Keeping software licensing under control is a major challenge for IT teams. You might think you have all your software licenses in check—until an audit comes along and proves otherwise. Over-licensing wastes money, under-licensing leads to compliance risks, and managing it all without a clear strategy is a headache. That’s where Effective License Position (ELP) comes into play.
An ELP helps organizations get a clear, accurate view of their software usage versus their entitlements, ensuring they’re neither overspending nor exposing themselves to legal risks. But how do you achieve this, and why should it be a priority for your IT strategy?
Keep reading as we break down why an Effective License Position is essential and how it can save your organization from unnecessary costs and compliance nightmares.
How to Manage Software Licenses with InvGate Asset Management
What is an Effective License Position (ELP)?
An Effective License Position (ELP) is a comprehensive analysis that compares the software licenses an organization owns (entitlements) versus what it actually uses (deployments).
Simply put, it determines whether a company is compliant with its software licensing agreements or if it’s either under-licensed (at risk of non-compliance fines) or over-licensed (overspending on unnecessary licenses).
Why does ELP matter?
Understanding and calculating your ELP correctly is crucial for multiple reasons:
- Compliance assurance – Software vendors frequently audit organizations. If you’re under-licensed, you could face penalties, legal action, or forced purchases at higher costs.
- Cost optimization – Without visibility into your actual software usage, you may be paying for more licenses than you need. A well-managed ELP helps cut unnecessary expenses.
- Better IT Asset Management – ELP is a key component of Software License Management (SLM) and IT Asset Management (ITAM). It provides a structured approach to tracking, managing, and optimizing software assets across your organization.
- Improved security and efficiency – Unused or unauthorized software can create security vulnerabilities and inefficiencies. An accurate ELP ensures your software landscape is well-governed and up to date.
- Stronger vendor negotiations – When you have precise knowledge of your license usage, you can negotiate better terms with vendors, avoiding overpriced renewals or unnecessary purchases.
ELP isn’t just about staying compliant—it’s about getting the most value out of your software investments while maintaining control over your IT assets. In the next section, we’ll explore how to calculate your ELP and the steps to maintain an accurate and effective licensing strategy.
How to calculate Effective License Position (ELP)?
Getting your ELP right isn’t as complicated as it sounds. Here’s a straightforward approach to calculating it:
#1. Create a comprehensive software inventory
If you haven’t done so already, the first task you should undertake is creating a complete software inventory. You need to know what you own. Of course, this task can be done manually, but it’s always better to use a SLM or ITAM tool. This way, you avoid manual errors, optimize time and resources, and ensure future scalability alongside your organization’s growth.
Some key details you should be able to track regarding your software include:
- Purchase orders.
- License certificates.
- Invoices.
- Agreements with vendors.
#2. Identify deployed software
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Perform a full software audit to determine what applications are actually installed and in use. Many organizations run more software than they realize, which can lead to compliance risks.
#3. Match entitlements with deployments
Compare your software inventory (what you own) with your deployments (what’s installed). This will help you identify if you are under-licensed and at risk of non-compliance, or over-licensed and paying for unnecessary software.
#4. Verify license terms and conditions
Licenses have different rules depending on the vendor and type. Make sure you understand whether the license is per device, per user, or subscription-based, any restrictions on usage, and renewal dates to avoid compliance issues.
#5. Identify gaps and optimization opportunities
Once you’ve matched your entitlements and deployments, determine where you need to close shortfalls by purchasing additional licenses or reduce costs by reallocating or eliminating unused software licenses.
#6. Implement continuous License Management
ELP isn’t a one-time process—it should be monitored and updated regularly. Using a SLM or ITAM tool helps automate tracking, detect discrepancies, and ensure compliance over time.
InvGate Asset Management’s License Management feature for ELP
To successfully establish and maintain an accurate ELP, you need a dedicated tool. And that’s where InvGate Asset Management comes in.
InvGate Asset Management is a powerful ITAM software designed to provide full visibility into your IT environment. It enables organizations to track, manage, and optimize their software assets, ensuring compliance and cost efficiency. With its extensive feature set, InvGate Asset Management simplifies Software License Management, helping you build and maintain a solid ELP.
Let’s go through a step-by-step guide on how to achieve this using the platform.
#1. Build a complete software inventory with InvGate Asset Management
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The first step in establishing an Effective License Position is to gain full visibility of your software landscape. Without an accurate inventory, managing licenses effectively is impossible. For a more robust solution, you can use a dedicated asset discovery tool or opt for a comprehensive ITAM software to streamline the entire process.
InvGate Asset Management automates software discovery, using agent-based and agentless scanning to track all installed applications, versions, and real-time usage. This ensures that IT teams have up-to-date data without the need for manual tracking.
#2. Centralize and manage license entitlements
Once the inventory is complete, the next step is to populate and centralize software license entitlements. Some license details are automatically captured during inventory collection, while others need to be manually added.
The best part? InvGate Asset Management allows organizations to customize fields, ensuring they can store any additional contract details required for effective tracking. To complete this step, navigate to the "Contracts" tab in the Contracts section of InvGate Asset Management.
Our platform enables IT teams to store and manage license agreements, purchase records, renewal details, and compliance requirements in an organized manner. By linking software licenses with specific applications, users, and devices, organizations gain full visibility into their entitlements.
#3. Match software usage with license entitlements
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With both software inventory and license records in place, the next step is to compare them to determine compliance.
InvGate Asset Management’s software compliance module automatically matches deployments with entitlements, identifying any discrepancies. If a software application is installed without a valid license, it creates an out-of-compliance risk.
On the other hand, if there are unused licenses, they represent an opportunity for cost optimization. The system also calculates true-up costs, helping IT teams understand how much they need to spend to close compliance gaps. By continuously monitoring these metrics, organizations can proactively address issues before they escalate.
#4. Optimize licenses through harvesting and cost control
Once compliance gaps and inefficiencies are identified, it’s time to optimize software licenses. Many organizations overspend on licenses simply because they lack visibility into underutilized applications.
InvGate Asset Management’s license harvesting capabilities allow IT teams to detect and reallocate unused licenses instead of purchasing new ones. With real-time software metering data, organizations can analyze actual usage patterns, determine if certain licenses should be renewed or reassigned, and even retire licenses that are no longer needed.
#5. Continuously monitor compliance with automation
ELP is not a one-time task—it requires ongoing monitoring to maintain compliance and optimize costs over time. InvGate Asset Management automates this process with real-time compliance tracking, renewal alerts and notifications, and customizable dashboards.
You can also create specific health rules and smart tags to automatically categorize software based on compliance status, usage patterns, or licensing terms, making it easier to detect anomalies and take corrective actions. This allows IT teams to recive notifications about expiring licenses, track compliance risks, and generate audit-ready reports without manual effort.
In conclusion
Establishing an Effective License Position (ELP) helps organizations cut costs, avoid legal risks, and maximize the value of their software investments. But maintaining an accurate ELP isn’t a one-time effort—it requires ongoing monitoring and optimization. That’s where InvGate Asset Management steps in, providing automated discovery, centralized license tracking, and compliance monitoring to simplify SLM.
With the right tools and processes in place, your organization can stay ahead of audits, optimize software spending, and ensure that IT resources are being used efficiently. Ask for a 30-day free trial of InvGate Asset Management and experience the benefits firsthand.
