Which licence is suitable?
The two most common licences available are;
- Perpetual Licence - one off payment for a licence, no annual renewals
- Term or subscription Licence - use of the licence is granted by the software owner for an agreed period of time. Licence fees are payable throughout the agreed term. Once the agreed term has end the licence can be extended for an additional term or the customer must cease using the software and remove it from their environment.
There are is a wide variety of models available for purchasing licences ranging from buying a single user licence to Enterprise Agreements.
Route to Market
There are a number of available routes to market to procure software, these include;
- Direct to the Software vendor
- Purchase through a third party i.e. outsource provider
- Through a reseller or partner of the software vendor
- Utilise existing public sector framework agreement
The chosen route will depend on a number of factors including cost, complexity of software required, existing agreement available and market conditions.
Organisations are advised to consider the various routes and appropriate procurement regulations prior to commencing with any procurement for software products and services. Further advice can be sought from your legal and procurement departments.
Buying Solutions currently have a Framework agreement for resellers (ICT Goods and Services Framework) which may be used to identify a potential reseller for public sector organisations. For more information on this framework please review the Buying Solutions Website.
Intellectual Property Rights and Escrow
Intellectual Property Rights (IPR) are the legal rights over an individual piece of software. The software source code remains the property of the software developer unless sold or the rights are transferred. Any changes or enhancements made to the source code by the software developer will also be protected by IPR.
When purchasing software, organisations need to carefully consider IPR and seek procurement and legal advice as appropriate.
IPR is especially important when software has been developed or amended to specifically meet individual requirements. In this case ownership of the IPR should be clearly identified.
Escrow, in contract law, is a legal arrangement whereby the software source code is held by a third party and can be passed from one party to another when certain conditions prevail. The use of escrow agreements has the potential to mitigate the risk in terms of the software supplier becoming unable or unwilling to support and maintain the software and it should also be considered in the wider context of prudent contingency planning
Buying Solutions have a number of arrangements with Escrow agents for public bodies to access. Further information on these arrangements can be found on the the Buying Solutions Website.
Support and Maintenance
- Support - advice and guidance for the customer on the products/ application in operation. It can include a helpdesk, website, bug fixes and patches. Depending on the criticality of the application to the business support can be provided to meet the business requirements. Typically support is take out to cover either business hours i.e. 9 am to 5 pm 5 days a week or 24 hours 7 days a week
- Maintenance - provides the customer with an upgrade path to the next version of software as it is made available by the software owner.
Support and maintenance are typically purchasable at the time of the licence at a percentage of the net licence value. The support percentage varies widely across the market ranging from 10 - 25% depending on the software vendor, value of licences purchased and market conditions.
Support and maintenance costs are typically payable annually in advance and are applicable for the life for the software in use.
When budgeting for a project the total life time cost of a software product should be considered prior to any purchase, as typically support and maintenance costs will be far greater than the initial software licence fee.
Is this Suitable for Collaboration
Sharing best practise across the public sector is recommended for any project and particularly so for software solutions. Understanding how other organisations/ sectors have approached a particular technology requirement may assist with the overall success of the project as well as potentially minimising cost.
There may also be an opportunity to collaboratively procure a software solution if a number of organisations/sectors are exploring similar solutions.
In order to find out more about sharing best practise or opportunities for collaboration please contact Procurement Scotland or your sector Centres of Expertise (CoE's).
Terms and Conditions
Terms and conditions will vary depending on the value and complexity for the software and services required. Procurement and legal advice should be sought for all software procurement.
Specific terms which should be considered when procuring software include;
- Maintenance/upgrade entitlements - when is a software development an entitled upgrade and when is a new licence?
- Removal & reinstatement of licences - if licences are uninstalled and then reinstated is there additional cost?
- Exit provisions - what happens at the end of the agreement what are the rights to use the licence?
- Support and maintenance annual incremental charges - linking annual increases to agreed indexations.
- IPR and Escrow