8 Best Practices for Software License Management

| November 19, 2021

updated on November 22, 2021 at 2:16 pm

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Have you ever ticked the “Yes, I Agree” box of Terms and Conditions while installing software? If yes, then you should read this article to the end. Maybe you haven’t landed in trouble yet, but not keeping up with these “Terms and Conditions” could create havoc for your company.

Even your employees violating these terms unknowingly could attract legal proceedings and penalties. This article will discuss best practices for software license management in your organization.

Software License Management

Today, most organizations are moving from on-premise to cloud software and the “Bring Your Own Device” policy. As employees can use this software remotely using their devices, the risk of non-compliance increases by a substantial degree. Therefore, software license management has become more crucial for businesses today than it was ever before.

Software license management is crucial for businesses that seek growth in adherence to regulatory compliance. Failure to implement an effective license management policy can seriously damage an organization’s IT security program, increase software expenses, legal charges and reduce efficiency.

Software license management includes more than just tracking renewals and usage. It also includes the management of software inventory and deploying software licenses to employees and teams for optimum output.

What Is Software License Management?

Software license management helps implement, maintain, and monitor software licenses, subscriptions, compliances, etc., in an organization. It helps businesses cut costs, keep track of their software licenses, and avoid fines and penalties for non-compliance.

The process further helps the company understand their software licenses and invest better in procuring software assets.

Software licenses are precious assets for any organization and require proper monitoring and maintenance than a traditional asset. Unlike fixed assets such as machines and furniture, software solutions come with usage terms, non-compliance of which could lead to legal proceedings.

Besides, the software is hard to track because of its intangibility and widespread distribution. Hence effective license management is crucial for the smooth operations of any organization.

License management software includes but is not limited to the following task:

  • Tracking Usage

    Tracking usage time, location, and authority of users is an integral part of software license management. It enables managers to identify whether any software is underutilized or over-utilized as per the agreed terms and conditions.

  • Detecting Unauthorized Usage

    Software license management includes tracking the usage of software applications on a computer, mobile phone, or any other device.

  • Tracking Purchasing and Renewing Dates

    Tracking purchase and renewal dates of all software is an essential part of software license management. It enables businesses to run smoothly without any outages or non-renewal halts.

  • Allocating Software Licenses

    Software license management includes optimum allocation of the available software resources for optimum efficiency.

  • Educating Users

    Software license management also includes educating users about software licenses and their legal implications. It ensures that employees are aware of the consequences of any illegal activity concerning the software license.

  • Reporting

    Software license management includes generating consolidated reports related to software licenses for auditing, budgeting, and decision making.

What are the Different Types of Software Licenses?

Software licenses could be categorized mainly into two types based on copyright law. These are:

  1. Proprietary License

In a proprietary license, the owner of a proprietary program owns the copyright and exclusive rights to allow or disallow copying, distribution, and modification of the software.

This means that a customer is not allowed to copy a proprietary program, even for backup purposes, nor are they allowed to distribute it to other individuals.

Most of the software used by businesses fall under this category. Microsoft Windows is probably the most common example of proprietary software.

The proprietary license can be further categorized into the following types based on usage and cost:

  • Free license: These are free to use but can’t be modified, resold, or repackaged. Examples include WinRAR, Play Store, and Apple Store, iOS apps.

  • Lifetime License: This type of software license can be used for a lifetime after a single purchase. Examples of software with lifetime subscription plans are Tally prime, Windows 365, etc.

  • Usage Subscription: Some licenses limit software usage for a specific task. For instance, the number of bills generated through any billing software. Once you reach the limit, the user has to extend the license for further usage.

  • Term License: This type of software license has a specified usage for a term. You will need to renew the subscription for further use after the period elapses, such as with Adobe photoshop.

  • Per Seat/Machine License: This digital license allows only a specific number of users or systems to use the software, such as with Netflix.

  • Time-Based subscription: Time-based software license is valid for a specific time. The cost depends upon the number of hours the software or service is used. Nucleus Finnacle, Flexcube, Android Studio are some of the examples.

There can be other types of licenses, such as site licenses and enterprise licenses customized as per user needs.

  1. Open-Source License

With open-source software, the copyright is owned by creators of the program. It means that anyone who receives a copy from someone else can redistribute it again or change and then distribute it.

In contrast to proprietary licenses, you don’t have to pay for an open-source license. However, such licenses might involve payment for any modifications you make to the program.

The most common example for an open-source license is Android OS. Android OS, owned by Google, is an open-source platform. Any smartphone company can modify Android as per their necessity and install it on their device. ColorOS, MIUI, etc., are examples of modified Android OS.

Why Is Software License Management Important?

Why Is Software License Management Important?

Software license management is essential for every company to maintain compliance, profitability, growth, and productivity. Software license management helps businesses in the following ways:

  • Maintaining legal compliances

    Non-compliance with the terms and conditions of the software license agreement could lead to hefty penalties, fines, and negative publicity. Software license management helps managers maintain compliance by sending alerts and tracking the usage.

  • Optimal usage of software licenses

    Software license management helps managers deploy software resources of the company based on data, potential requirements, and growth, ensuring optimum usage of available licenses.

