Software license management: Definition,
features, benefits and more
What is a software license?
Before getting into software license management, it is important to understand what software licensing is. It is the process of attributing user rights to an individual or a group of users to use a software application. A typical software license comes with an end-user license agreement (EULA), a document that specifies the nature of attribution, the usage limitations, and more.
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Modern organizations often have a hybrid and multisite IT environment, so software vendors offer different license models to suit their specific needs. An application may be available as a single-user license or a system-specific (node-locked) license. It may also come as one or more bundles (network licenses), or in other forms such as dongle, web-based, or cloud-based applications.
What is software license management?
The process of managing software usage permissions and restrictions from one single console is termed as ‘Software License Management (SLM)’. For cloud licenses, it is often referred to as SaaS license management.
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In technical terms, software license management can be defined as the legal process that controls or regulates:
- How to use the software?
- Who can use the software?
- When to use the software?
- Where to use the software?
What are the features of software license management?
The features of software license management are manifold based on the diverse license hosting and distribution types. Here are the common functionalities of modern SLM solutions:
Centralized monitoring
One single interface for managing licenses across devices, teams, locations, types of access, and more.
Functionality of generating reports from usage data
Get both real-time usage statistics and historical usage graphs with smart SLM.
Support for different types of licenses
Developers license an application in different ways depending on the mode of assignment. These include named-user, node-locked, floating, dongle-based, browser-based licenses, token-based, SaaS licenses, and more.
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With smart license management solutions like OpenLM, you can monitor all these types of licenses.
Control license allocation, overusage and checkout policies
Modern SLM helps you to allocate licenses only to the rightful users with features like options file management. For trust-based licenses such as Bentley, you can also control overuse and avoid the risk of paying overusage fines.
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Overall, with smart license management, you can implement enterprise-level checkout policies.
360° management of licenses
Comprehensive license management includes the following:
- Remote updation of license files
- Remote management of licenses with the help of an interface
- Scheduling of periodic reports
- Functionality of controlling license manager services (start, stop, reread, and more)
- Idle session monitoring and license harvesting
- Configuration of email alerts for different conditions
Benefits of implementing software license management
In a complicated licensing environment, manual license tracking can lead to errors, which can contribute to your loss. However, with a smart license management solution, you can:
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- Cut down the number of licenses purchased and eliminate bad licensing investments
- Optimize each license; therefore bring the maximum value out of your licensing investmentsÂ
- Monitor software license compliance by meeting critical license terms and thus avoid paying penalties during surprise audits by software vendors
- Create a uniform approach to license management, making the work easy for your IT managers and promoting better relationships with software vendors
- Enjoy enhanced security and manage software vulnerabilities efficiently
Roles of software license management in ITAM
Software license management facilitates the overall process of ITAM by:
Ensuring compliance and risk mitigation
- SLM is fundamental to ITAM, ensuring compliance with license agreements and mitigating risks associated with software usage.
- It provides a clear picture of an organization’s software landscape by tracking installations, usage, and agreements.
- This visibility is crucial for avoiding costly vendor true-ups due to under-licensing and preventing unnecessary expenditure on over-licensed software.
Optimizing software spend and ROI
- Robust SLM processes enable the reclamation of unused licenses, allowing for their redeployment.
- This maximizes the return on investment for software assets.
- Proactive license optimization directly impacts the bottom line, freeing up resources for other strategic IT initiatives.
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Influencing IT governance and strategy
- Effective SLM integrates with broader ITAM processes, significantly influencing IT governance and strategic decision-making.
- Data from license usage (e.g., peak usage, frequently used applications, idle licenses) provides invaluable insights for IT planning.
- This information empowers IT departments to make informed decisions on future software procurements, identify training needs, and rationalize application portfolios.
Driving informed decisions and accountability
- Understanding actual usage patterns can lead to decommissioning redundant software or negotiating more favorable licensing terms.
- Detailed audit trails and historical usage data from SLM tools are essential for demonstrating accountability and transparency during internal and external audits.
- By offering a comprehensive overview of software consumption, SLM becomes a critical input for shaping IT strategies related to cloud adoption, digital transformation, and cybersecurity, leading to a more efficient, secure, and cost-effective IT environment.
Understanding different types of software licenses, licensing models, and more
In our software-driven world, licenses are the legal agreements that govern how we can use the software we rely on. But navigating these agreements can be tricky, due to the complex terms and conditions. Here’s a look at the types of licenses, and major licensing models and terms you must know.
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Types of software licensesÂ
Software licenses are primarily of two types: commercial and open-source. The commercial licenses are the ones that one needs to purchase. Open-source licenses are mostly free to use but cannot be used against the standard terms and conditions.
Commercial and open-source licenses combined, there are a total of five different types of licenses:
- Public domain license These are the software that does not require any permission to use. Users can simply use the codes as they are. Users can also modify codes the way they want without giving any credits to the owner.
- LGPL The GNU Lesser General Public License or LGPL is almost similar to the public domain license. However, in this category, users must follow all the terms and conditions in case they want to modify the original codes.
- Permissive license This is the license that must be credited in case of any changes. Users can reuse or modify the codes until they acknowledge the legal terms and conditions.
- Copyleft license In order to use or modify these licenses, users must release their version under the original software license. This means, users can distribute copyleft software only as a derivative, and the cycle should go on.
- Proprietary license This is a commercial license in the true sense. It is always a paid one and doesn’t allow any copying or redistribution of the original code.
