Existing software license validation methods used by software publishers

Software license management (SLM) ensures that the software licenses in use are valid, to prevent the free use of proprietary software. It is a proactive practice aimed at preventing or minimizing software copyright violations both at an organization level and for a common user. License validation is a prerequisite for software installation.
The common ways to distribute licenses are:

Software license – validation methods and audits

Software license validation methods serve as control measures to ensure that software publishers are compensated. Software license audits are a reactive practice aimed at rectifying situations of non-compliance. It provides greater control and cost savings while ensuring efficiency in software distribution besides being a preventative mechanism for copyright infringement.

The global software asset management market size is expected to grow at a Compound Annual Growth Rate (CAGR) of 18.1%, from USD 2.0 billion in 2021 to reach USD 4.8 billion by 2026. (Source)

Software License Management (SLM)

Managing software licenses follows a pre-defined and widely used set of procedures. The process involves:

The process of software license management includes a few steps such as:

´╗┐Why Blockchain in Software License Management (SLM)

Implementing a Blockchain system for software license management can improve the traceability of software licenses throughout their lifecycle- from purchase to allocation, to decommission. The ledger is updated based on the transactions on Blockchain, to provide a real-time view of available assets and the distribution of used assets. The system can also help to map the systems that use specific software or even functionalities within it.

Benefits of implementing a blockchain-driven license validation and management

Blockchain is an excellent tool for creating, managing and storing licenses and licensing information. Its decentralized data storage and peer-to-peer computing network help implement any logic in smart contracts. The four most important benefits of Blockchain technology are:

Elements of Blockchain relevant for SLM

Blockchain becomes relevant for SLM with its log of transactions where information is stored in a distributed, decentralized manner and is accessible to everyone.

What does Blockchain do – Role of blockchain in licensing software

Blockchains are a natural fit for storing the sale and terms of routine licenses such as producing and distributing e-books and self-executing contracts that could include (or exclude) resale of the rights. Blockchain licensing enables trust, regulation, and monitoring while deciding which transactions are to be recorded. Blockchain can provide access to the public about updates in the reversal of rights back to a creator, or transfer to a new agent, or other recorded rights.

Blockchain implementation/operational aspects as a solution for SLM

A Blockchain system for SLM can prevent the installation of software when no licenses are available, thus preventing over-utilization. Some of the other operational features of Blockchain in SLM are:

Technology Challenges

Blockchains are unlikely to be of much use in mitigating ordinary infringements in software licensing. There could also be difficulties with the areas of custom licensing and scalability. Work needs to be done on blockchain technology and to establish a trusted link between the blockchain and established infrastructures and data sources.
Getting software usage data from the organizations is a difficulty as most of the organizations are operating their servers behind a firewall and usually their security practices do not allow software metering clients on their servers to send out data.

Asset Management enhanced with Blockchain

Blockchain can reduce costs, increase operational efficiency, improve transparency, and facilitate a range of innovative possibilities such as:

Blockchain for enhanced asset management – One of the major solutions in this space is designed to provide industry-leading asset management capabilities. Traditionally, asset-related transactions are shared across a business network using interfaces between different systems of each party involved. Third parties carrying out work on a customerÔÇÖs assets often use systems that are isolated. In some industries, regulators are looking for customers to proactively demonstrate compliance. It helps mitigate the challenge of communicating with multiple parties on connected systems.

More than 30% of software on machines tested worldwide was unlicensed according to 2021-22 statistics. (Source)

Use cases and examples

Blockchain typically finds uses in License management in these areas:

Chainyard in Blockchain and SLM

ChainyardÔÇÖs certified team brings extensive experience to architect, build, test, secure and operate solutions that help blockchain adopters succeed.
The solutions include:

ChainyardÔÇÖs blockchain consulting team uses a growing set of solution accelerators. The accelerators provide: