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How to Make the Software License Management Process Less Overwhelming in 2019

Posted by on May 24, 2019

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Analysts at Gartner have projected that worldwide IT spending in 2019 will total $3.8 trillion, up 3.2 percent from the $3.7 trillion that was spent in 2018. Expenses related to communication services, data center systems, and IT services are expected to grow by just 1.2, 1.6, and 2.4 percent respectively compared to 2018, while enterprise software purchasing represents the fastest-growing category of IT spending with 8.3 percent growth.

As organizations continue to undergo digital transformation, it makes sense that we're seeing more IT organizations spend more money on software—but how much of that money is being put to good use?

A 2016 study on corporate software usage and waste, hosted by the International Association of IT Asset Managers, surveyed 4.6 million hardware devices belonging to 149 organizations across 16 different industries, with a goal of measuring the true cost of waste in enterprise software purchasing. The study learned that globally 38 percent of software licenses that organizations purchase are either unused or rarely used. This amounts to $28 billion wasted in the United States alone, or roughly $247 per individual user.

At the other end of the spectrum, organizations that are guilty of overusing  software subscriptions may find themselves being audited by their software vendors for non-compliance with software license agreements (SLAs). These audits are a costly distraction from routine business and can lead to expensive true-up payments and even litigation costs when there is disagreement about software contracts or usage data.

To comply with licensing agreements and effectively manage software purchasing expenses, IT organizations engage in the practice of software license management (SLM). In the past, IT organizations managed their software licenses through lengthy spreadsheets that needed to be updated manually, but today, there are much less overwhelming and labor-intensive ways for organizations to ensure compliance with SLAs. Here's how you can make your software license management process less overwhelming in 2019.

What Is Software License Management?

Software license management refers to a specific aspect of an organization's software asset management (SAM) capability. It consists of processes, procedures, and tools that IT organizations implement to manage their software licenses throughout the entire software life cycle. IT organizations conceptualize the software life cycle in five stages: purchase, deployment, maintenance, utilization, and disposal—and software license management plays a role in ensuring that each stage of the software life cycle performs in an efficient and cost-effective way.

Software license management helps IT organizations determine how many licenses they need to purchase from a given software vendor, and to ensure that those licenses are deployed to areas in the organization where they can have the most impact. This is done through monitoring existing usage of the software in the organization through SLM. Later in the software life cycle, IT organizations can use SLM tools and capabilities to verify their compliance status with software license agreements and avoid external software audits from their vendors.

Focus on the Benefits of Software License Management

To effectively simplify the process of software license management in 2019, IT organizations need to focus on the benefits of an effective SLM program. Understanding the benefits of SLM is important for IT organizations that are developing a business case for the integration of SAM and SLM tools and applications into the company infrastructure. When IT organizations understand the benefits of SLM, they can focus on the most value-adding aspects of the process to achieve the best results.

Reduce IT Costs

An effective SLM program reduces IT costs by reducing or eliminating resource waste on excess software purchases. On a global scale, 38 percent of software licenses purchased are either rarely used or entirely unused—a figure that amounts to approximately $247 per workstation. With SLM, IT organizations can effectively monitor software usage for each application they license, determine their usage levels, and purchase licenses accordingly to reduce costs and eliminate waste.

Limit Business, Legal, and Financial Risks

Failure to comply with software license agreements represents a significant source of business, legal, and financial risk for IT organizations. When IT organizations breach their license agreements by installing too many instances of an application, using a purchased application for a purpose not described in the contract, or implementing virtualization in a way that does not comply with the SLA, it may trigger a software compliance audit from the vendor.

IT organizations that do not manage their software licenses effectively are at the mercy of vendors when it comes to an audit. A software audit that finds non-compliance can result in costly true-up payments and even result in legal fees when the vendor and the IT organization disagree about whether the contract was breached. Either way, these audits can significantly disrupt the business. Organizations that practice effective SLM can avoid audits by remaining in compliance and easily demonstrate their compliance with software license agreements in case of an audit.

Maximize End-user Productivity

The IT organization can support end-user productivity in the business by leveraging the monitoring aspect of SLM to ensure that the business purchases enough software licenses for everyone in the organization that requires a given application. In the same way that purchasing excess licenses results in wasted money, purchasing too few licenses can negatively impact productivity. This is especially true in cases where license agreements place restrictions on deploying the application on test servers or in virtual sessions.

Maximize IT Responsiveness

IT responsiveness refers to the ability of an IT organization to act quickly and decisively in response to new suggestions or challenges related to software license management. In the context of SLM, the increased responsiveness of the IT organization is due to the ready availability of up-to-date software license data that accurately reflects usage and installations within the organization.

This means that, for example, when a user requests a new software installation on their workstation, an IT operator can quickly verify whether the organization has an available license for the machine and whether the installation would trigger a non-compliance issue with the vendor.

