Everything You Need to Know About Software License Management

Melisa Wrobel June 8, 2023
- 12 min read

Software License Management (SLM) is a critical aspect of IT Asset Management (ITAM). Organizations heavily rely on software applications for their everyday functions. However, grappling with diverse licensing models and meeting compliance requirements requires good organization, knowledge on the matter, and a competent tool. 

Effective SLM is the way to address this. To understand how to implement it, in this article, we will explain what it entails, its scope, its best practices, and the must-have features. Then we will see how InvGate Insight can be your best ally during the process. 

Whether you're just starting to explore this practice, or seeking to enhance your existing methods, this article will provide you with valuable insights and practical guidance.

So, let's dive in and unlock the knowledge you need to master the art of Software License Management!



What is Software License Management?

Software License Management is the process of effectively tracking, controlling, and managing the usage and distribution of software licenses within an organization. It involves their systematic management, ensuring compliance with license agreements, optimizing software usage, and minimizing potential legal and financial risks associated with violations.

The practice encompasses all aspects of software licensing, including procurement, deployment, monitoring, maintenance, and retirement of software agreements. This means that it involves maintaining an accurate inventory of licenses, tracking their usage, and ensuring compliance with terms and conditions.

SLM is closely related to two other disciplines: Software Asset Management (SAM) and IT Asset Management. ITAM is in charge of managing all IT assets within an organization throughout their lifecycle, including hardware, software, and other technology resources. Meanwhile, SAM is included in ITAM and encompasses particularly the management of software assets. 

The practice focuses mainly on assuring three elements:

  • Compliance - Ensuring that software usage within the organization adheres to the terms and conditions outlined in the license agreements. This involves monitoring usage, tracking entitlements, and avoiding unauthorized or unlicensed software usage.

  • Cost optimization - Maximizing the value of software investments by optimizing license usage and minimizing unnecessary expenditures. This includes identifying unused or underutilized licenses and reallocating them to other users or departments, as well as negotiating favorable agreements with vendors.

  • Risk mitigation - Reducing legal and financial risks associated with non-compliance and unauthorized software usage. By maintaining accurate records and conducting regular software audits, organizations can identify and rectify any potential compliance issues before they escalate into legal disputes or financial penalties.

Types of software licenses

There are various types of software licenses, each with their own terms and conditions. Furthermore, it’s worth mentioning that different software vendors also usually have specific licensing models for their products. 

Nevertheless, here are some commonly encountered licenses:

  • Named license - Also known as a user-based license, it is tied to a specific individual or account. Only the designated user is authorized to access the software. This type of license is suitable for organizations that require individual user access control and want to track software usage on a per-user basis.

  • Concurrent license - It allows a specified number of users to access and use the software concurrently or simultaneously. The number of users who can access at the same time is limited in each case. This license category is beneficial for organizations with a large user base that also need to control the maximum concurrent users allowed.

  • Client Access License (CAL) - It provides client devices or users with the right to access specific server software. They are commonly used in server-based environments, such as Microsoft Windows Server, where each client device or user requires a separate CAL to access it. They can be either per-user or per-device, depending on the licensing model.


Key benefits of Software Lifecycle Management

Effectively managing software assets and optimize usage brings organizations various benefits:

  • Cost savings - By having visibility on license acquisition and usage, businesses can distribute them effectively across areas and negotiate more effectively with vendors, resulting in a budget and waste reduction.

  • Value to customers and employees - SLM ensures that software is available to the right users when they need it, improving productivity and efficiency, reducing downtime, and improving satisfaction.

  • Reducing complexity - Managing a diverse range of software licenses can be complex and time-consuming. By standardizing software usage across the organization, you can simplify this process by reducing software diversity within an organization. With fewer software variations to manage, your team can provide more efficient support and troubleshooting, reducing downtime and improving overall IT performance.

How to manage software licenses with InvGate Insight

But how do we do all this? InvGate Insight is an IT Asset Management software that allows you to effectively manage your software licenses through their whole lifecycle. The tool gives you a complete view of your whole IT environment and their relationships, and clear access to all the information on your assets, including licenses. 

Let’s see how you can streamline the SLM process.

Software License Management process 

Here's a step-by-step of the workflow process to manage software licenses using InvGate Insight:

  1. Create your inventory -The first step is to create a comprehensive inventory of your software licenses, contracts, and the assets that they are related to. You can install an agent on your computers to track the software installed on them or import them manually to InvGate Insight.
    Example of how InvGate Insight displays the consolidated IT inventory data.
  2. Build your license procurement -  Associate contracts with individual software titles, users, computers, and locations on InvGate Insight. This will enable efficient management of the purchase and support cycle for each application, as you will have a better view of the software usage and lifecycle.

  3. Map your CMDB - By mapping contracts and software within InvGate Insight’s Configuration Management Database, you can gain better visibility into the relationships of complex IT environments. This is key for software that is linked to many assets in your infrastructure.create-a-cmdb-with-invgate-insight
  4. Track software usage - By installing agents on each machine, you will get real-time software metering and accurate and up-to-date information on software usage. Use this real-time data to monitor license utilization, identify potential areas of cost savings, and detect any gaps or discrepancies in usage.
    Example of how the Software Metering feature looks like on InvGate Insight.
  5. Automate processes and smart tags - InvGate Insight’s automation features, smart tagging, and notifications will also help you stay on top of the status of your licenses. Set notifications to alert your team when licenses approach their limits, ensuring timely actions to prevent compliance violations or license shortages. Configure smart tags that will automatically categorize licenses based on customizable attributes, facilitating easy tracking and reporting.

