If you answered no to any of these questions, then your organization is likely taking the initial steps towards software asset management.  On any IT budget sheet, there is an entry for software.  While companies are continually trying to increase the return on IT equipment, it is essential to get the most value for dollars spent.  Purchasing too many licenses can be just as costly to an organization as not purchasing enough.

The first step towards software management that many companies take is to implement a software discovery tool.  While this is a great place to start, it is only one piece of the puzzle.  While discovery tools can report the application installations found, they cannot tell you if the software is licensed.  This is where software management gets tricky.  Obtaining the relationship between the installation and the license is crucial to achieving software management.

In the case of audits, saying you have x copies of an application installed will not be meaningful if there is no proof that those copies are properly licensed by your organization.  Non-compliance can cause significant fines as well as make future software license negotiations challenging.

Procurement of licenses can play an important role in the on-going effort to track and manage software.  Many organizations spend billions of dollars on procurement software but do not allocate funds to integrate that software with their Software Asset management tools.

The best way to track licenses is from the time they are purchased.  From that point the licenses can be related to the installations they create and the puzzle starts to come together.

Software licensing agreements have grown increasingly complex, particularly among large vendors.  It is important that the license is tracked properly based on the type of license that it is.  For example, if the organization is paying per license and every PC has the application installed, then there could be a cost savings by switching to an enterprise agreement.  On the contrary an enterprise agreement for an application used infrequently could be too costly.

There is also the issue of expiring licenses.  For the past 30 years, nearly every prospective customer sought to ensure that a “perpetual license” was incorporated as part of their agreement. Now, some long-standing vendors are renegotiating their agreements to eliminate the “perpetual” provision, if one has survived[1]; and some have moved to the cloud, which introduces a whole new licensing structure and complexity for cloud/subscription-based software.  License renewals if left unmanaged could cause the organization to slip into non-compliance.  It is important that the full terms of the licenses are managed to stay within the limits of compliance.