A software entitlement is the right to use software that a customer has acquired from a licensor, together with the record that describes it. An entitlement is defined by the product and edition it covers, the license metric in which it is counted, the quantity, its term, and the use rights and restrictions that apply. ISO/IEC 19770-3 treats software entitlements as the subset of software licenses concerned with usage rights, and defines both a vocabulary and a transport format for recording them.[1]
Entitlements are one side of every effective license position: they state what an organization may deploy or use, against which its actual deployment and use are measured.
History
Entitlements have always been recorded in contracts, order forms and license certificates, but the idea of a standard, machine-readable entitlement record is recent. ISO/IEC 19770-3 was published in 2016. Its stated purposes include easier demonstration of proof of ownership, cost optimization and easier license compliance management, and it anticipates that a common lexicon may encourage the industry to normalize the names and details of entitlement types.[1] It complements ISO/IEC 19770-2 (2015), which identifies installed software through software identification tags, and ISO/IEC 19770-5 (2015), which supplies the family’s terms and definitions.[4][2]
Scope and definitions
Elements of an entitlement
| Element | Question it answers | Example from vendor documents |
|---|---|---|
| Licensor and agreement | Under which contract? | IBM: the Client Relationship Agreement, its Attachments and Transaction Documents, with a Transaction Document prevailing for its transaction[5] |
| Product and edition | What software? | An Oracle ordering document lists the Programs licensed[6] |
| Metric | Counted how? | Oracle Named User Plus: individuals authorized to use the programs, whether or not active[9] |
| Quantity | How many? | IBM grants use up to the number of license entitlements acquired[5] |
| Term | For how long? | Oracle: perpetual unless the order specifies otherwise; Microsoft: subscriptions expire unless renewed, perpetual licenses become perpetual on payment in full[6][7] |
| Use rights and restrictions | Where, by whom, for what purpose? | Oracle: internal business operations only; IBM: no rental, hosting or timesharing for third parties[6][5] |
| Support and version rights | Which versions may be deployed? | Microsoft Software Assurance New Version Rights (see below)[12] |
| Transferability | Can it move to another entity? | Microsoft: fully paid perpetual licenses may be transferred only to an affiliate or in specified divestiture or merger cases[7] |
Some programs define entitlement directly. Cisco’s EA 3.0 Program Terms define it as the type, quantity or value, and duration of suites and add-ons the customer has committed to acquire, as adjusted by True Forward or True Up.[8] In such programs the entitlement changes over the term; see True-up.
Proof of entitlement
Proof of entitlement is the documentation that shows an entitlement exists. It normally combines the governing agreement with the transaction-level document that states product, quantity and metric. IBM’s agreement lists the kinds of Transaction Documents it recognizes, including license information, ordering documents and invoices, and refers to returning a program with its proof of entitlement to claim a refund.[5] ISO/IEC 19770-3 is explicit that a digital entitlement record does not replace these documents: the original licensing terms remain definitive for legal purposes and take precedence over the Ent encapsulation.[1]
Perpetual, term and subscription entitlements
A perpetual entitlement continues after payment, subject to its terms; a term or subscription entitlement ends at the end of its period unless renewed.[7] Some programs convert one into the other. Microsoft’s Enterprise Agreement program guide states that after final payments for licenses and Software Assurance the customer owns perpetual licenses to the then-latest version, and that on renewal it pays for Software Assurance only.[11] Version rights can outlast the support contract in a limited way: under Microsoft’s Product Terms, perpetual licenses acquired through Software Assurance may be upgraded after coverage ends, but only to versions released while coverage was active.[12] See Software maintenance and support.
Resale and splitting
In the European Union, the Court of Justice held in UsedSoft v Oracle (2012) that the distribution right in a downloaded copy is exhausted where the rightholder has granted a right to use it for an unlimited period in return for a fee corresponding to the copy’s economic value, so that later acquirers of that licence may rely on exhaustion. The Court also held that a first acquirer whose licence covers more users than needed may not split it and resell only part of the user rights.[10] The judgment concerns EU law and the facts before the Court.
Practice
Recording entitlements
A usable entitlement record captures each element above for every license line, links it to its proof, and records changes: additions, true-ups, transfers, terminations and support lapses. ISO/IEC 19770-1 places such records inside an IT asset management system.[3]
Entitlement lifecycle
An entitlement changes state over its life, and each change should leave a document behind.
- Acquisition. An order or transaction document creates the entitlement. Under IBM’s agreement, the client is responsible for acquiring additional entitlements before any increase in use.[5]
- Provisional use. Some programs allow use before the order. Adobe’s VIP lets members add products in the Admin Console for immediate access, with an order due within a 14-day grace period.[14] Microsoft’s Enterprise Agreement lets customers add users and devices for already-licensed products and account for them at the annual true-up.[11] Until the order is placed, the right exists but the record lags behind it.
- Adjustment. Program mechanisms such as Cisco’s True Forward raise the recorded entitlement to the measured consumption level.[8]
- Transfer. Transfers are allowed only where the agreement permits, as in the Microsoft affiliate and divestiture provisions described above.[7]
- Termination or expiry. Term and subscription entitlements expire at the end of their period. Perpetual licenses can also be given up: Oracle does not allow support on only part of a license set; the unsupported licenses must be terminated, and the terminations documented by a termination letter.[15]
Reconciliation
Reconciliation matches entitlements to deployments and usage under the vendor’s rules to produce an effective license position. Common difficulties include:
- Metric mismatch. Entitlements bought under one metric cannot be set against use measured in another without a contractual conversion.
- Bundles and suites. GAO found that multiple products within federal license agreements were not separately priced, and that agencies may lack per-product usage data, which makes it hard to know whether the quantity held is right.[13]
- Superseded versions and editions. Entitlements may be tied to versions released during a support period, as in the Microsoft example above.[12]
- Fragmented records. Mergers, reseller channels and multiple agreements scatter proof of entitlement across entities.
Standards and frameworks
ISO/IEC 19770-3 (Ent) is the standard format for entitlements. It deals only with entitlements, not with the processes for discovering software (Part 1) or with software identification tags (Part 2), and it does not cover product activation mechanisms.[1] Together with Part 2 for installed software and Part 4 for resource utilization, it allows the three inputs of a license position to be exchanged in standard form. See ISO/IEC 19770.
Relationship to other disciplines
Entitlement management sits between procurement, which creates entitlements, and software asset management, which reconciles them. Entitlement records are the customer’s main evidence in a software license audit and the starting point for license compliance and renewal planning.
Criticism and challenges
Vendors describe entitlements in different terms and documents, and the same product may be sold under several metrics and programs, which is the normalization problem ISO/IEC 19770-3 hopes a common lexicon will ease.[1] Machine-readable entitlement data is only as good as the contracts it summarizes, and the standard itself defers to the original documents.
Out of scope
This article does not cover hardware warranties, cloud service level agreements, or the pricing of entitlements. Vendor-specific metrics and rules are covered in the vendor articles and the catalog.