5 Steps to Maximize Software Licensing ROI

Although each software license management (SLM) program is unique to the organization it serves, several common steps can maximize the return on investment (ROI) made in people, processes, and technology.

Step 1: Centralize all software licensing operations

Consolidating all licenses, regardless of application location, creates a central repository where licenses can be made available to meet needs as they arise. The centralization of SLM provides IT managers with a single view for more effective and efficient license deployment across business units.

A single view also improves visibility into license inventory, letting administrators know which licenses are available and when a given license will expire. This, in turn, allows redeployment of under-provisioned licenses.

Centralizing licenses also enables proactive SLM, such as receiving alerts before licenses expire. Resolving issues early promotes employee productivity and reduces administrative costs.

In addition, centralization improves the use of IT resources. Rather than employing a dedicated SLM administrator at each site, an organization can designate a single person to manage licenses across the enterprise.

Step 2: Consolidate licenses and vendors

Once a central repository is established, the SLM administrator can accurately inventory licenses and compare them to licensing requirements. This often results in the ability to bundle licenses across various producer programs at significant cost savings.

An analysis of the sources from which an organization purchases software can lead to even more savings. By eliminating small purchases from multiple sources, in favor of volume purchases from a limited number of IT partners, the cost of individual licenses can be significantly reduced.

Step 3: Collect accurate usage statistics

Legacy SLM tools often only log the initial installation of an application, rather than monitoring its usage. Additionally, these tools do not allow users to “check in” a license when they are done using an application, a situation that can lead organizations to purchase unnecessary licenses.

Fortunately, modern software licensing platforms allow IT managers to base purchase and renewal decisions on accurate and detailed usage information collected over time. This can greatly reduce the mistakes that organizations commonly make with software licensing.

Step 4: Leverage Usage Reports Effectively

Today’s software management tools can generate detailed and accurate usage statistics. This allows IT managers to segment and analyze usage statistics by location, project, user group, or other categories. This provides detailed insights into actual software usage across the enterprise and enables organizations to:

  • Reduce spending on unnecessary software. The quickest and least painful way to reduce software costs is to eliminate unnecessary, unused, or underutilized software. This not only reduces purchase expenses, but also update and support costs. Sometimes organizations can even trade in unused titles.

  • Manage licenses based on peak demand. One way to purchase and manage licenses is to determine the number of licenses needed during peak periods. Then an organization can set thresholds that deny usage when demand increases.

    For example, an organization might allocate 10 licenses to a workgroup of 11 users and set 90% as the threshold. Then the peak demand will occur when one or no license is available. By denying access to certain users during peak periods, the organization can realize significant cost savings by owning fewer licenses.

    This policy is effective if users are only denied access for a few minutes or rarely. When denials are disruptive, users become less productive and hoarding behavior can occur, where individuals refuse to leave an app for fear of being denied in the future.

    Adopting a software licensing tool that allows analysis of usage by time of day, week, or month is vital.

  • Optimize software renewals and remixes. By some estimates, IT organizations spend 10-20% of their budget on unnecessary software updates and maintenance. Analyzing and leveraging usage data can help avoid the wrong assumptions that drive these costs.

    With robust software management tools, IT managers can determine whether usage trends are permanent or part of normal business cycles and take appropriate action. For example, software licenses can be remixed in cases where a project takes one set of software applications during the conceptual phase, another set during prototyping, and a third set during testing.

Step 5: Automate software licensing operations

As long as organizations rely on software to do business, the need to continually assess and evaluate licensing requirements will remain. The more timely, accurate, and precise licensing data IT managers have, the more closely they can align software licensing with business needs and, therefore, reduce costs. Automation is the key to getting the job done.

Automating software licenses also helps establish an efficient chargeback system. Such systems not only ensure that business units are correctly billed and credited for cross-license sharing, but also allow IT managers to develop more sophisticated license sharing strategies between business units. Only automation makes this possible; spreadsheets just aren’t sophisticated enough.

For more information, download Software Licensing for the Modern Enterprise.