Reputation Management

In the majority of cases, non-compliance with SLAs is accidental, but the outcome of a software audit can still negatively impact a firm's reputation. A 2015 study conducted by Gartner revealed that 68 percent of organizations receive at least one audit letter each year from a software vendor. If your organization is found to be violating license agreements in that one audit, you can rest assured that your other software vendors will start sending audit requests of their own. Once you develop a reputation for non-compliance, frequent audit requests can create interruptions and distractions that pose a real threat to your business.

Software compliance reviews have become a major source of revenue for the software vendors, and the only way to keep them off of your doorstep is to ensure that auditing your software compliance is a waste of their time and money.

Adopt a Strict Software Management Policy

Organizations that implement an effective software solution for SLM still need to ensure that their employees understand the risks of non-compliance and the penalties that the business could face if something unexpected is discovered during a software audit. IT organizations cannot manage their compliance with SLAs exclusively by monitoring software installation and usage—they must also implement policies and procedures that support compliance among employees.

New software deployments within all departments should be conducted and monitored by IT, and employees should recognize that using unlicensed software on their work machines is an unacceptable practice that needlessly exposes the organization to additional risk.

There are also certain license types that create software usage restrictions that employees should be aware of. If your organization licenses software on a per-user basis, it is crucial that employees do not share their login information and never use someone else's login credentials to access the application. If you license on a per-device basis, employees should understand how accessing the application on a separate device could impact your compliance status. The IT organization must accurately interpret contract information for each application and effectively relay that information to IT operators and users within the business to proactively mitigate compliance issues.

Take Advantage of Automated Software Discovery

In the past, organizations might use an Excel spreadsheet to keep lists of purchased software licenses, what machine they were installed on, and who was using them. In today's IT environment, organizations are moving away from solutions that depend on manual data entry and towards purpose-built software applications that do a better job of supporting their software asset and license management needs.

Methods of software license management that rely on manual data entry are time-consuming for IT operators and depend on constant updates to stay current. The database might be accurate at some point in time, but the IT organization must manually keep track of software usage changes to ensure that it is kept up-to-date. This consumes valuable resources that could be spent on more value-adding tasks.

Today's software solutions for SLM use automated software discovery tools to detect software installations and monitor software usage on the network. This eliminates the need for manual data entry as part of the SLM process and ensures that the IT organization always has access to correct, up-to-date information on software usage within the organization.

Regular software discovery is an important tool for detecting new and potentially unauthorized software installations on network machines. If an employee installs an application on their own machine without going through IT, that installation is detected through the software asset discovery feature and the IT organization can correct any non-compliance issues before they lead to a software audit.

Review Your Software License Types

Software license agreements can be immensely complex, to the point where many IT organizations bring in external consultants and software contract experts to interpret the terms of their agreements. While software license management tools and software can support compliance, organizations that do not clearly understand what is allowed by their software license agreement cannot hope to comply effectively.

You can ensure your compliance with software licenses in 2019 by reviewing your agreements and ensuring your correct understanding of your software license types for each software that you use. The most common license types include:

  • Per device - A "per device" license means that the software can only be deployed on a single machine, whether it is on a workstation or on a server. IT organizations can run into trouble with "per device" licensing when users attempt to access the application on their other devices, or when an application is deployed to a test environment on a separate device.

  • Per user - A "per user" license means that a single individual is given login credentials for the application and must confirm their identity to access the application. IT organizations can run into problems when users share their credentials to expand usage of the application without paying for additional licenses. Users should never share their login credentials when per-user licensing is involved.

  • Per network - This license permits usage of the application for all devices on a specified network. IT organizations can run into compliance issues when users access the application on devices outside the network, such as a home computer.

IT organizations should meticulously analyze their license agreements with vendors to determine exactly what is allowed by the contract, verify their compliance, and purchase additional licenses if required to avoid non-compliance issues.

Implementing a Software Asset Management Tool

IT organizations that find themselves overwhelmed by the process of software license management should implement a software asset management tool with features that effectively support the SLM process. Cherwell's Software Asset Management (SAM) offers organizations a simplified path to reduce software license spending while mitigating software audit risk.

Besides integration with its award-winning CSM platform, Cherwell's SAM solution makes it easy for IT organizations to manage software inventory, license compliance, and software usage to optimize resource deployment throughout the entire software life-cycle. Organizations can take advantage of features like:

  • Automated software discovery, making it easy to detect and monitor software that is installed on the network

  • Automated discovery and inventory capabilities include populating workstations and servers in the CMDB

  • Software usage analysis tools that reveals opportunities to reallocate licenses and reduce waste

  • Proactive compliance monitoring, ensuring that the IT organization is aware of compliance issues and can correct them before they are discovered in an external software audit by a vendor

Get in touch with us today or book a free demo and find out how Cherwell can help you simplify your software license management processes in 2019.

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