Key software licensing terms and concepts
Understanding some key terms will help you navigate software licenses more effectively:
- Copyright: Protects the software’s intellectual property, so that you cannot copy or distribute it without permission
- End-user license agreement (EULA): The legal document outlining the terms and conditions for using the software.
- Distribution rights: Refers to the permissions for copying and distributing the software.
- Modification rights: Specifies whether you can modify the software’s code.
- Warranty and disclaimer: Outline the level of support and responsibility the vendor takes for the software
By understanding these concepts and the different types of licensing models, you can make informed decisions about the software you use. Remember, it’s always a good practice to review the license agreement before installing any software. If something is unclear, don’t hesitate to contact the software vendor for clarification.
Challenges in software license management
Software license optimization can carry multiple risks if it is not done properly. Organizations usually start using smart software license management tools to overcome the following challenges.
- License overspending: It is a common practice among organizations to purchase more licenses than they actually need. Apparently, they do it to avoid any risk. However, in reality, companies end up spending millions of dollars on unused licenses.
- Poor documentation: Often, organizations fail to keep track of every license they have in their ecosystem due to manual record-keeping.
- Compliance failure: Poor documentation makes it difficult to follow the terms and conditions of individual licenses. As a result, SaaS-driven organizations without smart SLM are always at compliance risk.
- Surprise software audits by vendors: Working with multiple software vendors means you have to adhere to their respective terms and conditions. Software vendors also conduct periodic and surprise audits to check whether the organizations who purchased their licenses are following the terms. So, it’s wise to be prepared to avoid paying penalties and getting one’s reputation damaged.Â
- Scalability: As organizations become larger, the number of users and devices grows too, and thus license monitoring also becomes a complex task.
- Dynamic work environment: Technological advancements can affect market demands, causing software requirements in an organization to change rapidly. An organization’s license management policy must be in sync with this.
- Renewal management: Renewing essential licenses on time is crucial to not hamper the flow of business.
Software license management best practices
Purchase only what you need
Most of the time, organizations purchase licenses that they hardly put to use. This is a total waste of money and resources. Before purchasing any licenses, organizations must check or consult with a software license manager. This will save a lot of money from the annual IT budget.
Also, purchase only when you need
Purchasing the right thing at the right time gets counted. Purchasing software or obtaining their licenses thinking about the future could cost you a fortune. Technology is evolving extremely fast; today’s software could become obsolete tomorrow.
Use what you have paid for
Complying with a license’s terms and conditions is a must. If you or your organization crosses the thin line of compliance, you may face unwanted consequences. In extreme scenarios, an uncompliant organization may end up paying millions as a penalty.
Have you invested in a smart license management solution, or planning to invest in one? To get the most out of it, ensure you follow the following procedures.
- Understand your license agreements
- Implement well-defined software procurement policies
- Monitor and track software usage with the solution
- Conduct regular software audits (OpenLM Compliance helps you do that)
Future trends in software license management
Data shows that the SaaS-driven market is all set to grow from $317.55 billion in 2024 to $1,228.87 billion by 2032. With this, the way of managing software licenses is also changing. Here are a few key SLM trends that are expected to define the future of software licensing.
- Usage-based and feature-based licensing is increasingly prevalent. This model shifts from traditional, rigid perpetual licenses to billing based on actual software consumption or specific features utilized. This offers greater cost efficiency and flexibility, aligning software expenditure more closely with real usage.
- Subscription-based licensing is gaining strong preference. Predictable, recurring revenue streams and the ability to scale software access as needed make subscriptions an attractive option for both vendors and users, replacing large upfront investments with manageable operational costs.
- The prominence of flexible licensing models directly responds to the agile environment. Traditional, inflexible management models prove inadequate for dynamic workforces. Businesses are seeking licensing structures that adapt quickly to evolving team sizes and project requirements, enabling greater agility.
- There’s also an increased emphasis on license compliance. With complex licensing agreements and potential penalties for non-compliance, organizations are prioritizing robust strategies to ensure adherence to terms and conditions, mitigating risks and optimizing software spend.
- A significant shift is towards cloud-based licensing. Moving license management to the cloud offers enhanced scalability, accessibility, and centralized control. This allows for more efficient tracking and deployment of licenses across diverse teams, fitting perfectly with distributed workforces.
- The future of software license management will be heavily influenced by the application of advanced technologies like AI and ML in SLM. These technologies can provide deeper insights into license usage patterns, predict future needs, automate compliance checks, and identify optimization opportunities, transforming SLM into a proactive, data-driven discipline.
- There’s also a growing understanding of the need for integration of smart SLM with cybersecurity. As software assets become more interconnected and integral to business operations, linking license management with cybersecurity protocols ensures not only compliance and cost efficiency but also enhanced security against unauthorized access and vulnerabilities.
In the current age of agile, traditional management models don’t work as they are not flexible. Whether it’s managing a global workforce or optimizing your IT assets, you cannot help without solutions that support the agile framework. While using open-source software licensing software can be beneficial only for limited license management functionalities, you need a modern, built-for-the-cloud solution for endless software optimization.
Notably, OpenLM plays a crucial role in this regard. Built for the agile workforce, not only does the solution track your license allocation and usage, but also helps monitor compliance with complex licensing agreements.
Having our focus on managing engineering licenses earlier, OpenLM has now advanced into OpenLM SAM—a solution built for the cloud and having crucial asset management capabilities.
With our Annapurna release, OpenLM is also offering integration with premium business platforms such as ServiceNow, License Dashboard, Monday.com, Salesforce, and more.
Switch to smart asset management right away to tackle your team’s and software vendors’ ever-changing license requirements and start contributing to your organization’s enhanced efficiency.