their software contracts.

Ensuring that institutions of higher education have the software they need and are able to license it on consistently favorable terms has meant a reexamination of business practices across multiple administrative units--IT, purchasing, and legal--that had in the past only coordinated loosely if at all. In the late 1990s, a different approach emerged; colleges and universities began to realize that software--whether ordinary office applications, departmentally specific tools and programs, or core network and database technologies--needed to be treated as strategic assets.

DISCOVERING WHAT YOU HAVE

In 1997, MIT launched the Software Licensing Discovery Project, which looked at existing practices for acquiring software licenses, found the gaps in those processes, and proposed improvements for the future. They found that over 50 software titles could be considered critical because of their scope of use or importance to key functions of the university. But they also found that approaches to obtaining licenses were haphazard, and that staying current with upgrades and releases of new versions was all but impossible.

An important part of MIT's response was to create in 1998 a Contracts Team consisting of intellectual property counsel, software acquisitions specialists, and a business manager. The group's charter is to facilitate effective software license contracting by setting institutional priorities, negotiating legal terms and conditions directly with vendors, and assisting other staff in the development of good contracting practices. You can take a look at the Contracts Team Web site at web.mit.edu/is/contracts/contracts.html. It includes a clearinghouse of information about software under license at MIT, and a checklist of questions to guide faculty and staff who are considering new licenses.

SOFTWARE AS STRATEGIC ASSET

At the University of California at Berkeley, the office of Strategic Vendor Relations (ist-soft.berkeley.edu:4204) negotiates site and volume license contracts for "strategic technologies," assists departments and project groups in their license negotiations, and serves as a liaison among Procurement, Business Contracts, and other departments regularly involved in software acquisitions. The SVR's Bob Callaway, speaking in a TechTalk forum of the Corporation for Research and Educational Networking (CREN), sketched a vision for a future e-business approach to central support of software licensing. In his model, a Web-based service would show members of the campus community what is already available, and enable them to open inquiries about their needs and acquire software and upgrades on a self-service basis.

THE LIBRARY ANGLE

Libraries have become major buyers of access to digital information, which they acquire through licenses that bear many resemblances to those for software. The Yale University library hosts a Web site called Liblicense (www.library.yale.edu/~llicence) that offers extensive resources for librarians who negotiate licenses for information transmitted and accessed via computers. A unique feature of the site is a model license that lays out basic terms of contract that can be used by libraries in proposing amendments to vendors' standard contracts or drafting whole contracts themselves. Ann Okerson, associate university librarian at Yale, says that in the last year atone, more than a half dozen vendors have signed variations of the Liblicense model in lieu of their own, as they were concluding contracts with libraries at various universities.

CONSORTIUM LEVERAGE

State and regional consortia play an important role in higher education licensing practices. Most colleges and universities now participate in at least one buying consortium and often more than one, as memberships tend to overlap and to be non-exclusive. The Oregon Educational Technology Consortium (www.oetc.org), for example, offers discounts on eight online resources products and 28 software titles. The North East Regional Computing Program lists five titles under contract on its Web site (www.nercomp.org). Karen Partlow, learning and Information Technologies Program administrator for the IL-based Committee on Institutional Cooperation, says that its members saved $530,000 on a three-year contract for anti-virus software. The CIC's Center for Library Initiatives has saved over $15 million since its inception. Consortia have two important functions: negotiating contracts for pricing below the list-academic level, and articulation of members' needs--particularly for license terms and conditions--in discussions with vendors.