  • Preventing Unauthorized Usage

    Software license management would also enable us to prevent unauthorized usage of software licenses. Employees must be aware of the consequences of any illegal activity with regards to software licensing, e.g., usage of unlicensed copies, installation of unlicensed copies, etc.

  • Eliminating Underutilization

    Software license management also includes preventing the underutilization of software licenses. Underutilization reduces the ROI of an organization. Therefore, it is vital to identify underutilized software licenses and take necessary action.

  • Budget Forecasting

    A company must meet its software licensing requirement on time. Therefore, it is essential to generate accurate forecasting reports for budgeting and resource allocation purposes.

  • Preventing software downtime

    A company’s business might get stalled due to non-renewal or non-upgrade of software on time. Renewing and updating software on time is an integral part of software license management.

  • Reducing the cost of IT Infrastructure

    Software license management process reduces the cost of acquiring new software or maintaining old ones. It identifies under-utilized and outdated software, and helps managers compare two different software based on their usability.

  • Generating Reports

    It is also an objective of software license management to monitor and generate usage reports for auditing, billing, and decision-making purposes. It would enable us to monitor actual software licensing requirements concerning the company’s business activities.

How To Manage Software Licenses Successfully?

How To Manage Software Licenses Successfully?

Managing software licenses is a complicated task, as software solutions are intangible and difficult to track. There must be a pre-defined set of procedures that companies must follow to deal with software licensing-related issues.

There are some widely used practices across the IT industry for efficient management of software licenses.

  • Define Business Policy

    Make a set of procedures to follow while acquiring, using, and renewing software licenses. Also, define the documentation requirements, recording pattern, and internal check that should be performed before a software license is procured, used, distributed, or renewed.

    For example, the department head and operations manager should authenticate all the software purchase requirements.

  • Setup Internal Controls

    Implement internal controls that comply with business policies regarding software license compliances. Every transaction of software license should go through a level of authorization and authentication for approval. It helps curb any unauthorized access to the software.

  • Track Contracts/Licenses

    It is vital to keep track of software licenses contracts. For small companies, even a simple spreadsheet mentioning procurement dates, terms, and renewal dates could help keep track of subscriptions and contracts.

  • Conduct Internal Audits

    It is essential to conduct regular audits on software licensing. It would enable you to identify potential areas where you might have violated the contract or legal agreement. These audits could expose gaps in internal controls and authorization.

  • Deploy SLM Software

    Managing the licenses and maintaining compliances would be even more cumbersome if done manually. Using license management software would streamline the entire process from onboarding, documentation to renewal. It tracks the usage of software, prevents unauthorized usage, and generates valuable reports.

  • Educate Employees

    Educate employees about software license management policies. A simple session about software compliances on onboarding day could reduce the risk of non-compliance significantly.

    Employees should know the legal and ethical consequences of violating terms and conditions before using any applications.

  • Periodic Reviews and Updates

    All the software licenses should be reviewed and updated periodically. It is essential to review their renewal dates, upcoming updates, requirements, or removals. It helps the management to get an idea about upcoming expenses, nonessential software agreements, and more.

  • Track Expenses

    The software will help in keeping a close watch on software license expenses. You can also keep a check on the purchase of licenses as per the requirement.

  • Monitor Usage

    You must monitor software usage regularly to ensure compliance. It would enable you to identify the overuse or non-compliance of any software or subscription quickly.

    Track the usage, spending and usability of every software and compare them. If possible, determine the ROI of every software to identify the most valuable software. Comparing the company’s data with industry standards or your predictions would help identify underutilized software.

How Does EzAsset Asset Management Software Help?

EezAsset is a comprehensive IT asset management software that manages all IT assets, including software licenses. It ensures that your business complies with license agreements and keeps track of software lifecycle from procurement to expiry.

ezAsset SLM software can help reduce compliance risk and manage software licenses effectively for hundreds of users. It empowers users to manage and monitor all software licenses on a single platform.

The software gives complete visibility into all the software solutions in your organization, their deployment and utilization.

ezAsset IT software management system helps manage software licenses in the following ways:

  • Improved Compliance

    It ensures that your organization complies with license agreements laid down by software developers. The software will save you from potential fines, penalties, and legal proceedings with its compliance manager feature. It ensures that you do not inadvertently violate any clause while using software licenses.

  • Complete Visibility

    You get complete visibility about who uses licensed programs, how they are using them, and when. It helps businesses save costs and eliminates any unauthorized usage of software.

  • Improved Productivity

    ezAsset ensures that you deploy all your software effectively across the workforce and track any underutilized software. It also checks for updates and ensures you always have the latest version of applications.

  • Reduced Costs

    Software license management applications can help reduce your software costs. It provides insights into how your existing software is used and how many licenses you need to purchase.

  • Integration

    ezAsset can be easily integrated with your business applications to streamline the entire IT Asset Management process. The software eliminates manual data entry, which in turn reduces errors and omissions.

EZAsset helps manage all kinds of software licenses, including on-premise applications and SaaS cloud-based applications, etc. It helps reduce the compliance risk and manage the entire software licenses effectively across your organization.

Conclusion

Software license management has helped several thousand companies to run their business efficiently with improved compliance and productivity. It is time you follow these practices and make your organization invulnerable to legal proceedings.

Ultimately, effective software license management frees up your time. You can focus on real business opportunities than managing compliances.

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