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4.2 min to readAsset Management

Software license management benefits and best practices

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Steve GahrPractice Lead – SAP License Advisory Services
Asset Management

When your organization purchases software, it enters into a license agreement with the licensor upon installation or first time access. These End-User License Agreements (EULA) define ways under which the product can be used, in addition to the automatic rights of the licensor that may impose various types of risk to your organization such as data security violations, employee liabilities, unplanned spend due to non-compliance and unfavorable legal positions.

There are many types of licensing models that judge software use in different metrics. For example, a user license is an agreement that the software may be used by a specific person, machine-based licenses allow for installation on a specific device, etc. Organizations have to be aware of how they use and deploy software in order to remain compliant with their licensing contract. However, this is easier said than done, as organizations now deploy multiple software solutions across departments, devices, distributed networks and cloud. To avoid the legal and financial risks that can come with violating EULA’s, organizations must have an active software license management program.

Benefits of software license management

Software license management is the tracking and management of software license agreements and software deployments across an organization to ensure legal, compliant use of software in on-premises, mobile, and cloud environments.

Organizations that are active in achieve benefits in multiple areas.


Software license management gives organizations a clear, consolidated view of their licenses and deployments across solutions and vendors. This information can be incredibly valuable in the face of a software audit, giving organizations the data they need to manage risk and remain compliant as software is consumed across their organization.


Being aware of how each purchased license is installed within your organization provides insight into surplus licenses that are available and not been active in a long time. This information should be taken into account when renewing your contract, however it can also be used to create a license pool. By consolidating these available licenses into a pool, IT teams can more efficiently respond to employee request for licenses, meaning projects are completed faster


If your organization is unaware of how much a license is actually used after installation, it might continue to pay for underutilized software. The information gained through your software license management initiative can save your business money by renegotiating license contracts to only pay for what is needed. This information can also demonstrate where your business needs to correct noncompliance, which will ultimately save money when an audit is conducted.

EULA management

Being aware and understanding key terms outlined in each unique EULA agreement prior to purchasing or renewing agreements can provide you the knowledge on how to minimize risk and ensure proper use of the software within your organization.

Software licenses are easy to mismanage, often to great detriment. Studies show that 51 percent of Fortune 100 companies have unlicensed software in use. To avoid costly audits and optimize software spend, organizations should implement a software license management program.

Software license management best practices

As you inventory, organize, and optimize your organizations software license holdings, here are three best practices to keep in mind.

Align with your software asset management program

Software license management (SLM) is closely affiliated with Software Asset Management (SAM) therefore, the two programs must be closely aligned. While software license management focuses explicitly on ensuring solutions are not over or under licensed, SAM focuses on the solution as a whole, including functionality, cost, and deployment throughout the lifecycle. To explain it another way, a closely connected SLM and SAM program will provide you with a better understanding of your license position and better visibility into Entitlement, Inventory and Consumption (EIC).

It is a good idea to centralize SAM and software license management under one team. Housing license and asset data together ensures that both teams are on the same page with the most up to date data on license and software installations and use. With this information, the SAM / SLM team can ensure license optimization, inform the software procurement team on renewal, and have visibility into compliance risk areas. Additionally, having this information aligned prepares the organization for an inevitable software audit.

Perform a compliance audit

When implementing a software license program, you should begin by performing a compliance audit. This will show you every instance of software installed and in use, versus your allotted entitlements. With this information, you can begin to establish an Effective License Position (ELP). This is the first step in your SLM process, but this does not mean that once the audit is performed, and discrepancies are corrected, that your license management program is satisfied. Software license management and software asset management have to be continual processes to manage risk and optimize software spend. To facilitate this ongoing program, organizations will require Software Asset Management and Software License Management solutions.

Deploy a software license management solution

With the volume of software used across organizations today, it is impossible to manually track and optimize each license. To have consistent information, organizations should implement an SLM solution. Solutions such as these automate the process of locating deployed licenses. A valuable feature to look for in a software license management tool is one that will not only record if a license is deployed, but also how often it is used. If an employee has a program installed on their device but rarely uses it, the SAM / SLM team can notify the user, uninstall it, and add the license to the license pool.

Optimize for cloud

Today, solutions, infrastructure, and platforms are all moving to the cloud. Gartner anticipates that by 2020, 80 percent of enterprise software vendors will shift to subscription models from traditional license models. Having solutions and applications deployed in the cloud poses a challenge to software license management teams, as the software can simply be consumed without being installed. It is important to ensure that your SLM processes and tools allow you to effectively monitor software use in the cloud in addition to on-premises and mobile environments. This will allow your organization to embrace the benefits the cloud offers, while staying compliant and within budget. But, even before you move to the cloud, having an effective SLM Methodology in place will ensure that only the highly utilized applications are moved to the cloud, guaranteeing from day 1 that your cloud environment is optimized.

Final Thoughts

As software use proliferates throughout organizations and moves from on-premises to cloud, license management becomes increasingly important and complex. Employing these software license management best practices ensures that your organization can take advantage of the many operational and financial benefits that come with establishing an effective license position, while preparing for future audits and license model changes.
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A man in a tuxedo smiling for the camera.

Steve Gahr
Practice Lead – SAP License Advisory Services

Publisher Advisory, SAP