    View of InvGate Insight's smart tag configuration to enable ITAM automation.

Software License Management best practices

Apart from making use of these capabilities, these best practices in Software License Management will help you optimize your organization’s ITAM practice:

  • SLM Certification - Obtaining SLM certifications, such as the Certified Software Asset Manager (CSAM) or Certified IT Asset Manager (CITAM) validates and showcases your knowledge and skills in SLM processes, policies, and industry standards making sure you're qualified on the matter.

  • SLM Database - Maintaining a centralized SLM database or repository is crucial to have a single source of truth for managing software licenses. With a unified inventory you can easily achieve it with InvGate Insight, and provide your organization with acquisition and usage data, streamlined renewals, and a CMDB to monitor license lifecycle and ensure compliance.

  • SLM Policy - Developing a comprehensive SLM policy establishes clear guidelines and procedures for managing software licenses within the organization. Keep in mind to address the whole lifecycle and clearly communicate and give access to them to everybody involved.

  • Request automation - Automating requests for available software and having a generic request option to streamline the software acquisition process reduces waste, unifies software delivery, and captures customer demand efficiently. The best way to do this is to integrate your ITSM software with your ITAM tool, like InvGate Service Desk and InvGate Insight. 

  • Regular audits and optimization - Conducting regular software audits and optimization exercises ensures everything is working as it should, and prepares you for possible external audits. . By analyzing software usage data and aligning licenses with actual needs, you can optimize license distribution, avoid unnecessary purchases, and reduce potential risks. 

License Management software must-have features

As we've seen above, you need certain elements to streamline your SLM. In particular, there are nine License Management software must-have features:

  • Relationship building - The ability to associate licenses with specific users, computers, or locations helps in tracking license allocations and usage accurately. It enables organizations to align licenses with the appropriate stakeholders, ensuring accountability and cost attribution.

  • Financial tracking - Built-in financial tracking capabilities allow organizations to monitor costs and budget allocation.
    InvGate Insight's budget control capabilities.
  • Software Metering - To monitor and measure software usage, identify underutilized licenses, optimize license allocation, and make informed decisions regarding license procurement and renewals.

  • Normalization - Normalization capabilities standardize software names, versions, and attributes across the organization, contributing to keeping data clean and consistent for accurate management and reporting.

  • Contract Management - To facilitate efficient license tracking, compliance monitoring, and negotiation.

  • Smart tagging - Dynamic categorization enables you to assign and manage licenses based on customizable attributes or tags, enhancing license visibility, enabling quick searches, and simplifying License Management based on specific criteria, such as software types, usage rights, or license models.

  • Notification and automation - To enable predefined actions based on triggers, streamlining workflows, and reducing manual effort.

  • Deployment and scripting- - To automate deployment processes, apply license configurations, and maintain license consistency across the network.

  • CMDB Integration - To have a holistic view of software assets, their relationships, and dependencies within the IT infrastructure. 

Software License Compliance Management

Software License Compliance Management involves various strategies to ensure adherence to license agreements and mitigate legal and financial risks. 

  • Using software metering capabilities to monitor software usage and prevent exceeding the threshold of owned licenses. Establishing controlled software installation procedures to prevent the installation of apps not owned or properly licensed. Running internal audits to assess license compliance across the organization, identify discrepancies, and implement measures to ensure compliance. 

  • Setting up real-time dashboards to track useful ITAM metrics on a daily basis and act on any abnormality as soon as it’s detected.

Though it might sound fancy or overcomplicated, Compliance Management can be easily done with the must-have features we mentioned above, and provided by InvGate Insight. For instance, you can enable smart tags to categorize software based on license attributes, and control installation procedures. Or you can create customizable dashboards to track the KPIs you’re most interested in, while automating periodic reports to run internal audits.

In conclusion

Software License Management enables organizations to minimize risks and maximize the value of their software investments. It empowers them to maintain a centralized license inventory, monitor usage, and identify cost-saving opportunities. 

Keep in mind that it is an ongoing process that requires continuous tracking, evaluation, and adaptation to keep pace with evolving software environments and licensing models.

To start implementing your Software License Management strategy, ask for InvGate Insigt’s 30-day free trial

Frequently Asked Questions

Why is Software License Management important?

SLM is essential for compliance, cost optimization, and risk mitigation. It ensures organizations adhere to license agreements, maximize software investments, and minimize legal and financial risks.

What is the ITIL Software License Management process?

The ITIL SLM process involves activities like procurement, tracking, compliance monitoring, and retirement. It aims to ensure compliance, optimize software usage, and align with ITIL best practices.

What is a software license manager?

A software license manager is either a role or a tool responsible for overseeing and managing software licenses. They maintain inventories, track usage, ensure compliance, and optimize license usage for cost savings and risk reduction.

How to manage software license keys?

Managing software license keys effectively involves maintaining a centralized repository, implementing secure access controls, regularly auditing and reconciling license keys, and utilizing software license management tools.

What is the difference between software ownership and software licenses?

Software ownership refers to owning a copy of the software, while a software license grants the right to use the software under specific conditions.

Is a software license an asset?

Software licenses are considered intangible assets, as they have value and can be accounted for in an organization's financial records.

Can a software license be a fixed asset?

Software licenses are typically not classified as fixed assets, as they are not physical or tangible. They are often categorized as intangible assets or part of an organization's intellectual property.

How do I know if a software is licensed?

To determine if a software is licensed, review the software documentation or user agreement, contact the software vendor for verification, perform a software audit, or seek assistance from legal or licensing experts.

Read other articles like this : ITSM, ITAM, InvGate Insight, Product tutorials

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