What is Software Asset Management?

Software Asset Management (SAM) is a key component of software license management, or SLM, relating specifically to the optimization of software licensing. SLM helps IT teams to monitor, document, manage and control software licensing and spend in the enterprise across on-premise, cloud infrastructure, and SaaS licenses.

Different Types of Software Licenses to Understand

While software and services have blurred in recent years, all software that an enterprise would want to use includes licenses and terms. This is true whether the software is installed on a laptop, mobile device, physical server, a piece of networking equipment, or on a cloud infrastructure instance (virtual server). In fact, even open-source software that is free to use still has a license that must be tracked and managed. To properly execute software lifecycle management and deploy SLM effectively, you need to understand all the types of licenses being used. These will also impact your contractual and financial obligations for each piece of software installed and in use at your enterprise, and the scope of your SLM work and your SAM workflows.

Common license types include:

Per Subscription

A subscription manages this license type for the user or device, usually has an expiration date. This describes most SaaS licenses today.

Per device, CPU or core

These licenses are for a single machine, whether it is a laptop or mobile device or a server. Per core licensing became more common with the rise of multi-core CPUs and has become more popular for cloud-based usage where VMs have core equivalents.

Per Seat/User

These licenses are tied to a specific user. Sometimes they can install and use the software on multiple devices (like their desktop and laptop). Usually, per-seat or user-based licenses are tied back to user identity via SSO or employee directory software.

Per Network

This license type covers all the machines running on a single network or on multiple indicated networks

General Public License (GPL):

Covers software that comes with no charge and can be used, shared, copied, and modified for free (freeware). This is one flavor of open source licenses, of which there are many types. Some freeware contains so-called “copy-left” provisions that mandate that any software code changes be shared back with the community.

Database

Database licensing is more complex than most other types of licensing because vendors build licenses based on multiple factors, including the number of servers or cores, high-availability, failover, in-memory, and more. Database vendors aggressively pursue violations and change licensing models frequently, in part to collect punitive penalties from enterprises that fail to maintain compliance.

How to Manage Software Licenses

Software application license management is complicated but not rocket science. The management of software licenses falls under the rubric of IT license management. The software license procurement process also falls under this area of control. Managing software licenses has a number of key stages.

Procurement and Negotiation: Enterprises today try to consolidate procurement activities with a fewer number of vendors to reduce complexity and improve negotiation leverage. In addition, procurement teams always seek to leverage bulk pricing to replace on-off our out-of-scope purchases of software. This is a particular issue for lower-cost purchases of SaaS licenses or smaller pieces of software.

Receiving and Adding to Inventory: Once licenses are purchased, they are transmitted to the IT team, and the software licenses are added to the inventory database of the enterprise. It is better if licenses are transmitted in a programmatic format that allows for automated entry and management of licenses.

Disbursement and Installation: After addition to the inventory database, then IT can place the software into self-service delivery or installation systems or make those licenses available for general use.

Patching and maintenance: To keep software secure and up to date, IT teams will need to apply patches and update the software when the manufacturer sends out required updates. These processes today are largely automated.

Repatriation and Return to Service: When an employee leaves a company, the software licenses they controlled can be repatriated, reentered into the inventory database, and returned to service.

Benefits of Software License Management

There are many benefits to deploying SLM and continuously monitoring and managing software licenses.

Key benefits of software license management include:

Cost control

Spending on software can quickly spin out of control unless it is actively managed and monitored. Employees may install their own software paying out of pocket rather than using existing paid-for licenses. This maintains software license integrity.

Improved negotiation leverage

By providing a comprehensive view of license status and usage trends, IT and procurement teams can more effectively negotiate with software vendors for the best terms

Improved negotiation leverage

SLM can make audit and compliance easier by creating a single source of truth for all software license data and closely tracking EULA (End User License Agreement) compliance. One device that is outside of EULA can result in considerable penalties.

Decreasing “True-Up” Risk

SLM decreases the chances that your enterprise is using out-of-date or out-of-compliance licenses, reducing the risk of big penalties payable to software vendors.

Reducing errors and manual labor

SLM automates many of the repetitive manual tasks involved with license management and integrates with other tools using automated workflows to reduce errors and improve accuracy.

Analyzing Software Usage / Software Usage Management

Procurement teams can use SAM to analyze software usage patterns for capacity and resource planning and budgeting and create software usage management strategies.

Improving Employee Experience

SLM helps IT and HR teams deliver to all employees the software they need within the most advantageous licensing terms.

Challenges in Software License Management

The number of software licenses used by the average employee today is spiraling upwards in the current environment. Not only are the numbers of licenses increasing, but the landscape is also growing more complex across SaaS, cloud, on-device and hybrid versions of all three. Due to this complexity, IT, legal, finance, and HR teams face many challenges in managing software licenses. These challenges create real risks with real downsides – security risks, financial risks, and audit and compliance risks.

Here are some of the most significant challenges and risks:

Financial penalties for out-of-license usage

Penalties can run into the seven figures for large organizations. Software vendors are more aggressively enforcing licenses, as well.

Existential security risk

The SolarWinds and Microsoft Exchange attacks demonstrated that software must be patched and secured as a top priority. Organizations that fail this mission could end up a victim of ransomware or other types of cyberattacks, most of which are perpetrated through software vulnerabilities.

Certification and compliance risk

SOC2 and ISO 27001 certification statuses are dependent on all software complying with stipulated processes and controls. Not accurately tracking and discovering software running on assets on enterprise networks can move an organization out of compliance.

Privacy risk

Improperly patched and maintained software can result in leaks of Personally Identifiable Information (PII). Under new laws such as GDPR and CCPA, privacy breaches draw considerable fines and provide grounds for lawsuits.

Business risk

Poorly managed software licenses can mean employees do not have the software they need to perform their jobs. This can lead to lost time and reduced productivity, negatively impacting your business.

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Software License Management Best Practices

Organizations that wish to gain the most benefit from SLM should follow a clear slate of best practices. These vary by organization, but some of the most widely accepted best practices for software license management include:

Financial penalties for out-of-license usage

Penalties can run into the seven figures for large organizations. Software vendors are more aggressively enforcing licenses, as well.

Existential security risk

The SolarWinds and Microsoft Exchange attacks demonstrated that software must be patched and secured as a top priority. Organizations that fail this mission could end up a victim of ransomware or other types of cyberattacks, most of which are perpetrated through software vulnerabilities.

Certification and compliance risk

SOC2 and ISO 27001 certification statuses are dependent on all software complying with stipulated processes and controls. Not accurately tracking and discovering software running on assets on enterprise networks can move an organization out of compliance.

Privacy risk

Improperly patched and maintained software can result in leaks of Personally Identifiable Information (PII). Under new laws such as GDPR and CCPA, privacy breaches draw considerable fines and provide grounds for lawsuits.

Business risk

Poorly managed software licenses can mean employees do not have the software they need to perform their jobs. This can lead to lost time and reduced productivity, negatively impacting your business.

Conclusion: Software License Management Saves Money, Reduces Risks, Improves Productivity

SLM plays a crucial role in every enterprise to backstop software asset management tools and simplify the lives of IT teams. SLM can save considerable cash when properly executed: IT Consultancy Gartner says organizations might save 30% in reduced licensing costs if they follow SLM best practices. By better controlling and managing licenses, IT teams can improve their security posture and reduce the risk exposed to their organization. Lastly, smart SLM delivers productivity improvements by automating the rote tasks required by automating key manual tasks to the cloud.

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