5 Steps to Maximize the Return on Investment of Software Licensing

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

Step 1: Centralize all software licensing operations

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

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

Centralization of licenses also enables proactive SLM, such as receiving alerts before licenses expire. Early problem solving supports 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 assign a single person to manage licenses across the enterprise.

Step 2: Consolidate Licenses and Suppliers

Once a central repository is established, the SLM administrator can accurately inventory the licenses and compare them to license requirements. This often results in the possibility of bundling licenses under various producer programs with significant savings.

An analysis of the sources from which an organization purchases software can generate 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 record the initial installation of an application, rather than monitoring its usage. Additionally, these tools do not allow users to “save” 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 their purchase and renewal decisions on precise and detailed usage information collected over time. This can dramatically reduce the mistakes organizations typically make when it comes to software licensing.

Step 4: Make efficient use of usage reports

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 information about the actual use of software in the business and allows organizations to:

  • Cut spending on unnecessary software. The fastest, least painful way to cut software costs is to eliminate unnecessary, unused, or underused software. This not only reduces purchasing expenses, but also updating and support costs. Sometimes organizations can even trade in unused securities.

  • 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 use when demand increases.

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

    This strategy is effective if users are only denied access for a few minutes or infrequently. When denials are disruptive, users become less productive and hoarding behavior can occur, with individuals refusing to quit an app for fear of being turned down in the future.

    Adopting a software licensing tool that can analyze usage by time, 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 lead to these costs.

    With robust software management tools, IT managers can determine if 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 uses 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 assess licensing requirements will remain. The more up-to-date, accurate and precise the license data of IT managers is, the more closely they can align software licenses with business needs and, in turn, reduce costs. Automation holds 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 properly billed and credited for cross-licensing, 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 Business.


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