Global IT spending on software keeps increasing every year as organizations leverage new tools to grow their business operations. While growth is a critical driver in IT spending, most organizations do not manage their software assets efficiently, resulting in wastage of money. The solution to this issue lies in software license management.

In this blog, we’ll explore the different aspects of software license management and how you can deploy best practices to effectively manage your software assets.

What is software license management?

Software license management (SLM) focuses on managing all the software licenses in an organization’s IT infrastructure. The main goal of SLM is to ensure that your business complies with all the regulations concerning end-user and enterprise license agreements. By ensuring the optimal use of software licenses, you can maximize the value you gain from your software assets.

SLM is also an integral part of software asset management (SAM) — a catalog of all software and applications that are part of your IT network. The first step in achieving the goals of SAM is to ensure the effective management of software licenses.

What is software licensing?

Software licensing refers to the process by which a software publisher or owner provides access to end users without losing their ownership rights to the product. In business, software licensing works just like a rental operation. For instance, you can rent your property to a third party in exchange for a fee without relinquishing ownership. The same is true of software licensing, where you provide a license (permission to use) to someone in exchange for a fee.

What are the two categories of software licenses?

Every day we interact with many software products that play a key role in simplifying our lives. We also work with various software solutions without even thinking about it. We can broadly classify software licenses into the following:

Free and open-source software (FOSS) licenses

An open-source software program is available openly on the internet without restriction. You can modify its features and have direct access to its source code. With this access, you can make any modifications required in your software program. While open-source programs offer great flexibility, they are notorious for lacking intellectual property protections and poor maintenance and support.

Proprietary software licenses

The source code is not offered publicly in proprietary software licenses for everyone’s access. The company that created the program has full rights to the source, and no one can access the software without a valid license. Although there is no flexibility in modifications, proprietary software solutions ensure full intellectual property protections and come with a full team for support and maintenance.

What are the main types of software licenses?

Open-source and proprietary software licenses are a great way to classify software licenses. However, these are not the only way to categorize the software programs installed in an IT environment. Numerous types of licensing models exist in the software world.

These are the three most commonly used types of software licenses:

Perpetual license

In this model, a customer pays a one-time fee in exchange for the indefinite use of a software program. The licensing model is quite simple here, as the user has to only pay for the software solution once and use it forever.

Despite its simplicity, this model has several limitations and doesn’t especially benefit the user or the vendor. Since the vendor gets paid only once, they may not always be able to keep the program updated with the latest bug fixes and features. Users, on the other hand, may not experience the convenience of SaaS programs that are always up to date, with minimal maintenance required from their end.

Subscription license

A subscription license is a licensing model in which users access a software program for a monthly or annual fee. SaaS is an example of the subscription software model. This model has significant advantages like low entry barriers, better user support, periodical maintenance, purchase based only on consumption and more.

In recent years, software vendors have been moving away from the perpetual model in favor of the subscription model. For the vendors, it brings in steady income through recurring monthly revenues. This steady income allows them to innovate regularly and keep their product up to date. Customers get access to a robust product that requires no commitment or huge upfront costs. Also, this model offers the best version of a software product.

Use-time or metered license

This model is a flexible way of controlling software licenses. Here, users receive limited access based on their use-time or access to certain applications. Users who need access to only certain features for a limited time can take advantage of this model in exchange for a low price.

What are the benefits of software license management?

The most obvious benefit of software license management is its ability to save time and money. In addition to that, you can also achieve the following benefits by effectively managing your software license agreements.

Comprehensive visibility

One of the key benefits of SLM is that it promotes comprehensive visibility within an IT infrastructure. You can see all the software licenses in your ecosystem and how they are being used. Better visibility ensures better compliance, low risk and easy software audit.

Usage optimization

You can optimize your software usage with full visibility into your software licenses. With IT spending increasing every year, companies cannot afford to lose their money on unused software. SLM ensures better usage optimization and eliminates waste.

Cost reduction

SLM also helps you renegotiate contracts, pay only for the licenses you need, optimize your ROI and more. By reducing unused licenses, you can save significant money on your IT spending. Also, better compliance and optimization can help you avoid potential legal penalties.

License compliance

When you have better visibility into your software and usage, you can easily adhere to all the regulations and End-User License Agreement guidelines. You can equip yourself with the right information and use it during a vendor audit. You can avoid future discrepancies and legal complications with proper documentation about your software licenses.

What is software license compliance?

In the subscription model, the vendor retains the ownership of a software program while the end user buys a copy of the license for private use. Both parties must adhere to the guidelines outlined in the licensing agreement. Software license compliance is all about ensuring the authorized usage of a purchased software program.

Why is license compliance important?

The guidelines in the End-User License Agreement may dictate various components regarding the ideal usage of a software program. For instance, piracy is always a serious concern for many vendors. However, piracy is not always a result of malicious intent. In some cases, companies run older versions of software on unlicensed devices without knowing about it. During an audit, a vendor may check whether the number of purchased licenses matches the number of endpoints running the software.

Piracy is not the only concern when it comes to software license compliance. A vendor may also incorporate various usage restrictions when licensing a software program. Your license agreement may have specific rules regarding sublicensing, software distribution, modifications, etc. License compliance ensures that all these guidelines are met without fail.

What are software license management best practices?

Now that we have established the significance of software license management, it is time to focus on incorporating it correctly. We have compiled a list of best practices to give you a starting point on effective software license management.

Maintain an organized inventory

Create a list of all your software licenses and maintain a central repository with proper documentation. This list should cover everything under the sun that might be important, including contract information, pricing, EULA specs, renewal dates, etc. Although this may take a significant effort, it is an important first step in properly maintaining your software licenses.

Continually track software usage

Once you have identified the software assets in your tech stack, you must monitor their configuration, installation and usage. Proper tracking will help you with the optimal utilization of your software assets and track your spending.

Create and document all information

In addition to organizing your software inventory, you must properly document all the information regarding software licenses. Use a robust documentation solution to document information such as purchase agreements, EULA, maintenance contracts and more. Besides providing easy access to information, documentation will also come in handy during an audit.

Utilize automation where possible

Manually processing all your software information can be quite tedious when you have other tasks that may need your attention. You must leverage automation wherever possible. For instance, a powerful RMM solution can help track all the software used in your endpoints. As a result, you can save the trouble of manually taking a software inventory of all your assets.

Employ a software license management tool

A software license management tool allows you to effectively perform all the functions mentioned above and ensure proper management of all your software licenses. With the right tool, you can generate periodic reports, review software compliance, create expiry alerts and more.

What is a software license management tool?

A software license management tool delivers key insights about the software titles installed in your IT environment. You can use this solution to overcome all your software management issues. This solution scans the network periodically to monitor all the activities in your software tools. You can activate software license tracking to monitor your software licenses and prevent noncompliance.

Your SLM tool will generate alerts whenever a new issue (license expiry, non-compliance, etc.) is detected. You can instantly review and resolve all these issues through proper license allocation. You can also generate reports on software licenses and compliance to proactively manage your software assets.

Manage software licenses with IT Glue

IT Glue is a powerful documentation solution that comes with robust software management features. IT Glue can help you track licenses and tie them back to the hardware assets in which they are installed. With IT Glue, you can have a single source of truth for both your hardware and software assets.

In addition, IT Glue can automate the tracking of licenses natively with Microsoft 365, or leverage open API to track any additional licenses. It also comes packed with features like SSO, IP access control, host-proof hosting, MFA, audit trails and more, all within a SOC 2 Type II compliant solution.

To learn more about how you can manage your software licenses with IT Glue, request a demo.