M&A, Business Models and Ecosystems in the Software Industry

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Relevance of open source licensing for commercial software

Open Source Licensing

This page shows you why you should carefully consider using open source software in commercial software: Advantages and disadvantages of open source usage, why open source is used in commercial software and how to manage open source licensing and to control open source usage.

Most important is professional management of open source usage by defining an open source policy for your software company and by following structured processes for open source licensing approval and control. Rest assured that attorneys, consultants and tool vendors are there to assist you.

Advantages of Open Source usage

Simple and fast access to open source are often named as key advantages. Low cost and high quality are additional reasons to consider open source. For a software vendor, there might also be a strategic advantage to use open source software to provide the "non-competitive" part of a solution, while the developers care for the competitive part of the solution.

Motivation for open source usage in commercial software

Usually there are numerous open source components used in commercial software. It makes sense to use open source in commercial software if and only if you can comply with the open source license attached to that open source software. If you do so, you can leverage open source to quickly create functionality and to build on trusted functionality that is provided by software vendors or the open source community.

Relevance of Open Source Licensing

Open source components like the International Components for Unicode, ICU,or Hibernate are used in many commercial software solutions. Non-compliance with the license terms can have dramatic consequences. To avoid these open source licensing consequences, a software vendor has to install an open source licensing policy and practice. But what are the negative aspects and side effects of open source licenses?

Potential disadvantages of open source

Use of open source in commercial software can show the following disadvantages:

  • Missing commercial services, like support and service level agreements impact the ability to run in commercial environments;

  • Commercialization of software might be blocked;

  • Missing or incomplete license attributes, like e.g. for sublicensing software or running software in an on demand environment;

  • Missing warranty and liability;

  • Non-compliance with license terms might lead to litigations.

Open Source licenses and software supply chains

Usage and licensing rights are transferred between players in the software supply chain. Software passed along the supply chain might contain open source software, too. Due to the copyleft effect in certain licenses, the non-compliance of one supplier might impact all other software companies down the supply chain.

So software vendors should diligently check which open source components are contained in the software supplied to them and which license terms apply.

The use of tools eases the work on this problem. You can use open source scanners to find open source code and the corresponding license terms.