License Management Software

A business with 200 to 501 employees, on average, uses about 123 SaaS applications. Without the right tools, it can be challenging for IT teams to manage licenses and ensure compliance with vendor agreements for that many software applications.

This is where license management software comes in. It helps manage the license inventory, track application usage, and ensure compliance with end-user agreements. A license manager also assists with software audits and supports the automatic activation and deactivation of licenses.

This buyers guide will help you better understand license management software, its features and benefits, and recent market trends, so you can choose the best tool for your business.

Here's what we'll cover:

• What is license management software?
• Common features of license management software
• What type of buyer are you?
• Benefits of license management software
• Key considerations when selecting license management software
• Market trends to understand

What is license management software?

License management software is a tool that helps businesses document and manage software licenses to ensure compliance with vendors’ usage terms and conditions. It registers the various software applications used in an organization and manages the license inventory.

License management solutions offer complete visibility into company-wide software usage. They automatically track license expiration and renewal dates to help ensure compliance and avoid penalties. They can be purchased as stand-alone tools or as part of software asset management (SAM) suites.

Software license management in Freshservice (Source)

Common features of license management software

In this section, we’ve listed some of the common features buyers seek when purchasing a license management solution.

Automated discovery	Identify and register the different types of software applications used across departments, and track their usage and license models.
License tracking and license inventory	Maintain a centralized license inventory with complete information on the number of active and unused licenses, software license agreement terms, expiry/renewal dates, license versions, and more.
License entitlement management	Manage the rights to use licensed software across departments. Assign, revoke, or reallocate license entitlements based on the needs of various users or teams.
Dashboard/reporting	Report over or underutilization of software licenses, and track software purchase ROI using dashboard reports and analytics.
Alerts/notifications	Receive alerts about license expiry dates, overutilization, and unauthorized use through email or pop-up notifications.
Software licensing model	Define and deploy various types of licensing models, such as trial licenses, concurrent licenses, or mobile licenses, based on your pricing strategies.

What type of buyer are you?

License management software is used by vendor organizations as well as end-user businesses to track software license usage. Let’s check which category you belong to.

• Software vendors/developers: Software vendors and developers use license management tools to create licensing models (e.g., per user, per device, concurrent) and manage client accounts. They also use license managers to conduct software audits and track compliance of client accounts with usage terms and policies. Software licensing models, audit management, and license key generation are some key features for these buyers.
• End-user organizations: End-user organizations use license management tools to track and manage license entitlements, report over- or underutilization of software resources, and generate usage reports. Automated discovery, software license tracking, entitlement management, reporting, and alerts are the common features needed for these buyers.

Benefits of license management software

Here are some ways in which license management software can benefit your business:

• Automates IT asset management functions: With license management software, your IT team will no longer have to manually track license deployments and usage. The software automatically tracks these metrics and maintains a centralized license inventory. Its reporting feature provides insights into license under or overutilization to help you decide whether to scale up or down your license subscriptions.
• Lowers costs: A license manager allows you to identify underutilized or unused software licenses and reduce your subscription to them, thereby helping save money. The tool also helps track software usage and decide which type of license model can give a higher ROI.
• Reduces the risk of noncompliance: The end-user license agreement (EULA) you sign with a software vendor defines how you can use the application and license model, your liabilities, and the data security policies to be followed. License management tools conduct software audits to track if your organization is adhering to the terms stated in the EULA and help avoid noncompliance penalties.

Key considerations when selecting license management software

Besides software features and benefits, here are some factors you should consider when buying license management software:

• Stand-alone tool versus software suite: You can select either a stand-alone license management tool or a SAM software suite with license management features. Besides license management, SAM suites offer depreciation management, software auditing, and lifecycle management capabilities. Assess your current and future needs, as well as your budget limitations, to decide on a suitable software model.
• Cloud-based versus on-premise solutions: Based on your tech and IT infrastructure capability, decide if you should select a cloud-based or an on-premise license management tool. Cloud-based solutions are easier to set up, more cost-effective, but your data is stored on third-party servers. On-premise tools, on the other hand, are costlier and have to be maintained by your in-house IT team, but they allow more customization capabilities and better control over your data.
• SaaS subscriptions versus traditional licenses: The metrics you want to track will vary depending on whether you use SaaS or traditional on-premise applications. Thus, your choice of license management software will rely on your existing software license type (cloud-based or on-premise). Check with vendors if their license manager tool can handle both SaaS and traditional licenses.

Market trends to understand

Here are some trends impacting the license management software market that you should be aware of:

• Digital transformation initiatives driving the demand for license management software: Increasing use of cloud-based platforms, adoption of BYOD and IoT trends, and higher budgets for software investments are expected to drive the demand for license management solutions. Businesses are adopting these solutions to track application usage, pirated or illegal licenses, unauthorized access to SaaS applications, and more.
• Increase in software audits by vendors boosting the use of license management software: Recent years have witnessed an increase in the number of vendor-initiated software audits. In line with this increase, businesses are relying more on SAM suites and license management tools to ensure compliance with multiple EULAs and avoid penalties.

Note: The application selected in this article is an example to show a feature in context and is not intended as an endorsement or a recommendation. It has been obtained from sources believed to be reliable at the time of publication.