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Software license management (SLM) might sound like a low-priority task that IT departments can handle without much cause for concern. However, as software use and spending continues to grow, managing software licenses starts to have a significant financial impact.   

This blog will uncover the key benefits of software license management, how it can save your business money, and how to conduct a software license audit at your organization.

What is Software License Management?

All the software that a company uses requires tracking, managing and updating - not only for optimal performance but to make sure licensing agreements are being followed. 

Software licenses are legal documents. They state how the software is to be legally used and if it can be copied or distributed.  

Software license management is the process of monitoring and maintaining these software licenses. It is a part of a company’s total Software Asset Management, or SAM which deals with the scaling, documenting, and control of software.

How Software License Management Tools Can Help

Once you start digging into the roles and responsibilities of software license management, it can get a little complicated. An automated IT license management software, like QBx Portal, can be a big help by simplifying the best practices below.

1. Understanding and Abiding by Terms

The first step to effective SLM is understanding the agreements your company has made by purchasing and using software from a given vendor. Different types of licenses exist and can even be negotiated prior to purchasing. Some common licensing types are: 

• Per device or CPU
• Subscription-based
• Perpetual
• Per network
• Consumption-based
• General Public License 
• Database
  

Because licensing types may change depending on market trends, maintaining software licenses can be a complicated task. 

2. Establishing Good Gatekeeping

Sometimes the best solution to any challenge is defining how it will be handled. Good application license management creates guidelines for the use, installation and purchase of software. This includes restricting individual users from downloading or installing software on all devices used for company business without authorization. 

Learn more about digital asset management in our knowledge center:

• What Is Software Asset Management?
• What Are the Functions of Software Asset Management?
• Software License Management Best Practices
• The 5 Best Methods for Microsoft Software Asset Management and Licenses

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3. License Lifecycle Tracking and Updates

Software license compliance management includes tracking the quantity and type of all programs installed by your company. This might be in the form of downloads, hardcopy installs or cloud applications. 

With regards to tracking, SLM should also: 

• Compare what is owned to what is used
• Regularly check for updates 
• Automatically update if included licensing
• Check to see if/when licenses expire
• Trace who is using which software applications and how often
• Track licenses when on-boarding and off-boarding employees for application reassignment

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4. Meet Cost Savings Goals

If you’ve found your company has overspent in the past, tracking where and how you’re spending (and saving) now is imperative. Setting and tracking goals for software savings helps budget for the future and proves how cost-effective SLM is. 

5. Prepare for External Audits with Regular Internal Audits

External audits of software licenses conducted by both software vendors and third party organizations actually do occur. As your company does not directly own vendor software and is only licensed to use it, compliance checks may be requested. 

Having a regular system for internal audits is one of the best software license management tools you can invest in. In addition, SLM that includes compliance checks avoids licensing breaches found by external auditors.

Software License Audit Savings 

In addition to ensuring your SLM system is effective, regular software audits produce savings by avoiding:

• Hefty fines and fees associated with breaking licensing agreements
• Legal action and costs
• Overspending on unneeded licenses
• Unnecessary software maintenance fees
• Avoiding “true up” accounting reconciliations
  

Audits also proactively help with ways to budget and save including: 

• Accurate forecasting of future software
• Knowing if you qualify for volume discounts 
• Reharvesting of software licenses in an efficient and legal way
  

According to studies, it is estimated that shadow IT accounts for nearly 30–40% of the IT spending in bigger enterprises. 

With a tool like the QBx Portal, not only can companies identify underutilized licenses but also prepare for audits, delegate rights securely, keep tabs on license costs, identify potential areas for problems in Office 365 licenses. 

Conducting a Software License Compliance Audit at Your Business

As gleaned from the above information, making sure your company regularly audits its SLM system can be highly beneficial, especially if you’ve never done it before. 

Manually reconciling all of your purchased licenses with installed software can be done. The only issue is that using spreadsheets or other home-grown databases can get complicated with the amount of software and different types of licenses being used today.

The dedicated administrative labor and software expertise needed can justify the cost of an automated software license monitoring system and software license audit services for even medium-sized businesses.

For more information on software license tracking systems and for help determining how to audit Microsoft Office 365 software licenses at your organization, contact Quadbridge today!