Understanding Software Licenses: A Critical Component of Business Risk Management

At The Code Registry our mission is to empower all businesses globally with the knowledge and tools to ensure their digital assets; namely their code and proprietary software, are secure and well managed. One critical aspect of software development that is often overlooked is how to navigate the complexities of open-source licenses to mitigate legal and operational risks. Now, you may be thinking that your software doesn’t use any open-source licenses, or that your development team keep all licenses fully up to date at all times. Unfortunately the reality is that this simply isn’t the case. In two separate studies by Synopsys they found that 96% of codebases they audited contained open-source software and in another report they found that 84% of codebases contained open-source licenses with a known vulnerability.

In the following article we discuss why the use of open-source software is unavoidable and in-fact a necessity for most development projects. What we want to do is empower business leaders and senior IT professionals with the right tools to better understand and manage their open-source licenses to ensure they mitigate any risks and adhere to all compliance documentation. 

Why is Open-Source software so prevalent?

There are number of reasons why nearly all software being developed today includes elements of open-source software. Ultimately the most basic reason is, if you are going to code something but it has already been coded before by someone else and is available – why wouldn’t you use it? 

Some of the main key factors that make open-source software so widely used are;

1. Cost Efficiency: Open-source software is often free to use, which makes it an attractive option for both individuals and organizations looking to reduce software costs. This cost-effectiveness extends beyond initial acquisition to include lower ongoing costs, such as maintenance and support. 

2. Flexibility and Customization: Open-source software doesn’t mean you have to use exactly what is available, most developers use it as a starting point and then modify and adapt the software to meet their specific needs. This flexibility is particularly valuable for businesses that require tailor-made solutions but also are mindful of costs.
3. Community Support and Collaboration: Open-source projects are typically supported by large, active communities of developers and users who contribute to the software’s development, provide support, and share knowledge. This collaborative environment fosters rapid problem-solving and continuous improvement of the software – which is especially beneficial for developers working in smaller teams or individually to have access to more knowledge.
4. Innovation and Rapid Development: The open-source model encourages innovation by allowing developers to build on existing software rather than starting from scratch. This collaborative approach can lead to faster development cycles and the integration of cutting-edge features and technologies.
5. Avoidance of Vendor Lock-In: Open-source software mitigates the risk of vendor lock-in, where you as a business become dependent on a single vendor for products and services (often due to them building completely custom, bespoke code) making it costly to change vendor. With open-source software, businesses have the freedom to modify and distribute the software, reducing dependency on any single vendor.

OK, then what’s the downside?

Consider this scenario: a developer quickly grabs a snippet of code online to fix a bug. It’s a common practice, but what if that snippet comes with a license? Suddenly, your company is responsible for complying with that license, which could range from crediting the original author to making parts of your own code open-source.

That’s where the real risks and compliance issues can arise. While the use of open-source software can expedite development and reduce costs, it’s the licences and security that accompany the open-source software that can create issues further down the line if they are not managed properly. 

The downsides of open-source software can be grouped into 3 categories;

1. Security Risks: Open-source code is publicly available, which means that both users and potential attackers can inspect it. While many eyes can lead to faster detection of vulnerabilities, it also means that vulnerabilities are more accessible to hackers. As mentioned earlier, a study highlighted that around 84% of codebases contain at least one known open-source vulnerability. Where vulnerabilities are found, because open-source software relies on community support to remedy the issue it can sometimes result in delayed patches for these vulnerabilities.
2. Legal and Compliance Risks: Open-source software comes with various different licenses, each with specific terms and conditions. Non-compliance with these licenses can lead to legal issues, including lawsuits, fines, and the requirement to open-source proprietary code if copyleft licenses like GPL are used improperly. These licenses can also be hugely complex and where multiple open-source licenses exist within a single project there may be conflicts to deal with.
3. Lack of Accountability: With no central authority responsible for a piece of open-source software, there is often no one to hold accountable if something goes wrong. This can be problematic for businesses that need accountability and assurances of software performance and security. 

This underscores the importance of detecting licensed code in your software, whether it’s a single snippet or an entire package. Another layer of complexity is that license requirements can change over time, what was acceptable yesterday might not be tomorrow, exposing your business to unforeseen risks. So for every business, having a robust method of identifying, managing and tracking your software licences is paramount to the future success and security of your code.

Where does The Code Registry fit in?

At The Code Registry, our cutting-edge code intelligence platform is designed to safeguard your business by thoroughly scanning your code for licenses, identifying hidden snippet licenses, and even generating Software Bill of Materials (SBOMs)—a comprehensive list of all your components and licenses.

With each new replication of your code (which can be set to update at your own preference) our full AI-powered intelligence engine gets to work. We perform a comprehensive scan of your entire codebase, returning not only the assessment of the most recent replication, but also a comparison Vs your previous replication, so you, the business leader can track changes and improvements across key metrics.