The Keys to Deploying Software License Management Best Practices

May 17, 2024

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Software license management has become a key focus and concern as enterprises’ IT estates balloon in scope and cost, and vendors more aggressively audit their customers. Recent research has revealed nearly 70% of companies have undergone a major software license audit in the past three years. For many enterprises, these audits can result in massive financial penalties. It’s not uncommon for vendors like Oracle, Microsoft, SAP, or IBM to charge customers seven or eight figures for noncompliance.

In most cases, an audit leads to discovery of noncompliance. Typically, noncompliance is unintentional.  For example, companies often fall out of compliance from:

  • Inadvertent misuse, such as buying license types that restrict usage to certain environments, but then finding employees using them in other environments.
  • Changes to licensing programs, definitions, and usage rights that evolve over time.
  • Upgrading or downgrading software without fully understanding the implications on utilization.
  • Complex stipulations about virtualization.
  • Shadow IT and apps employees use outside of IT management.

Besides audit worries, there can be significant waste. 85% of companies overpay for IT purchases. And then there is this: a recent survey of six million customers showed that 50% of all software licenses were not being used — adding up to more than half a billion dollars in unnecessary spending.

Employing software license management best practices can provide the insight needed, eliminate wasted spending, and reduce audit worries.

Software License Management Best Practices

Forrester forecasts that spending on software will be nearly $1 trillion in 2024 and continue to grow at about 12% a year through 2027. With so much money on the line, it’s surprising how few companies have complete visibility into their assets. To change that, enterprises need to put these software license management best practices in place.

Conduct a Comprehensive Software Audit

Software licenses are legal agreements that grant users the right to use a particular software application for a specific period of time. When you accept a license agreement, you commit to abiding by the terms and conditions of the license. So, the first step in effective software license management is making sure you are living up to your contractual obligations.

To do that, you need to know what you have and how it’s being used. Conduct a thorough software license audit across the organization to identify all installed applications, verify license compliance, and establish a baseline for future license management activities.

Your software audit should focus on three main areas:

  1. Compliance: Mitigate risk of noncompliance and control costs.
  2. Optimization: Make sure the software is right-sized for employee needs
  3. Savings: Look for areas where you can eliminate unused software or reallocate rather than purchase new.

Implement a Centralized License Management System

One study of IT leaders revealed that less than 6% said they had complete visibility into how their employees were using software. Without a centralized license management system, it’s a daunting task.

A centralized license management system streamlines the tracking and reporting of software licenses, automates license reconciliation, and can integrate with procurement and asset management systems. This approach provides a single source of truth for software license information to track deployment and usage.

Develop a Software License Management Policy

A well-defined software license management policy outlines the procedures for license acquisition, deployment, tracking, and retirement. This serves as a framework for consistent and standardized license management practices across the organization.

Optimize Software Licensing Models

Organizations should evaluate various licensing models, such as subscription versus perpetual licenses, and leverage volume licensing agreements to optimize costs. Working with a company like NPI can help uncover wasted spending and optimize your software licensing.

Right-sizing software licensing is crucial to optimizing your spending. For example, does everyone in your organization really need a Microsoft 365 E5 license, or could some employees work just fine with a less expensive E3 license?

Establish Ongoing License Monitoring

Implementing software license monitoring tools allows organizations to track software usage and license consumption accurately. This information can help identify underutilized or overused licenses, enabling organizations to optimize license allocation and procurement decisions.

Implement Software License Harvesting

Software license harvesting involves reclaiming unused licenses and redeploying them to areas of need within the organization. This practice can significantly reduce software spending while maintaining compliance with licensing agreements.

Provide Software License Management Training

Educating employees on license compliance and policies, as well as raising awareness of software license management best practices, fosters a culture of responsible software usage. Regular training ensures that everyone understands their roles and responsibilities in maintaining license compliance.

For example, you may be well aware of the dangers of Shadow IT from a cybersecurity and licensing standpoint, but your employees may not be.

Regularly Review and Update Software License Management Practices

As business needs and software landscapes evolve, it is crucial to regularly review and update software license management best practices. Adapting to changing technologies and licensing models ensures that you remain agile and compliant.

Managing Software Licensing Complexity

The average enterprise device has 67 applications installed. About 10% have more than 100. Most departments use between 40 and 60 different apps and company-wide, that number can balloon to more than 200.

For large enterprises, software management is complex. The more employees and locations you have, the more complicated it becomes. These best practices help rein in unnecessary spending, optimize software licenses, and avoid costly noncompliance. By adopting these practices, you can maximize the value of your software assets while reducing your risks.

However, for these software license management best practices to work efficiently, it requires active management and consistent application.

NPI helps enterprise IT teams identify and eliminate overspending on IT purchases, accelerate purchasing cycles, and increase decision-making confidence. Deep, vendor-specific expertise helps enterprises negotiate better deals and right-size licenses across the organization. This experience helps companies optimize deals to align with future needs while maximizing every IT budget dollar.

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Contact NPI today to discuss how we can help you improve software license management, reduce software costs, and maintain compliance across your organization.