Today’s software landscape is fragmented and dynamic. As a result, software license management (SLM) is a challenging task for most organizations. SLM helps you manage your software licenses more efficiently by assigning software licenses to specific users, devices, or services; monitoring usage in real-time, and auditing to identify unused licenses.
In the 21st century, businesses are increasingly adopting virtual work environments in order to reduce operational costs and drive efficiency. Virtual desktops reduce hardware expenses and improve worker mobility by allowing employees to access applications from anywhere with an internet connection.
However, this pivot toward virtualization has also introduced new challenges for IT departments tasked with managing software licenses across multiple locations. It is estimated that 29% of SaaS software is underutilized.
In this blog post, we will explore eight ways that effective Software License Management can reduce costs in your organization as well as any other company looking to optimize their operations.
What is software license management?
SLM is the process of managing software licenses across an organization, including tracking existing software licenses, identifying which devices or users require licenses, and accurately tracking the amount of time each user is spending with each licensed application.
The process of managing software licenses initially started with a focus on tracking the number of licenses installed on physical devices across an organization. Today, organizations increasingly manage software licenses in the cloud, across hybrid environments that include a mix of both on-premises and cloud applications.
In the cloud, software licenses are often managed through a SaaS service that tracks cloud application usage and automatically removes licenses from users who have stopped using them for a specified period of time.
Organizations face the risk of high penalties, audits, and reputational damage when they do not properly license and track software usage. The failure to license and track software usage can lead to fines of up to $100,000 per application.
To avoid these penalties, organizations of all sizes need to carefully track their software licenses and usage. Beyond the regulatory risk, organizations can also save money by implementing effective SLM. On average, companies overspend on software by 38%, which can add up to millions of dollars for large enterprises.
Software license management: 8 ways it can reduce costs
SLM can help you track software usage to determine ROI for different products. You can do this by using a license tracking software that monitors the devices and users that are actively using specific applications, you can identify which products are providing value to your organization and which are not.
You can also use this data to create reports that show how employees are using specific applications and where they are falling short. This information can be used as a starting point for a conversation between IT and employees about where they could be using the software more effectively.
Identify unused licenses
As you track software usage and determine which products are providing value, you’ll also be able to identify which ones are not being used. This is especially helpful for applications that were purchased during a previous business cycle, but that are no longer necessary.
You can use this information to determine which licenses are no longer necessary or are being underutilized, and then remove them from users who are not making use of them. A reduction in the number of software licenses will lower your organization’s overall licensing cost
Many organizations are transitioning from on-premises to cloud software. However, their existing software licensing agreements may not be compatible with SaaS. By managing on-premises and cloud software licenses together, you can avoid the confusion of trying to reconcile two different types of software licenses.
Instead, you can monitor the number of licenses for both cloud and on-premises applications and track which individuals or teams require which licenses.
Automate your SLM processes
As your organization grows, you may need to add or remove employees who are using specific software licenses. SLM can help you automate these processes so that they are done accurately, at scale. Automating your SLM processes leads to consistency and accuracy of licenses across the organization.
For example, you may want to implement rules that automatically remove licenses from employees who have left the company. You can also use automation to proactively add licenses to employees who are new to the team or expected to use specific applications.
This helps you to reduce the number of manual processes which avoids making payments for licenses that are no longer in use. Eventually, you will be able to quickly and accurately scale your SLM processes as the organization grows.
As you’re tracking software usage and determining ROI, you can also use this data to make real-time decisions about licensing and product acquisition. Monitoring the devices and users actively using specific applications identifies which products are being used, when they are being used, and for how long.
This information can be used to inform discussions about whether to add more licenses for specific products, or to remove licenses for products that no longer need them. As a leader, you can use this data to make more informed decisions across the organization. Decisions based on real data lead to company growth and saving on costs.
Such decisions ensure that your organization is optimally equipped to handle its current workload. If a license is underused by your team, it could mean that you need to reduce your workforce.
Reduce the number of physical devices
As you’re tracking software usage, you can identify which devices are actively using specific applications. This information can be used to reduce the number of physical devices within your organization. Tracking which devices are actively using specific applications helps you identify idle resources which cost you unnecessary license payments since they are not in use.
For example, if your accounting team only uses a physical calculator, you can remove the devices from other departments who have no need for them. Reducing the number of physical devices in your organization can save you money on electricity, cooling, and maintenance.
Monitor user behavior to understand productivity loss
In addition to track which devices are actively using specific applications, you can monitor user behavior to understand productivity loss. By tracking the devices that are actively using specific applications, you can identify which devices are not actively using applications.
Identifying these devices helps you to determine the root cause of the productivity loss. You need to ask your team why their work morale is low. Monitoring user behavior using software licenses helps you to build a more effective team making your employees’ lives easier and it identifies which employees are struggling and takes steps to address their needs.
Compliance with license agreement and legal requirements
Software license management can be a complex process. Having a license monitoring system in place helps you stay prepared for an audit and avoids fines or other penalties. Noncompliance with these agreements can be costly for you.
You can also ensure that your employees’ software is in accordance with your company’s policies. The following are some tips to help ensure that your organization is compliant with the terms of the license agreement:
Use a variety of vendors for all of your software licensing contracts.
Identify which product or service you need to purchase from each vendor. You should ask the vendor if they have a license agreement with their customers that covers the product or service you need from them. If not, then it’s best to ask them whether they have one for their customers as well.
Review all licenses before purchasing any new software products from any vendor. By reviewing all licenses prior to purchasing any new software products from any vendor, you will be able to identify any inconsistencies between your existing contract with the vendor and what they are currently offering in their marketplace.
Ensure that there is no conflict between where you purchase your software and where it is licensed by the vendor in terms of payment.
Ensure that you have a clear understanding about what each piece of software you are purchasing has to offer to your customers. In order for your customers to understand what “it” is all about, they will need to understand what pieces it contains so that they can tell whether or not it is capable of meeting their needs.
Ensure that all vendors have clear policies regarding their business practices and policies regarding how they deal with issues such as litigation or disputes related to their products and services.
To sum it up
When it comes to managing software in the enterprise, there will always be challenges. But by using software license management, you can better track the usage of your software and see where there are inefficiencies.
This allows you to make necessary changes, like upgrading or downgrading your software as needed, or removing licenses for employees who are no longer using them. With these changes, you can reduce costs, increase productivity, and improve your company’s overall efficiency.