Unlike computer hardware where you actually own (i.e., receive title) the physical equipment purchased, title to software remains with the vendor who grants a license for its use. A transfer of title away from the vendor would have serious economic ramifications since it would allow the new owner to sell, distribute, modify or otherwise dispose of the software in any manner he or she wishes. Given the low cost and ease with which software can be duplicated, transfer of title would effectively prevent the vendor from ever recovering the investment it made in developing the software, let alone obtaining a reasonable return. Therefore, by taking advantage of protection afforded under copyright law and incorporating appropriate licensing restrictions, the vendor can control the use and distribution of its software.

Selection of application software involves functional and cost considerations discussed in Chapters Two and Four; the structure and legal frame-work under which it is licensed, discussed in Chapters Five and Six; and whether it is pre-packaged, customized or custom developed, which is the subject of this Chapter.